Penalty under Rule 209A needs proof of knowledge of duty evasion; mere market purchase was insufficient.

Penalty under Rule 209A of the Central Excise Rules, 1944 requires proof of conscious involvement or knowledge that the goods were liable to duty and had been dealt with in a manner attracting penalty. Mere purchase of goods from the open market through brokers, without central excise documents or in small quantity, was not enough to infer such knowledge in the absence of supporting material. On that basis, the penalty was held not sustainable and was set aside.

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Issues: Whether penalty under Rule 209A of the Central Excise Rules, 1944 was sustainable in the absence of proof that the appellant had knowledge that the goods were purchased without payment of central excise duty.

Analysis: Penalty under Rule 209A requires conscious involvement or knowledge that the goods were liable to duty and were dealt with in a manner attracting penal consequence. The record showed that the appellant purchased the goods in the open market through brokers and there was no material to attribute knowledge to him merely because the goods were bought without central excise documents or in small quantity.

Conclusion: The penalty was not justified and was set aside.

Ratio Decidendi: Penalty under Rule 209A cannot be sustained unless the person proceeded against had knowledge of the duty evasion or conscious involvement in dealing with the goods.

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