Rule 209A penalty fails where provisional clearance, classification uncertainty, and absence of deliberate evasion are shown.

Penalty under Rule 209A was held unsustainable where tyres were cleared provisionally after the concessional notification came into force, the applicable classification remained unclear, and the assessee had passed on only the duty actually paid. The departmental record showed provisional clearance pending documentary confirmation, and trade correspondence reflected uncertainty over whether the tyre sizes fell within the moped category. As the goods were under physical control and no mala fide conduct or deliberate evasion was established, the punitive provision had to be construed strictly and the benefit of doubt given to the assessee; the penalty was therefore set aside.

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Issues: Whether penalty imposed under Rule 209A was sustainable where the assessee cleared tyres under provisional clearance, the classification under the concessional notification was unclear, and the duty element had been passed on only to the extent actually paid.

Analysis: The clearance took place after the concessional notification came into force, and the departmental inspector himself stated that the tyres would be allowed to be cleared provisionally until documentary confirmation was produced. The trade association's communication also showed uncertainty as to which tyre sizes fell within the moped category. The assessee had paid the duty demanded and passed on only the duty actually borne, and the goods were under physical control. On these facts, the element of mala fide conduct or deliberate evasion necessary for penalty was not established, and the penal provision, being in nature of punishment, called for giving the assessee the benefit of doubt.

Conclusion: The penalty was unsustainable and was set aside in favour of the assessee.

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