Appeal dismissed for non-compliance with Central Excise procedures, penalty reduced, credit denied for improper stock maintenance.

The appeal was dismissed as the appellants failed to comply with Central Excise procedures by shifting duty-paid inputs to a sister unit without proper authorization, leading to duty demand and penalty imposition. The court upheld the penalty but reduced it to Rs. 15,000, considering the absence of intent to evade duty due to the presence of the stocks in the sister unit. The appellants were deemed ineligible for credit as they did not maintain the credited stocks in the factory where credit was availed or used for manufacturing, as required by Central Excise law.

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Issues:
- Appeal against duty and penalty on non-availability of inputs for which credit was taken.

Analysis:
- The appellants availed Cenvat credit on polyester yarn and fibers but shifted them to a sister unit due to contamination risk during manufacturing of dyed yarn.
- Central Excise Officers found the stocks at the sister unit during a visit, leading to duty demand and penalty imposition.
- Appellants argue they recorded receipt of duty-paid inputs and had no intention to evade duty, as the goods were stored in their own unit.

- The learned SDR contends that duty-paid inputs must remain in the factory where credit was availed or used for manufacturing, suggesting the absence of permission to shift the stocks implies an intent to evade duty.
- The penalty is justified due to the violation of Central Excise procedure and the removal of inputs without proper authorization.

- The judge notes the duty of maintaining credited stocks in the factory and using them for manufacturing as per Central Excise law.
- Failure to follow procedures regarding the location of duty-paid inputs renders the appellants ineligible for credit.
- The penalty is reduced to Rs. 15,000 as the presence of the stocks in the sister unit indicates no intention to evade duty.
- The impugned order is upheld, rejecting the appeal.

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