Rule 209A penalty cannot cover fake gate passes alone when no excisable goods were actually dealt with.

Rule 209A of the Central Excise Rules, 1944 applies only when a person deals with excisable goods, knowing or having reason to believe that such goods are liable to confiscation. Where only fake gate passes were issued and no excisable goods were actually acquired, transported, removed, sold, purchased, or otherwise dealt with, the rule did not cover the conduct. The later insertion of Rule 26(2) in the Central Excise Rules, 2002 was noted as extending liability to document-based frauds, but it could not be applied retrospectively to the earlier facts.

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Issues: Whether penalty under Rule 209A of the Central Excise Rules, 1944 was sustainable when fake gate passes were issued but no excisable goods were supplied.

Analysis: Rule 209A applies only where a person acquires, transports, removes, deposits, keeps, conceals, sells, purchases, or otherwise deals with excisable goods, knowing or having reason to believe that such goods are liable to confiscation. On the facts found, only fake documents were issued and no excisable goods were actually involved in any prohibited dealing. The conduct alleged therefore did not fall within the scope of Rule 209A. The later insertion of sub-rule (2) in Rule 26 of the Central Excise Rules, 2002 was noted as covering such document-based frauds, but that provision could not be applied retrospectively to the present case.

Conclusion: Penalty under Rule 209A was not imposable and was set aside; the appeal was allowed.

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