Rule 209A penalty requires dealings with liable goods and cannot apply to an unrelated person in a Modvat dispute.

Rule 209A of the Central Excise Rules, 1944 permits penalty only where a person deals with excisable goods knowing, or having reason to believe, that they are liable to confiscation. In the context of a Modvat credit dispute, the provision was treated as inapplicable to a person who was not concerned with the irregularities and had not dealt with the goods said to be involved. On that basis, the rule supplied no foundation for penalty against such a person, and penalty under Rule 209A was therefore not imposable in those circumstances.

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Issues: Whether penalty under Rule 209A of the Central Excise Rules, 1944 could be imposed on a person who was not concerned with the Modvat credit dispute in the proceedings.

Analysis: Rule 209A permits penalty only where a person deals with excisable goods that he knows or has reason to believe are liable to confiscation under the Act or the rules. The penalty provision was applied in the context of the duty-evasion matter under consideration, and its quantum mechanism was tied to the value of the goods involved in that proceeding. As the respondent was not concerned with the Modvat irregularities and the goods said to be involved were not dealt with by him, the rule furnished no basis for imposing penalty in such circumstances.

Conclusion: Penalty under Rule 209A was not imposable on the respondent.

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