Knowledge-based penalty under Rule 209A fails where no evidence shows trader's conscious involvement in duty evasion.

Penalty under Rule 209A of the Central Excise Rules, 1944 could not be imposed on a trader in the absence of evidence showing conscious knowledge that the goods were liable to confiscation or that the manufacturer was wrongly availing SSI exemption. The record contained no statement or material proving that the trader knew the brand name did not belong to the manufacturer or that duty evasion was involved. Mere dealing in goods manufactured by a concern alleged to have evaded duty was insufficient to fasten penal liability. The penalty was therefore unsustainable for want of proof of the required knowledge or involvement.

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Issues: Whether penalty under Rule 209A of the Central Excise Rules, 1944 could be imposed on a trader in the absence of evidence that he knew the goods were liable to confiscation or that the manufacturer was wrongly availing exemption.

Analysis: Penalty under Rule 209A requires some material showing conscious involvement or knowledge that the goods were liable to confiscation. The record contained no statement or other evidence showing that the trader knew the manufacturer was not entitled to SSI exemption or that the brand name did not belong to the manufacturer. The show cause notice and the adjudication order proceeded only on the fact that the appellant dealt in goods manufactured by the concern against whom duty evasion was alleged. In the absence of proof of knowledge, the essential basis for fastening penal liability was missing.

Conclusion: Penalty under Rule 209A could not be sustained against the appellant, and the assessee succeeded on this issue.

Ratio Decidendi: A penalty provision requiring knowledge of liable-to-confiscation goods cannot be invoked without evidence of conscious knowledge or involvement in the evasion.

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