2005 (10) TMI 117 - AT - Central Excise

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 ... Cenvat/Modvat - Inputs - Penalty 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.