Personal penalty under Central Excise rules requires knowledge that goods were liable to confiscation; penalty was set aside.

Personal penalty under Rule 209A of the Central Excise Rules, 1944 and Rule 26 of the Central Excise Rules, 2002 requires that the person dealt with goods knowing, or having reason to believe, that they were liable to confiscation. Where the show-cause notice did not propose confiscation and the adjudication order did not record such knowledge or belief, the essential foundation for the penalty is absent. On that basis, the penalty imposed on the appellants was set aside.

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Issues: Whether personal penalty under Rule 209A of the Central Excise Rules, 1944 and Rule 26 of the Central Excise Rules, 2002 could be sustained against the appellants when the show-cause notice did not propose confiscation of the goods and the order did not record that the appellants knew the goods were liable to confiscation.

Analysis: Personal penalty under both provisions is attracted only where the person concerned deals with goods knowing, or having reason to believe, that they are liable to confiscation. The notice and the adjudication order did not allege or establish such prior knowledge. No proposal for confiscation was made in respect of the goods, and the essential foundation for invoking the penalty provisions was therefore absent. In that situation, the penalty could not be sustained.

Conclusion: The penalty imposed on the appellants under Rule 209A of the Central Excise Rules, 1944 and Rule 26 of the Central Excise Rules, 2002 was set aside.

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