Penalty for dealing in confiscable excisable goods upheld where knowledge or reason to believe was established

Rule 209A of the Central Excise Rules, 1944 authorises penalty on any person who acquires, possesses, or deals with excisable goods knowing or having reason to believe that they are liable to confiscation. On the stated facts, the purchaser company and its manager were found to have been aware that the supplier had crossed the exemption limit and that duty became payable thereafter; senior management correspondence also showed knowledge, and the supplier was later found fictitious. The absence of a separate finding of guilty mind did not help, because the rule is satisfied by knowledge or reason to believe. The penalty was therefore sustainable.

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Issues: Whether penalty under Rule 209A of the Central Excise Rules, 1944 was sustainable against the purchaser company and its manager for dealing with excisable goods liable to confiscation.

Analysis: Rule 209A fastens penalty on any person who acquires possession of, or deals with, excisable goods knowing or having reason to believe that they are liable to confiscation. The responsible officer's statement showed awareness that the supplier had crossed the exemption limit and that duty was payable after crossing that limit. The record also showed regular correspondence with the supplier and knowledge at senior management level, while the supplier was later found to be fictitious. The absence of a separate finding of guilty mind did not assist the appellants because the rule turns on knowledge or reason to believe. The cited principle against penalty for mere technical breach did not apply on these facts.

Conclusion: The penalty was correctly imposed and was sustainable against the appellants.

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