Rule 209A penalty requires conscious involvement and disclosed evidence; undisclosed material cannot support liability.

Penalty under Rule 209A of the Central Excise Rules, 1944 cannot rest on an undisclosed certificate or on material not put to notice, because reliance on such a document without opportunity to explain breaches natural justice. The certificate, issued at project level, did not show Board-level authorisation, knowledge, or conscious participation in evasion. Rule 209A also requires conscious dealing with goods liable to confiscation and a knowing concert with the evasion; on the record, no such basis for confiscability or culpable involvement was established. The penalty was therefore unsustainable and was set aside.

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Issues: Whether the penalty imposed on the appellant under Rule 209A of the Central Excise Rules, 1944 could be sustained on the basis of an undisclosed certificate and in the absence of proof of conscious involvement in evasion.

Analysis: The penalty was founded substantially on a certificate that was not part of the relied-upon documents or the show cause notice, and reliance on it without notice or opportunity of explanation offended natural justice. The certificate was also issued by an engineer at project level and did not establish any authorisation, knowledge, or decision of the Board itself. For attracting Rule 209A, conscious dealing with goods liable to confiscation and a knowing concert are required, and no such liability to confiscation of goods was established on the record.

Conclusion: The penalty under Rule 209A was unsustainable and was set aside in favour of the appellant.

Final Conclusion: The appellant was not liable to the penalty and the appeal succeeded on merits.

Ratio Decidendi: A penalty under Rule 209A of the Central Excise Rules, 1944 cannot be sustained unless the noticee is shown to have had conscious knowledge and participation in relation to goods liable to confiscation, and reliance on an undisclosed document without notice violates natural justice.

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