Penalty under Customs law fails where goods are not notified and no evidence proves smuggling or restricted status.

Penalty under Section 112(b) of the Customs Act was not sustainable because the goods were not notified under Section 123 and the Revenue failed to prove that they were smuggled into India. The record contained no evidence establishing smuggling, and the mobile handsets were not shown to be restricted goods. As a result, the statutory preconditions for imposing penalty were not met, and the appeals failed.

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Issues: Whether penalty under Section 112(b) of the Customs Act, 1962 could be sustained when the goods were not notified under Section 123 of the Customs Act, 1962 and there was no evidence to show that the goods were smuggled into India.

Analysis: Section 112(b) authorises penalty only where a person is concerned with goods that he knows or has reason to believe are liable to confiscation. Since the goods were not notified under Section 123, the burden remained on the Revenue to establish that they were smuggled goods. The record disclosed no evidence proving smuggling, and the mobile handsets were not shown to be restricted goods. In these circumstances, the prerequisites for penalty were not satisfied.

Conclusion: The penalty was not sustainable and the appeals failed.

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