Criminal discharge does not bar customs penalty, but untested witness statements cannot safely support departmental liability.

Criminal discharge does not automatically bar customs penalty proceedings because departmental liability is tested on different standards and evidence. The text also states that a penalty cannot be sustained where it rests substantially on the untested statement of a person who was not produced for cross-examination and whose reliability could not be safely accepted on the facts. On that basis, the customs penalty order was set aside, with refund of the deposited amount and no order as to costs.

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Issues: (i) Whether the petitioner's discharge in the criminal case barred the imposition of penalty in the customs proceedings; (ii) Whether the penalty could be sustained when it was based substantially on the statement of a person who was not made available for cross-examination.

Issue (i): Whether the petitioner's discharge in the criminal case barred the imposition of penalty in the customs proceedings.

Analysis: The standards governing criminal liability and departmental liability are distinct. A discharge in the criminal case does not, by itself, nullify or preclude penalty in departmental proceedings, because the two proceedings operate on different tests and evidentiary thresholds.

Conclusion: The discharge in the criminal case did not, by itself, bar the customs penalty.

Issue (ii): Whether the penalty could be sustained when it was based substantially on the statement of a person who was not made available for cross-examination.

Analysis: The authorities relied on the statement of Hussein to fasten liability on the petitioner. Since Hussein was not produced for cross-examination and was not available even in the prosecution case, the statement could not safely be treated as reliable evidence on the facts of the case. In these circumstances, the factual basis for the penalty was found inadequate.

Conclusion: The penalty could not be sustained on such material.

Final Conclusion: The customs penalty order was set aside and the writ petition succeeded, with refund of the deposited amount and no order as to costs.

Ratio Decidendi: Penalty in customs proceedings must rest on reliable material, and where the decisive evidence is an untested statement of a person not available for cross-examination, the penalty cannot be upheld on the facts of the case; a criminal discharge does not automatically preclude departmental action.

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