Voluntary customs statements and corroborating recovery can sustain penalty in smuggling cases, while equitable factors may justify reduction.

Statements recorded under the Customs Act were treated as admissible in confiscation and penalty proceedings, and the seizure-day statement was accepted as voluntary because it preceded the alleged custodial period. Recovery of concealed gold, the petitioner's admission, and surrounding circumstances were sufficient to establish involvement in smuggling. The penalty was therefore sustained as valid, but the quantum was moderated in view of the petitioner's limited role and financial background, resulting in a reduced penalty.

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Issues: Whether the penalty imposed under Section 112 of the Customs Act, 1962 for improper importation of gold was liable to interference on the ground that the incriminating statements were obtained under duress and the case rested mainly on the statement of a co-accused, and whether the quantum of penalty required reduction.

Analysis: The statements recorded under Section 108 of the Customs Act, 1962 were held to be legally admissible for confiscation and penalty proceedings, and the statement recorded on the date of seizure was treated as voluntary because it was made before the alleged custodial period. The recovery of 14 gold bars from concealment in the co-accused's shoes, together with the petitioner's own admission and the surrounding circumstances, supported the finding that the smuggling involvement was established. At the same time, the petitioner's limited role and financial background were taken into account while considering the appropriate penalty.

Conclusion: The penalty was upheld as valid and not liable to be set aside, but the amount was reduced from Rs. 2 lakhs to Rs. 1.5 lakhs.

Ratio Decidendi: A statement recorded under Section 108 of the Customs Act, 1962 may validly form the basis of penalty proceedings when it is voluntary and corroborated by surrounding circumstances and recovery of contraband; however, the quantum of penalty may be moderated on equitable considerations.

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