Rule 26 penalty can stand without separate confiscation proceedings where knowledge of liable goods and active involvement are shown.

Rule 26 penalty may be imposed on a person dealing with excisable goods if he knew or had reason to believe the goods were liable to confiscation. The absence of a separate proposal for confiscation in the notice, or the absence of an actual confiscation order, does not by itself defeat penalty proceedings where clandestine removal and active involvement are established. On that reasoning, the penalty was upheld and the objection based on non-initiation of confiscation proceedings failed.

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Issues: Whether penalty under Rule 26 of the Central Excise Rules could be sustained against a director when no proposal for confiscation of goods and no confiscation order had been made.

Analysis: Rule 26 authorises penalty on a person who deals with excisable goods knowing or having reason to believe that the goods are liable to confiscation. The decisive requirement is the person's knowledge or reasonable belief regarding liability to confiscation, not the existence of a separate proposal in the show cause notice or an actual order of confiscation. Where clandestine removal and the appellant's active involvement are established, the absence of seizure or confiscation of the goods does not prevent invocation of the rule.

Conclusion: Penalty under Rule 26 was rightly upheld, and the objection based on absence of confiscation proceedings failed.

Ratio Decidendi: Penalty under Rule 26 can be imposed on a person concerned with excisable goods if he knew or had reason to believe that the goods were liable to confiscation, even where no separate confiscation proposal or order exists.

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