Pre-deposit waiver and Rule 209A penalty require prima facie evidence of knowledge; buyers obtained interim relief.

At the stay stage, complete waiver of pre-deposit was not warranted where the department's own accounts and related despatch entries provided sufficient prima facie evidence of clearances, and unsupported financial hardship was insufficient to justify full relief; partial waiver was therefore granted to the manufacturer and its partners, with the balance duty and penalty stayed subject to deposit. Penalties on buyers under Rule 209A of the Central Excise Rules, 1944 required material showing conscious dealing with goods known or reasonably believed to be liable to confiscation, and the record did not disclose the individual role or requisite knowledge of the buyers; the penalties against them were therefore stayed and waived unconditionally at the interim stage.

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Issues: (i) Whether the appellants were entitled to waiver of pre-deposit and stay in respect of the duty and penalties confirmed against the manufacturer and its partners; (ii) Whether the penalties imposed on the buyers under Rule 209A of the Central Excise Rules, 1944 were sustainable at the interim stage.

Issue (i): Whether the appellants were entitled to waiver of pre-deposit and stay in respect of the duty and penalties confirmed against the manufacturer and its partners.

Analysis: The demand was based on the manufacturer's own accounts and related entries showing despatches under kachha challans. In the absence of contrary contemporaneous records showing substitution of kachha and pucca clearances, the department's material was found to constitute sufficient prima facie evidence. The financial plea was not supported by reliable and current material, and there was no adequate basis to extend complete waiver at the stay stage.

Conclusion: Partial waiver of pre-deposit was granted to the manufacturer, and the balance duty and penalty were stayed subject to deposit of specified amounts; the plea for complete waiver was rejected.

Issue (ii): Whether the penalties imposed on the buyers under Rule 209A of the Central Excise Rules, 1944 were sustainable at the interim stage.

Analysis: For penalty under Rule 209A, the relevant requirement was conscious dealing with goods knowing or having reason to believe that they were liable to confiscation. The order under challenge did not bring out the individual role of the buyers or the necessary element of knowledge, and in some cases the buyers had denied purchases altogether. On the material before it, the penalty orders against the buyers were not shown to be prima facie sustainable.

Conclusion: Unconditional stay and waiver of the penalties imposed on the buyers were granted.

Final Conclusion: The stay application was allowed only to a limited extent for the manufacturer and its partners, while the penalties on the buyers were completely stayed and waived at the interim stage.

Ratio Decidendi: At the stay stage, complete waiver is not justified where the departmental records furnish sufficient prima facie evidence, but penalty under Rule 209A requires material showing knowledge or reasonable belief that the goods were liable to confiscation.

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