Penalty for dealing with non-duty paid goods fails where untested statements and no independent corroboration support the charge.

A personal penalty under Rule 209A of the Central Excise Rules, 1944 was held unsustainable where the department relied mainly on statements that were not tested by cross-examination. The principal transport-company witness did not implicate the noticee in his earliest statement and later retracted the incriminating version, while no independent evidence linked the noticee to removal or purchase of non-duty paid goods. The alleged railway-station transaction was also unsupported by surviving material. In a penalty proceeding, the department had to prove the charge with credible evidence, and the failure to do so entitled the noticee to relief.

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Issues: Whether the personal penalty imposed under Rule 209A of the Central Excise Rules, 1944 for dealing with non-duty paid goods was sustainable on the evidence relied upon by the department.

Analysis: The penalty was founded mainly on statements of persons who were not produced for cross-examination, and their statements therefore did not attain evidentiary reliability. The principal transport-company witness did not implicate the appellant in his earliest statement and later retracted the incriminating version in cross-examination. No independent material linked the appellant to removal or purchase of the disputed goods, and the alleged railway-station transaction was also not supported by surviving evidence. In a penalty proceeding, the department had to establish the charge with credible proof, which it failed to do.

Conclusion: The penalty was not sustainable and the finding was in favour of the assessee.

Final Conclusion: The impugned penalty order was set aside and the appeal was allowed with consequential relief.

Ratio Decidendi: A penalty for dealing with non-duty paid goods cannot be sustained unless the department proves the charge by reliable evidence capable of being tested by cross-examination; untested statements and uncorroborated allegations are insufficient, and the benefit of doubt goes to the noticee.

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