Uncorroborated co-noticee statements cannot sustain customs penalty where criminal acquittal exists; de novo confiscation issues must still be decided.

Penal liability under the Customs Act cannot rest solely on uncorroborated statements of co-noticees when the connected criminal court has acquitted the noticee on the same facts and no independent evidence supports the charge; the penalty was therefore set aside. In a de novo adjudication, the authority must decide every issue covered by the show cause notice, including confiscation of seized foreign currency and a vehicle; failure to do so rendered the order incomplete and justified remand for fresh consideration on confiscation.

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Issues: (i) whether penalty under Section 114 of the Customs Act, 1962 could be sustained on the basis of statements of co-noticees when the appellant had been acquitted in the connected criminal case on the same facts; (ii) whether the adjudicating authority was required to decide the confiscation of the seized foreign currency and vehicle in the de novo proceedings, warranting remand.

Issue (i): whether penalty under Section 114 of the Customs Act, 1962 could be sustained on the basis of statements of co-noticees when the appellant had been acquitted in the connected criminal case on the same facts.

Analysis: The proceedings under the Customs Act were separate from the criminal prosecution, and an acquittal did not automatically nullify the adjudication. However, the material relied upon for penalty consisted only of statements of co-noticees, while the trial court had found no direct incriminating material against the appellant and had acquitted him on the same factual matrix. In such circumstances, uncorroborated accomplice material was insufficient to sustain penal liability, especially when no additional independent evidence was produced by the Revenue.

Conclusion: The penalty under Section 114 of the Customs Act, 1962 was not sustainable and was set aside in favour of the assessee.

Issue (ii): whether the adjudicating authority was required to decide the confiscation of the seized foreign currency and vehicle in the de novo proceedings, warranting remand.

Analysis: The earlier order had been set aside and the matter remanded for fresh adjudication, so the Commissioner was obliged to deal with all issues covered by the show cause notice, including confiscation of the foreign currency and the vehicle under the relevant confiscation provisions. Since the impugned order failed to determine those issues, the adjudication was incomplete and required further consideration.

Conclusion: The matter was remanded to the Commissioner for a limited decision on confiscation in favour of the Revenue.

Final Conclusion: The penalty against the appellant was annulled, while the confiscation aspects were sent back for fresh determination, leaving the dispute only partially resolved.

Ratio Decidendi: Penal action under the Customs Act cannot rest solely on uncorroborated co-noticee statements when the connected criminal court has acquitted the noticee on the same facts, and a de novo adjudication must decide every issue specifically covered by the show cause notice.

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