A division bench of the Bombay High Court in Commissioner of Central Excise v. M/s. Bansal Steel Corporation & Ors held that penalty under Rule 209A of the Central Excise Rules, 1944 can be imposed only when the person has physically dealt with the excisable goods.
The department imposed penalty under Rule 209A of the Central Excise Rules, 1944 on the respondents, M/s. Bansal Steel Corporation & Ors on the basis of allegation that they issued fake gate passes to one M/s. Singhal Swaroop Ispat Ltd for misusing modvat credit.
On appeal, the CESTAT held that the ingredients of Rule 209A of Central Excise Rules, 1944 under which the penalty has been imposed are attracted only if the persons concerned have physically dealt with excisable goods with the knowledge or belief that such goods were liable to confiscation and that the provisions are not attracted unless the person concerned has physically dealt with such goods.
By relying on the decision of the division bench in the case Commissioner of Central Excise Vs. M/s. Ramesh Kumar Rajendra Kumar & Co. & Anr, Justices Abhay S. Oka and Riyaz I. Chagla ruled that Rule 209A can be invoked and the penalty imposed only when the person has physically dealt with the excisable goods with the knowledge or belief that the goods are liable for confiscation.
The Court further said that in the present case, “there was no case of the Respondents having physically dealt with the excisable goods with the knowledge or belief that such goods were liable to confiscation. We are thus, of the view that Rule 209A cannot be invoked in the present case. We follow the view taken by the Division Bench of this Court in Judgment dated 14 September 2010 (supra) whilst interpreting Rule 209A of the said Rules.”
Read the full text of the Judgment below.
