Knowledge requirement for Rule 209A penalty defeated where no evidence showed buyers knew goods were liable to confiscation.

Penalty under Rule 209A of the Central Excise Rules, 1944 requires proof that the person dealt with excisable goods knowing or believing that they were liable to confiscation. On the record, there was no statement or independent evidence showing that the appellants knew the fabrics had been cleared without duty, and purchase on commercial invoices alone did not establish the necessary awareness. There was also no material showing benefit from clandestine removal or any legal duty to insist on Central Excise invoices in the circumstances. The penalty was therefore set aside and consequential relief followed.

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Issues: Whether penalty under Rule 209A of the Central Excise Rules, 1944 was sustainable in the absence of evidence that the appellants knew or believed that the goods were liable to confiscation.

Analysis: Penalty under Rule 209A requires proof that the person dealt with excisable goods with knowledge or belief that the goods were liable to confiscation. The record disclosed no statement or independent evidence showing that either appellant knew that the fabrics had been cleared without payment of duty. Mere purchase against commercial invoices, without Central Excise invoices, did not by itself establish the requisite awareness. There was also no material to show that the appellants were beneficiaries of the alleged clandestine removal or that any legal obligation existed for them to insist upon Central Excise invoices in the circumstances.

Conclusion: The penalty was not sustainable and was set aside. The appeals were allowed with consequential relief.

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