Limitation and Rule 209A penalty fail where branded goods were disclosed to the department and no intent to aid confiscation was proved.

Departmental awareness of the assessee's branded tins and logo, evidenced by correspondence and examination of the labels, defeated the allegation of suppression, so the extended limitation period could not be invoked and the demand was held time-barred. Penalty under Rule 209A of the Central Excise Rules, 1944 also failed because the sole selling agent's deliberate knowledge or belief that the goods were liable to confiscation was not established. The appeals were allowed and consequential relief followed to the extent permissible.

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Issues: (i) whether the demand was barred by limitation on the ground that the use of the brand name or logo had not been suppressed from the department, and (ii) whether penalty under Rule 209A of the Central Excise Rules, 1944 was sustainable against the sole selling agent.

Issue (i): whether the demand was barred by limitation on the ground that the use of the brand name or logo had not been suppressed from the department

Analysis: The correspondence between the assessee and the department showed that the department had been informed about the branded tins and the use of the logo, and had examined the labels before and after the arrangement with the sole selling agents. In that situation, the allegation of suppression could not be sustained, and invocation of the extended period was not justified.

Conclusion: The demand was barred by limitation and the assessee succeeded on this issue.

Issue (ii): whether penalty under Rule 209A of the Central Excise Rules, 1944 was sustainable against the sole selling agent

Analysis: Penalty under Rule 209A requires proof that the person dealt with the goods with knowledge or belief that they were liable to confiscation for contravention of the rules. Such deliberate knowledge or intent was not established against the sole selling agent, and the basis for penalty was absent.

Conclusion: The penalty on the sole selling agent was not sustainable and the assessee succeeded on this issue.

Final Conclusion: The appeals were allowed, with consequential relief to the extent permissible, because the demand failed on limitation and the connected penalty could not be upheld.

Ratio Decidendi: Where the department was aware of the relevant facts through correspondence and examination of the goods, the extended period cannot be invoked for suppression; penalty under Rule 209A requires established knowledge or belief that the goods were liable to confiscation.

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