Trader penalty under Rule 209A depends on knowledge or reason to believe goods were liable to confiscation; interim relief granted.

Dealers in automobile parts sought waiver of pre-deposit and stay of recovery of penalties imposed under Rule 209A of the Central Excise Rules, 1944. Interim penalty liability against a trader arises only where there is material showing that the trader knew, or had reason to believe, that the goods purchased were liable to confiscation. On the stated facts, the applicants claimed they were mere dealers who paid negotiated prices and lacked knowledge of any duty evasion or confiscability, while the principal manufacturer had already deposited the duty and its penalty. Waiver of pre-deposit was granted and coercive recovery was restrained during pendency of the appeals.

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Issues: Whether the dealers, being traders of automobile parts, were entitled to waiver of pre-deposit and stay of recovery of penalties imposed under Rule 209A of the Central Excise Rules, 1944.

Analysis: Penalty on a trader under Rule 209A could arise only if there was material to show that the trader knew or had reason to believe that the goods purchased were liable to confiscation. The applicants asserted that they were only dealers, had paid negotiated prices, and were unaware of any duty evasion or the consequent confiscability of the goods. The principal manufacturer had already deposited the duty and the penalty imposed on it, which supported grant of interim relief to the dealers pending disposal of the appeals.

Conclusion: Waiver of pre-deposit was granted and the Revenue was restrained from taking coercive recovery action during the pendency of the appeals.

Final Conclusion: The dealers obtained interim protection against recovery of penalties, and their appeals were directed to be heard along with the connected main appeal.

Ratio Decidendi: Interim penalty relief under Rule 209A turns on whether the trader had knowledge or reason to believe that the goods were liable to confiscation.

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