Transporter penalty under Rule 26 failed where sealed goods were carried on consignor's declaration without evidence of knowing involvement.

Penalty on a transporter under Rule 26 of the Central Excise Rules was held unsustainable where the goods were received in sealed and packed condition and transport documents were prepared on the consignor's declaration. The Tribunal observed that a transporter is not required to act as an excise officer or independently verify whether goods are duty-paid before carriage. It also noted that no duty-confirmation proceedings had been initiated against the manufacturer despite the allegation that the goods were non-duty-paid. On that basis, the penalty against the transporter was set aside and consequential relief followed.

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Issues: Whether penalty on the transporter under Rule 26 of the Central Excise Rules was sustainable for carrying goods declared by the consignor as tobacco but later found to be pan masala.

Analysis: The goods were handed over to the transporter in sealed and packed condition, and the transportation documents were prepared on the basis of the consignor's disclosure. The Tribunal noted that a transporter cannot be expected to act as an excise officer and determine whether the goods are duty-paid or non-duty-paid before accepting and carrying the consignment. It also found it significant that no proceedings for duty confirmation had been initiated against the manufacturer, even though the goods were alleged to be non-duty paid, making the penalty against the transporter unjustified.

Conclusion: The penalty was not sustainable and the appeal was allowed, with consequential relief to the assessee.

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