2005 (10) TMI 117 - AT - Central Excise

Summary

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.