Customs penalty based on corroborated third-party statement upheld, but excessive quantum reduced on appellate review.

A penalty under customs law may be sustained on a credible and sufficiently corroborated statement of another person, and the objection based on criminal procedure safeguards failed because the statement was not a confession by the maker against himself. The appellant was therefore held liable under Section 112. The Tribunal also found the penalty excessive in the circumstances, noting no special reason to impose the maximum merely due to the appellant's anti-smuggling role, and reduced the penalty substantially. The finding of liability was upheld, but the quantum was cut down on appellate review.

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Issues: (i) Whether the appellant could be subjected to penalty under Section 112 on the basis of the statement of another person and attendant corroborative material, notwithstanding objections based on retraction and absence of safeguards under criminal procedure. (ii) Whether the penalty imposed was excessive and required reduction.

Issue (i): Whether the appellant could be subjected to penalty under Section 112 on the basis of the statement of another person and attendant corroborative material, notwithstanding objections based on retraction and absence of safeguards under criminal procedure.

Analysis: The statement implicating the appellant was treated as reliable and was not shown to have been obtained during wrongful confinement. The objection founded on the warning requirement applicable to confessions under criminal procedure was held inapposite because the statement was not a confession by the maker against himself. The Tribunal also relied on later Supreme Court authority recognising that penalty can be sustained on the basis of another person's statement, and noted some corroboration from the statement of another witness.

Conclusion: The appellant was liable to penalty under Section 112, and the challenge to reliance on the statement failed.

Issue (ii): Whether the penalty imposed was excessive and required reduction.

Analysis: Although the appellant's role justified penalty, the Tribunal found no particular reason for imposing the maximum penalty merely because the appellant was connected with anti-smuggling functions. The amount imposed was considered disproportionate in the circumstances.

Conclusion: The penalty was reduced from Rs. 50 lakhs to Rs. 8 lakhs.

Final Conclusion: The finding of liability was sustained, but the quantum of penalty was substantially reduced in exercise of appellate scrutiny.

Ratio Decidendi: A penalty under customs law may rest on a credible and sufficiently corroborated statement of another person, and appellate interference is warranted where the quantum of penalty is excessive in the circumstances.

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