Penalty under Customs law needs proof of conscious dealing and knowledge; unsupported co-noticee statements were insufficient here.

Penalty under section 112(b) of the Customs Act requires proof of active dealing with goods liable to confiscation and knowledge or reason to believe that they were smuggled. The article states that the penalty was based mainly on a co-noticee's statement, with no independent corroborative evidence, documents, or admissions linking the appellant to the gold. It also notes that cross-examination of the co-noticee was not allowed. On that basis, the statement could not safely sustain penal liability, as mere association or suspicion does not establish conscious involvement. The penalty was therefore held unsustainable and set aside.

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Issues: Whether the penalty imposed under section 112(b) of the Customs Act, 1962 on the appellant for alleged involvement in smuggling of gold was sustainable in the absence of independent corroborative evidence, proof of knowledge or reason to believe that the goods were liable to confiscation, and effective reliance on the statement of a co-noticee without cross-examination.

Analysis: Penalty under section 112(b) requires proof that the person acquired possession of, or was concerned in carrying, removing, depositing, harbouring, keeping, concealing, selling, purchasing or otherwise dealing with goods liable to confiscation under section 111, and further that he knew or had reason to believe that such goods were liable to confiscation. The finding against the appellant rested essentially on the statement of a co-noticee, while the record did not show any independent material such as documents, admissions, or corroborative evidence connecting the appellant with the alleged smuggled gold. The appellant consistently denied involvement, and the requested cross-examination of the co-noticee was not granted. In these circumstances, the statement could not safely be used as the sole basis for penalty, and the necessary element of knowledge or conscious dealing was not established. The reasoning also followed the settled approach that penal liability under this provision requires active or physical dealing with the goods and cannot rest on mere business association or suspicion.

Conclusion: The penalty under section 112(b) of the Customs Act, 1962 was not sustainable and was set aside in favour of the appellant.

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