Rule 209A penalty sustained where directors knew of and participated in excise contraventions

Concurrent findings that a company fraudulently availed credit without receipt of inputs and clandestinely cleared goods without payment of duty supported penalty under Rule 209A against the directors. The record also showed that the authorised signatory acted in day-to-day business on instructions of one appellant and that the appellants were aware of the company's excise contraventions. A belated claim that other persons managed the business was found inconsistent and unsupported. On that basis, the penalty was sustained and the challenge failed.

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Issues: Whether the penalty levied under Rule 209A of the Central Excise Rules, 1944 on the directors was justified.

Analysis: The adjudicating authority and the Tribunal recorded concurrent findings that the company had fraudulently availed credit without receipt of inputs and had clandestinely cleared goods without payment of duty. The record further showed that the authorised signatory acted in the day-to-day business on instructions of one of the appellants, and that the appellants were aware of the company's activities. The belated plea that other persons were managing the business was found to be inconsistent and unsupported.

Conclusion: The penalty under Rule 209A was rightly sustained and the challenge failed.

Ratio Decidendi: Where concurrent findings establish knowledge of and participation in a company's excise contraventions, penalty under Rule 209A can be sustained against the concerned persons.

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