Rule 209A penalty requires proven knowledge of confiscable goods; mere suspicion against a warehouse operator is insufficient.

Penalty under Rule 209A of the Central Excise Rules, 1944 could not be imposed on a warehouse operator where the record showed only warehousing and delivery of goods on the basis of delivery orders and excise invoices. The department failed to prove, by cogent evidence, that the operator participated in undervaluation, prepared false documents, or had knowledge or reason to believe that the goods were liable to confiscation. Mere suspicion was insufficient, and the absence of confiscation of the goods further weakened the basis for penalty. The principle applied is that liability under Rule 209A requires proof of knowing involvement in dealing with goods liable to confiscation or conduct facilitating evasion.

---

---

Issues: Whether the warehouse operator was shown to have knowledge of, or reason to believe in, the duty evasion and consequent confiscability of the goods so as to attract penalty under Rule 209A of the Central Excise Rules, 1944.

Analysis: The appellant's role was confined to warehousing and delivery of goods on the basis of delivery orders and central excise invoices issued by the manufacturer. The record did not establish that the appellant participated in undervaluation, prepared false documents, or had any specific knowledge that the goods were liable to confiscation. The finding of suspicion alone was insufficient, and the department failed to prove the essential ingredient of knowledge or reasonable belief required for penalty under Rule 209A. The absence of confiscation of the goods also weakened the foundation for fastening penalty on the warehouse operator.

Conclusion: Penalty under Rule 209A of the Central Excise Rules, 1944 was not sustainable against the appellant.

Ratio Decidendi: Penalty on a person other than the manufacturer cannot be sustained under Rule 209A unless the department proves, by cogent evidence, that the person knowingly dealt with goods liable to confiscation or had reason to believe that his conduct would facilitate evasion.

---