Knowledge of confiscable goods governs Section 112(b) penalty; only the person with conscious dealing was penalised.

Penalty under Section 112(b) of the Customs Act attaches only where a person knowingly acquires or deals with goods believed to be liable to confiscation. On the facts, the company was not separately shown to have had the requisite knowledge or conscious dealing, so it was not liable; the broker was engaged only in post-import sale activity and commission receipt, with no proof of knowledge of confiscability, so he was also exonerated. Shri Ashok Wadia, however, had knowledge that the vehicle was liable to confiscation and had acknowledged the liability, so penalty was upheld against him. The matter was remitted only for determination of the quantum of penalty.

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Issues: (i) whether M/s. Jai Krishan Liquors Pvt. Ltd. was liable to penalty under Section 112(b) of the Customs Act, 1962; (ii) whether Shri Ashok Wadia was liable to penalty under Section 112(b) of the Customs Act, 1962; and (iii) whether Shri Satya Prakash Bagla was liable to penalty under Section 112(b) of the Customs Act, 1962.

Issue (i): whether M/s. Jai Krishan Liquors Pvt. Ltd. was liable to penalty under Section 112(b) of the Customs Act, 1962.

Analysis: The car had been purchased in the name of the company, but the material on record showed that the managing director had taken the relevant decisions and had owned the penal liability in his statement. The company was not shown to have separately acquired or dealt with the goods with the requisite knowledge so as to attract individual penal liability distinct from the managing director.

Conclusion: The company was not liable to penalty under Section 112(b) of the Customs Act, 1962.

Issue (ii): whether Shri Ashok Wadia was liable to penalty under Section 112(b) of the Customs Act, 1962.

Analysis: The vehicle was acquired with knowledge that it was liable to confiscation under Section 111 of the Customs Act, 1962. Shri Ashok Wadia had also stated that the importer could transfer the vehicle and had expressed readiness to pay the penalty. On these facts, the statutory requirement of conscious dealing with goods known or believed to be liable to confiscation was satisfied.

Conclusion: Shri Ashok Wadia was liable to penalty under Section 112(b) of the Customs Act, 1962.

Issue (iii): whether Shri Satya Prakash Bagla was liable to penalty under Section 112(b) of the Customs Act, 1962.

Analysis: The broker was found to have been engaged only in post-importation sale activity and receipt of commission. No evidence established that he acted with knowledge or reason to believe that the car was liable to confiscation under Section 111 of the Customs Act, 1962.

Conclusion: Shri Satya Prakash Bagla was not liable to penalty under Section 112(b) of the Customs Act, 1962.

Final Conclusion: Penalty was upheld only against Shri Ashok Wadia, while the company and the broker were exonerated, and the matter was sent back for determination of the quantum of penalty.

Ratio Decidendi: Penalty under Section 112(b) attaches only to a person who knowingly acquires or deals with goods liable to confiscation, and where the managing director alone has consciously undertaken the liability, the company is not separately penalised on the same facts.

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