Customs penalty evidence and notice requirements: penalties sustained on corroborative statements, but personal penalty set aside for lack of individual notice.

Penalties under Section 112(b)(i) of the Customs Act were sustained against the first two appellants because the seizure of foreign-origin fabrics and metallic yarn from the lorries, the drivers' and cleaner's voluntary statements, delivery notes, and corroborating witness evidence formed a coherent chain of incriminating circumstances; minor inconsistencies did not undermine the earliest statements, and Section 123 was held inapplicable because the goods were recovered from the vehicles rather than the appellants' personal possession. The individual penalty on the third appellant was set aside because the notice had been issued only to the partnership firm and not to him personally, making the adjudication procedurally defective and not fit for remand.

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Issues: (i) Whether the penalties on the first two appellants under Section 112(b)(i) of the Customs Act, 1962 were sustainable on the basis of the drivers' and cleaner's statements, corroborative circumstances, and the surrounding evidence, and whether Section 123 of the Customs Act, 1962 displaced the case. (ii) Whether the penalty imposed on the third appellant was vitiated for want of a show cause notice to him in his individual capacity.

Issue (i): Whether the penalties on the first two appellants under Section 112(b)(i) of the Customs Act, 1962 were sustainable on the basis of the drivers' and cleaner's statements, corroborative circumstances, and the surrounding evidence, and whether Section 123 of the Customs Act, 1962 displaced the case.

Analysis: The seizure of foreign-origin fabrics and metallic yarn from the two lorries, the immediately recorded statements of the drivers and cleaner, the delivery notes, and the statement of a further witness together formed a coherent body of evidence implicating the appellants. Minor discrepancies in successive statements were held not to destroy the probative value of the earliest voluntary statements, and the absence of recovery of the alleged payment or the non-tracing of a named person did not by itself make the evidence unreliable. Section 123 was held inapplicable on the facts because the goods were recovered from the lorries and not from the personal possession of the appellants, but the penalties were nevertheless supportable on the totality of circumstances and the appellants' connection with the goods and vehicles.

Conclusion: The penalties on the first two appellants were upheld and their appeals were dismissed.

Issue (ii): Whether the penalty imposed on the third appellant was vitiated for want of a show cause notice to him in his individual capacity.

Analysis: The notice had been issued to the partnership firm, but the adjudication proceeded against the individual partner and imposed penalty on him personally. The absence of a notice to him individually was treated as a serious procedural infirmity affecting the validity of the penalty order. In view of the long lapse of time and the death of the appellant, remand for fresh adjudication was considered inappropriate.

Conclusion: The penalty on the third appellant was set aside and his appeal was allowed on the procedural ground.

Final Conclusion: The Tribunal sustained the penalties in respect of the first two appellants, but annulled the individual penalty on the third appellant for want of a proper notice.

Ratio Decidendi: In customs penalty proceedings, a penalty may be sustained on a cumulative assessment of voluntary statements and corroborative circumstances even where Section 123 is inapplicable, but a penalty imposed on a person personally without a show cause notice to that person is vitiated.

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