Rule 209A penalty requires physical dealing with excisable goods and knowledge of confiscability; absent proof, penalty falls.

Penalty under Rule 209A of the erstwhile Central Excise Rules, 1944 is sustainable only where a person has physically dealt with excisable goods and had knowledge or belief that they were liable to confiscation. In the absence of evidence of such physical involvement, the penalty cannot be maintained. The connected appeal was closed on issuance of a discharge certificate under section 127 of the Finance Act, 2019, while the penalty appeal was allowed and the penalty set aside.

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Issues: Whether penalty under Rule 209A of the erstwhile Central Excise Rules, 1944 could be sustained in the absence of evidence that the person had physically dealt with the excisable goods with knowledge or belief that they were liable to confiscation.

Analysis: The appeal relating to the assessee stood closed on issuance of a discharge certificate under section 127 of the Finance Act, 2019. For the penalty appeal, the controlling principle was that Rule 209A is attracted only where the person has physically dealt with the excisable goods and had the requisite knowledge or belief regarding their confiscability. In the absence of evidence of such physical dealing, the penalty could not be sustained.

Conclusion: The penalty under Rule 209A was set aside and the appeal was allowed.

Final Conclusion: The adjudication ended with the penalty being annulled for want of proof of physical involvement with the goods, while the connected appeal stood withdrawn under the settlement scheme.

Ratio Decidendi: Penalty under Rule 209A can be imposed only when the person has physically dealt with the excisable goods with knowledge or belief that they are liable to confiscation.

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