Penalty under Rule 209A fails without a confiscability finding, where the underlying demand has already been set aside.

Penalty under Rule 209A of the Central Excise Rules, 1944 could not be sustained where the demand against the job worker had already been set aside and no authority had recorded that the disputed goods were liable to confiscation. The absence of a confiscability finding meant the foundational condition for invoking Rule 209A was not established. The penalty was therefore set aside.

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Issues: Whether penalty under Rule 209A of the Central Excise Rules, 1944 could be sustained when the demand against the job worker had already been set aside and no finding had been recorded that the disputed goods were liable to confiscation.

Analysis: The demand against the job worker had been set aside by the Tribunal. Neither the original authority nor the appellate authority had recorded any finding that the disputed goods were liable to confiscation. In the absence of such a finding, the essential basis for imposing penalty under Rule 209A was not made out.

Conclusion: Penalty under Rule 209A of the Central Excise Rules, 1944 was not sustainable and was set aside.

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