**Concept: The question tests on the basics of Counting**

**Solution:**

The word PENCILS is made of 7 different letters. Since E has to be next to I, we consider them as a single Unit.

We now have 6 units (5 letters and 1 unit of E and I)

External arrangements = 6! = 720

Internal arrangements (for E and I) = 2! = 2

Total number of words = 720 * 2 = 1440

**Option C**