Penalty for aiding duty evasion fails when the underlying duty demand has already been set aside as time-barred.

Penalty under Rule 209A cannot stand where the underlying duty demand against the main noticee has already been set aside as time-barred. The Tribunal noted that the appellant was penalised for allegedly facilitating evasion by the principal purchaser, but the duty demand itself no longer survived. As the penalty was dependent on the existence of a valid and enforceable duty demand, the absence of such demand removed the legal foundation for penal liability. The penalty was therefore held unsustainable and set aside.

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Issues: Whether penalty imposed under Rule 209A of the Central Excise Rules could survive when the duty demand against the main noticee had already been set aside as time-barred.

Analysis: The appeal challenged the penalty imposed on the appellant for allegedly facilitating evasion of duty by the principal purchaser. The duty demand against the principal noticee had already been annulled by the Tribunal on limitation grounds. On that basis, the sustaining of penalty against a person alleged to have aided the evasion depended on the existence of a valid and enforceable duty demand. Where the demand itself does not survive, the foundation for penalty also fails.

Conclusion: The penalty was not sustainable and was set aside in favour of the appellant.

Ratio Decidendi: A penalty for facilitation of duty evasion cannot be sustained where the underlying duty demand itself has been set aside and no enforceable demand survives.

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