Rule 209A penalty requires conscious knowledge of excisable goods; personal liability upheld, corporate penalty set aside.

Penalty under Rule 209A of the Central Excise Rules, 1944 was sustained against the individual because the authorities found that he had conscious knowledge of the seized ball bearings and knowingly dealt with them as non-duty paid excisable goods. Penalty was set aside against the transport corporation because a juristic entity cannot be fastened with liability under Rule 209A merely on an employee's act in the ordinary course of business without proof of the corporation's own knowledge or conscious involvement. The decision therefore upheld the personal penalty while granting relief to the corporation.

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Issues: (i) Whether penalty under Rule 209A of the Central Excise Rules, 1944 was sustainable against the individual who had knowingly dealt with the seized ball bearings. (ii) Whether penalty under Rule 209A of the Central Excise Rules, 1944 could be imposed on the transport corporation for the goods booked in the ordinary course of business.

Issue (i): Whether penalty under Rule 209A of the Central Excise Rules, 1944 was sustainable against the individual who had knowingly dealt with the seized ball bearings.

Analysis: The finding against the individual rested on the conclusion that he had knowledge of the nature of the seized goods and had knowingly dealt with them as non-duty paid excisable goods. The authorities below had assessed his role in the handling and booking of the goods and had attributed conscious involvement to him.

Conclusion: Penalty on the individual was upheld and the appeal to that extent failed.

Issue (ii): Whether penalty under Rule 209A of the Central Excise Rules, 1944 could be imposed on the transport corporation for the goods booked in the ordinary course of business.

Analysis: The corporation was found to be a juristic entity without a separate mind capable of knowingly dealing with the goods in the requisite manner. The employee's act was treated as beyond the scope of employment, and vicarious liability was not accepted for fastening penalty under Rule 209A in the absence of conscious involvement by the corporation itself.

Conclusion: Penalty on the transport corporation was set aside and the appeal to that extent succeeded.

Final Conclusion: The decision sustained the personal penalty while granting relief to the corporation, resulting in a mixed disposal of the connected appeals.

Ratio Decidendi: Penalty under Rule 209A requires conscious knowledge and participation in dealing with confiscable excisable goods, and it cannot be imposed on a corporation merely on the basis of an employee's act done outside the scope of employment absent proof of the corporation's own knowledge or involvement.

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