Rule 209A penalty unsustainable where co-noticees were identically placed and a connected finding had become final

Penalty under Rule 209A of the Central Excise Rules, 1944 on distributors alleged to have aided and abetted duty evasion could not be sustained where the co-noticees were in the same position and the findings against them were concurrent and indivisible. The Tribunal had already set aside the penalty, and a connected challenge involving an identically placed co-noticee had failed, making that determination final and binding. In those circumstances, the Court declined to uphold a contrary view on the same factual matrix, and the question whether Rule 209A required mens rea did not survive independently.

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Issues: Whether the penalty imposed under Rule 209A of the Central Excise Rules, 1944 on the distributors/co-noticees for aiding and abetting evasion of duty was sustainable.

Analysis: The findings recorded against all co-noticees were concurrent and indivisible, as they all stood in the same position as distributors of the manufacturer. The Tribunal had set aside the penalty, and in a connected matter involving an identically placed co-noticee, the challenge to the same order had already failed, making that determination final and binding. In such a situation, the Court could not sustain a contrary view on the same factual matrix. The question whether Rule 209A required mens rea therefore did not survive independently once the impugned penalty could not be upheld consistently with the final outcome in the connected matter.

Conclusion: The penalty under Rule 209A could not be sustained, and the issue was answered in favour of the assessee and against the Revenue.

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