Penalty for dealing with goods liable to confiscation failed where the notice did not propose confiscation.

Penalty under Rule 209-A of the Central Excise Rules, 1944 and Rule 26 of the Central Excise Rules, 2001/2002 was held unsustainable because those provisions apply only where a person deals with excisable goods liable to confiscation. The show-cause notice did not propose confiscation of any goods, so the foundational condition for invoking either rule was absent. On that basis, the penalty imposed was set aside.

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Issues: Whether penalty could be imposed under Rule 209-A of the Central Excise Rules, 1944 and Rule 26 of the Central Excise Rules, 2001/2002 when the show-cause notice did not propose confiscation of any goods.

Analysis: The provisions invoked authorise penalty only against a person who deals with excisable goods liable to confiscation. The show-cause notice contained no proposal for confiscation, and therefore there were no goods shown to be liable to confiscation. In the absence of such liability, the foundational requirement for invoking either rule was not satisfied.

Conclusion: Penalty under Rule 209-A of the Central Excise Rules, 1944 and Rule 26 of the Central Excise Rules, 2001/2002 was not sustainable, and the penalty imposed on the appellant was set aside.

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