Natural justice and corroboration requirements defeated customs penalty based only on third-party material and untested statements.

Penalty under Section 112(b)(i) of the Customs Act was found unsustainable where the alleged involvement rested mainly on third-party worksheets, emails and statements. The adjudication was vitiated because relied upon documents were not supplied despite requests, and no cross-examination or independent corroboration was provided, contrary to natural justice. The record also showed no search of the appellant's premises, no statement by the appellant, and no independent evidence that he dealt with, possessed, or knowingly handled the smuggled gold. On that basis, uncorroborated co-noticee statements and third-party material were insufficient to fasten penal liability, and the penalty was set aside with consequential relief.

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Issues: Whether the penalty imposed under Section 112(b)(i) of the Customs Act, 1962 was sustainable when the appellant's alleged involvement was based mainly on third-party worksheets, emails and statements, without supply of relied upon documents, cross-examination or independent corroboration.

Analysis: The appellant's role was derived from printouts and emails recovered from the residence of a third party. The relied upon documents were not supplied despite requests, vitiating the adjudication on principles of natural justice. The record did not show that the appellant's premises were searched or that his statement was recorded. No independent evidence established that he acquired possession of, dealt with, or physically participated in handling the smuggled gold, or that he knew or had reason to believe that the goods were liable to confiscation under Section 111. The statements of co-noticees and third-party material remained uncorroborated and were not sufficient, by themselves, to fasten penal liability under Section 112(b).

Conclusion: The penalty under Section 112(b)(i) was not sustainable and the appeal was allowed with consequential relief.

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