Clandestine excise clearance and active knowledge justified Rule 209A penalty, though the quantum was reduced on facts.

A manager in overall charge of a factory was held liable to penalty under Rule 209A where the evidence showed his active knowledge and consent to clandestine receipt, production and removal of excisable goods. The manufacturer's findings of non-accountal of raw material, unrecorded production and clandestine clearance had already attained finality, and the appellant's statement and corroborative records linked him to clearance without documents against cash payment. While penal liability was sustained, the Tribunal found the penalty excessive on the facts and reduced it in light of his role and surrounding circumstances.

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Issues: (i) Whether the appellant, as manager and overall in charge of the factory, was liable to penalty under Rule 209A of the Central Excise Rules, 1944 for clandestine receipt, production and removal of excisable goods; (ii) Whether the penalty imposed on the appellant required reduction on the facts of the case.

Issue (i): Whether the appellant, as manager and overall in charge of the factory, was liable to penalty under Rule 209A of the Central Excise Rules, 1944 for clandestine receipt, production and removal of excisable goods.

Analysis: The findings against the manufacturer regarding non-accountal of raw material, unrecorded production and clandestine clearance had attained finality. The appellant's own statement showed that he was looking after receipt of raw material, production and dispatch of finished goods, and the record also contained corroborative statements showing clearance without documents and against cash payment. On these facts, the illegal acts were inferred to have been done with his active knowledge and consent, bringing him within the scope of penal liability under Rule 209A.

Conclusion: The appellant was rightly held liable to penalty under Rule 209A.

Issue (ii): Whether the penalty imposed on the appellant required reduction on the facts of the case.

Analysis: Although the appellant was liable to penalty, the Tribunal took into account the overall circumstances and his position as manager while assessing the quantum. The adjudication was otherwise sustained, but the penalty was considered excessive in the facts and was therefore scaled down.

Conclusion: The penalty was reduced from Rs. 5 lakhs to Rs. 2 lakhs.

Final Conclusion: The finding of culpability under Rule 209A was sustained, but the monetary penalty was moderated on a factual assessment of the appellant's role.

Ratio Decidendi: A person in overall control of a factory who, on the evidence, has knowledge of and consents to clandestine receipt, manufacture and removal of excisable goods can be penalised under Rule 209A, and the quantum of penalty may be adjusted according to the proved role and surrounding circumstances.

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