Penalty under Central Excise Rules fails where no prohibited dealing or rule breach is established on the facts.

Penalty under Rule 209A of the Central Excise Rules applies only where a person acquires, possesses, or otherwise deals with excisable goods in a manner liable to confiscation, and that basis was not established on the facts recorded. The appellant's statement, taken after officers had already inspected the factory and verified stock and records, did not support an inference of misleading conduct or any proved breach of the Rules. The residuary penalty under Rule 210 also could not be invoked without an identifiable violation of the Central Excise Rules. The penalty was therefore unsustainable and was set aside.

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Issues: Whether penalty imposed on the appellant under Rule 209A and Rule 210 of the Central Excise Rules was sustainable.

Analysis: The appellant's statement was recorded after the officers had already visited the factory and taken stock of the material and records. The alleged explanation could not alter the existing shortages or excesses, and the basis for alleging that the appellant misled the officers was not made out. Rule 209A applies only where a person acquires possession of or otherwise deals with excisable goods liable to confiscation in the manner specified in the Rules, and no such breach was alleged against the appellant. The residuary penalty provision under Rule 210 also had no application in the absence of any alleged violation of the Central Excise Rules.

Conclusion: The penalty was not sustainable and the appeal was allowed.

Final Conclusion: The impugned penalty order was set aside as the provisions invoked did not cover the appellant's conduct on the facts found.

Ratio Decidendi: Penalty under Rule 209A or the residuary Rule 210 of the Central Excise Rules cannot be sustained unless the person's conduct falls within the specific prohibited circumstances and a breach of the Central Excise Rules is established.

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