Rule 209A penalty requires proof of knowing dealing with confiscable goods; mere job-work coordination is insufficient.

Penalty under Rule 209A of the Central Excise Rules, 1944 required proof that the person knowingly, or with reason to believe, dealt with excisable goods liable to confiscation. Mere coordination of job-work processing of fabrics was insufficient where the record did not show conscious participation in clearance without duty or knowledge that the goods were liable to confiscation. A stray statement that processed fabrics were sometimes received without bill or invoice, without supporting evidence, did not establish the necessary mens rea. The penalty was therefore not sustainable and was vacated.

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Issues: Whether penalty under Rule 209A of the Central Excise Rules, 1944 could be sustained against a person who coordinated processing of fabrics for job work, in the absence of evidence that he knowingly dealt with goods liable to confiscation.

Analysis: Penalty under Rule 209A could be imposed only if the person concerned was shown to have dealt with excisable goods knowing, or having reason to believe, that they were liable to confiscation. The record showed that the fabrics were processed by a job worker for customers who were largely exporters, and there was no material in the impugned order establishing that the appellant knew that the processed fabrics had not suffered duty or were liable to confiscation. The only circumstance relied upon was a statement that processed fabrics were sometimes received without bill or invoice, but no supporting evidence was found in the order to show conscious participation in clearance without duty or knowledge of confiscability.

Conclusion: The penalty under Rule 209A was not sustainable and was rightly vacated; the appeal succeeded.

Ratio Decidendi: Penalty under Rule 209A of the Central Excise Rules, 1944 requires proof that the noticee knowingly dealt with excisable goods liable to confiscation, and such penalty cannot rest on mere association with the processing activity absent evidence of conscious knowledge.

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