Penalty under Rule 209A requires a finding that goods are liable to confiscation; absent that basis, the penalty fails.

Penalty under Rule 209A of the Central Excise Rules is sustainable only where the goods are first found liable to confiscation, because the rule applies to a person concerned with such goods and having knowledge or reason to believe that position. In the absence of any finding that the goods were liable to confiscation, the legal foundation for the penalty fails. The penalty was therefore set aside and the applications succeeded, with the penalties annulled.

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Issues: Whether penalty under Rule 209A of the Central Excise Rules could be sustained in the absence of any finding that the goods were liable to confiscation.

Analysis: Rule 209A fastens penalty on a person concerned with goods which he knows or has reason to believe are liable to confiscation. The provision can operate only where the goods are first found liable to confiscation. As there was no finding that any goods were liable to confiscation, the basis for imposing and sustaining penalty under the rule was absent.

Conclusion: The penalty under Rule 209A could not be sustained and was set aside.

Final Conclusion: The applications succeeded and the penalties imposed on the concerned persons were annulled.

Ratio Decidendi: Penalty under Rule 209A of the Central Excise Rules is maintainable only when the goods are found liable to confiscation.

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