Rule 209A penalty fails where a raw material supplier is not shown by independent evidence to aid clandestine removal.

Penalty under Rule 209A of the Central Excise Rules, 1944 was found unsustainable where the person proceeded against was shown only as a raw material or scrap supplier and there was no independent evidence that he assisted in clandestine removal. The allegations that he controlled the company's affairs or was present during search were unsupported by tangible material; statements of others implicating him were uncorroborated, one was recorded behind his back, and the show cause notice itself identified another person as being in charge. No statement from the appellant was recorded and no material established active involvement.

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Issues: Whether penalty under Rule 209A of the Central Excise Rules, 1944 was sustainable against a person alleged to be only a raw material supplier, without independent evidence of his role in clandestine removal of goods.

Analysis: The appellant was neither a partner nor related to the company's partners and was shown only as a supplier of scrap/raw material. The allegations that he was looking after the company's affairs or was present at the time of search were not supported by tangible evidence. The employee's statement implicating him was recorded behind his back and, by itself, could not be used against him. The director's statement alleging authorization to look after the factory was also uncorroborated, while the show cause notice itself referred to another person as the one in charge of the company. No statement of the appellant was recorded and no material established that he helped in the clandestine removal of goods.

Conclusion: Penalty under Rule 209A was not legally made out against the appellant and the penalty was unsustainable.

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