Rule 209A penalty requires knowledge of confiscability; dealer status alone cannot substitute for proof, so the penalty was set aside.

Penalty under Rule 209A of the Central Excise Rules requires proof that the person acquired or possessed excisable goods knowing, or having reason to believe, that they were liable to confiscation. The record contained no material showing that the dealers knew the goods were non-duty paid or otherwise liable to confiscation, and knowledge could not be presumed merely from their status as dealers. Penalty was therefore not sustainable and was set aside.

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Issues: Whether penalty under Rule 209A of the Central Excise Rules was sustainable against the dealers in the absence of evidence that they knew or had reason to believe that the goods were liable to confiscation.

Analysis: Rule 209A authorises penalty only where a person acquires possession of excisable goods knowing, or having reason to believe, that they are liable to confiscation. The record did not show any material establishing that the appellants knew the goods were non-duty paid or otherwise liable to confiscation. The attempt to infer such knowledge merely from the fact that the appellants were dealers was treated as a presumption unsupported by law or evidence.

Conclusion: Penalty under Rule 209A was not justified and was set aside in favour of the appellants.

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