Rule 209A penalty requires proof of knowledge of liable-to-confiscation goods; mere receipt or work under purchase order is insufficient.

Penalty under Rule 209A requires proof that the person proceeded against knew, or had reason to know, that the goods were liable to confiscation because they had been cleared without payment of duty. The burden lies on the Revenue to establish that knowledge, and mere execution of work under a purchase order or receipt of goods at the appellant's premises is not enough by itself. On the material considered, the Revenue had not discharged that burden, and the appellant therefore established a prima facie case for unconditional waiver of pre-deposit and stay of recovery of the penalty pending appeal.

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Issues: Whether penalty under Rule 209A could be sustained in the absence of proof that the appellant knew or had reason to know that the goods were liable to confiscation and cleared without payment of duty.

Analysis: Knowledge on the part of the person proceeded against is an essential ingredient of Rule 209A. The burden lies heavily on the Revenue to establish that the person against whom penalty is imposed knew, or had reasons to know, that the goods were liable to confiscation for having been cleared without payment of duty. Mere execution of work under a purchase order or receipt of goods in the appellant's premises does not by itself establish such knowledge. On the material before it, the Revenue had not discharged that burden.

Conclusion: The appellant made out a prima facie case and was entitled to unconditional waiver of pre-deposit and stay of recovery of the penalty during pendency of the appeal.

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