Rule 209A penalty cannot rest on invoice issuance alone without possession or dealing in excisable goods.

Penalty under Rule 209A of the Central Excise Rules, 1944 required actual possession of, or dealing with, excisable goods with knowledge or reason to believe that they were liable to confiscation. Mere issuance of invoices without movement or delivery of goods did not satisfy that requirement. The later introduction of Rule 26, which expressly covered invoice issuance without delivery, confirmed that such conduct was not within Rule 209A at the relevant time. The Tribunal's conclusion that penalty could not be imposed on these facts was upheld, and the assessees were relieved from penalty.

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Issues: Whether penalty under Rule 209A of the Central Excise Rules, 1944 could be sustained where the respondents were not shown to have acquired possession of, or otherwise dealt with, excisable goods with knowledge or reason to believe that they were liable to confiscation.

Analysis: Rule 209A permits penalty only against a person who acquires possession of excisable goods, or is otherwise concerned in transporting, removing, depositing, keeping, concealing, selling, purchasing, or otherwise dealing with such goods, with knowledge or reason to believe that the goods are liable to confiscation. The essential prerequisite is actual possession or dealing with excisable goods in the manner contemplated by the rule. A mere issuance of invoices without movement of goods does not satisfy this requirement. The later introduction of Rule 26, which specifically brings within its fold issuance of invoices without delivery of goods, showed that such conduct was not covered by Rule 209A at the relevant time. The Tribunal's view that penalty could not be imposed on the facts was therefore consistent with the governing rule.

Conclusion: Penalty under Rule 209A was not exigible on the facts, and the finding in favour of the assessees was upheld.

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