Customs penalty under Section 112(b) requires proven knowledge and corroborated evidence of dealing with confiscable goods.

Penalty under Section 112(b)(i) of the Customs Act was held unsustainable where the person was alleged only to have financed funds, but there was no reliable proof that he knowingly dealt with goods liable to confiscation under Section 111. The material relied on consisted mainly of retracted third-party statements and a printout from a pen-drive seized from another person, without independent corroboration. As the record did not establish physical dealing with smuggled goods or knowledge that the funds were used for smuggling, the penalty was set aside. The stated principle is that Section 112(b) requires proof of knowledge or reason to believe, together with actual concern in dealing with confiscable goods, on the basis of credible evidence.

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Issues: Whether penalty imposed under Section 112(b)(i) of the Customs Act, 1962 was sustainable when the appellant was alleged only to have financed funds and there was no independent proof that he knowingly dealt with goods liable to confiscation under Section 111.

Analysis: The penalty under Section 112(b) requires proof that the person acquired possession of, or was otherwise concerned in, carrying, removing, depositing, harbouring, keeping, concealing, selling, purchasing, or otherwise dealing with goods which he knew or had reason to believe were liable to confiscation. The material relied upon against the appellant consisted mainly of third-party statements and a printout recovered from a pen-drive seized from another person. Those statements were retracted and were not corroborated by independent evidence. The record did not show that the appellant had physically dealt with the smuggled gold or that he had knowledge that any funds allegedly lent by him were being used for smuggling activity. The finding that he knowingly funded the smuggling operation was not supported by reliable evidence.

Conclusion: The penalty under Section 112(b)(i) was not justified and was set aside in favour of the appellant.

Final Conclusion: The appellant was not proved to have the requisite knowledge or involvement in the smuggling activity, and the penalty could not survive.

Ratio Decidendi: Penalty under Section 112(b) of the Customs Act, 1962 can be imposed only when knowledge or reason to believe, together with actual concern in dealing with goods liable to confiscation, is established by reliable and corroborated evidence.

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