Knowing facilitation and false information are required for Customs penalty; negligent inquiry alone is insufficient.

Penalty under Section 114(iii) of the Customs Act requires a knowing act or omission that facilitates export of goods liable to confiscation; mere negligence in conducting a market inquiry, without evidence of prior instigation, conspiracy, aid, or receipt of drawback benefit, is not abetment. For Section 114AA, liability arises only where information is knowingly false; incorrect material obtained from improper sources, without intent to misstate, does not meet that standard. On the stated facts, the Inspector's casual and improper inquiry after the fraudulent exports had already occurred did not justify penalty under either provision.

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Issues: Whether penalty under Section 114(iii) and Section 114AA of the Customs Act, 1962 was sustainable against an Inspector who had conducted the market inquiry in a casual and improper manner, but without evidence of prior facilitation, knowledge, intention, or receipt of illegal duty drawback benefit.

Analysis: The liability for penalty under Section 114(iii) required an act or omission done knowingly to facilitate export of goods liable for confiscation. The record showed only that the appellant conducted the inquiry negligently and from incompetent sources after the fraudulent exports had already occurred and after the mastermind had already obtained the drawback benefit. There was no evidence that the appellant had instigated, conspired with, or aided the exporter before the exports, nor any material showing that he was a beneficiary of the illegal drawback. Such casual or inefficient performance of duty could amount to lapse, but not abetment. For Section 114AA, the information had to be knowingly false; obtaining incorrect information from improper sources without intent to misstate did not satisfy that requirement.

Conclusion: The penalty under Section 114(iii) and Section 114AA was not justified, and the assessee succeeded.

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