Rule 209A penalty cannot stand without a valid basis for confiscation of uncleared job-work goods.

Penalty under Rule 209A of the Central Excise Rules, 1944 was held unsustainable where the goods remained uncleared in the manufacturer's premises and the record showed no independent act by the appellants that rendered the goods liable to confiscation. The proposed confiscation rested on the use of the appellants' brand name and a possible denial of small scale industry exemption, but that basis was not enough to establish aiding and abetting. In the absence of a sustainable foundation for confiscation, the penalty could not be maintained and was set aside.

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Issues: Whether penalty under Rule 209A of the Central Excise Rules, 1944 was sustainable against the appellants for alleged aiding and abetting in relation to goods manufactured on job work basis and seized while remaining uncleared.

Analysis: The goods were found in the manufacturer's premises and had not been cleared. The basis of seizure and proposed confiscation was the use of the appellants' brand name and the view that the goods might not be entitled to the small scale industry exemption. The record disclosed no independent reason attributable to the appellants showing that their conduct rendered the goods liable to confiscation. In the absence of a sustainable foundation for confiscation of the goods, the imposition of penalty on the appellants for aiding and abetting could not be maintained.

Conclusion: The penalty under Rule 209A was not sustainable and was set aside in favour of the assessee.

Final Conclusion: The appeals succeeded and the penalties imposed on the appellants were annulled.

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