Penalty enhancement on remand and Rule 209A liability require challenge and evidence of knowledge or participation.

A penalty could not be enhanced in remand proceedings where the Revenue had not challenged the original penalty, because the adjudicating authority could not worsen the appellant's position after a remand arising from the assessee's appeal. Penalty under Rule 209A of the Central Excise Rules, 1944 also could not be sustained against a person who was not shown to have knowledge of, consented to, or participated in the clandestine removal during the relevant period; designation alone was insufficient. The appeal therefore succeeded and the penalty order was set aside with consequential relief.

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Issues: (i) whether a penalty originally imposed could be enhanced in proceedings after remand when the Revenue had not challenged the original penalty; (ii) whether penalty under Rule 209A of the Central Excise Rules, 1944 could be sustained against a person who was not shown to have knowledge of or participation in the clandestine removal during the relevant period.

Issue (i): whether a penalty originally imposed could be enhanced in proceedings after remand when the Revenue had not challenged the original penalty.

Analysis: The remand was made in an appeal by the assessee, and the original penalty had not been assailed by the Revenue. In such a situation, the adjudicating authority could not place the appellant in a worse position than that which existed at the time of the original adjudication.

Conclusion: The enhanced penalty was not sustainable.

Issue (ii): whether penalty under Rule 209A of the Central Excise Rules, 1944 could be sustained against a person who was not shown to have knowledge of or participation in the clandestine removal during the relevant period.

Analysis: The appellant became General Manager only from a date after the period of clandestine removal. The penalty had been imposed merely on the basis of his designation, without evidence that he knew of, consented to, or ed the alleged clandestine activities. Liability under Rule 209A required some evidence connecting him with the offence.

Conclusion: The penalty could not be sustained.

Final Conclusion: The appeal succeeded and the penalty order was set aside with consequential relief.

Ratio Decidendi: A penalty cannot be enhanced against an appellant in remand proceedings when the original penalty was not challenged by the Revenue, and liability under Rule 209A requires evidence of knowledge, consent, or participation in the offending conduct.

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