Penalty under Customs law requires clear findings of knowing dealing with goods liable to confiscation; vague evidence is insufficient.

Penalty under Section 112 of the Customs Act, 1962 cannot be sustained on vague or unsupported findings. For clause (a), the show cause notice contained no allegation of abetment; for clause (b), the record had to show that the person knowingly acquired, possessed, or dealt with goods believed to be liable to confiscation. The mere fact that the seized cameras were not confiscated did not by itself rule out penalty, but the penalty finding still had to rest on clear evidence and definite conclusions. Because the findings on collusion and faulty accounting were not properly supported, the penalty order could not stand and the question of penalty had to be re-adjudicated afresh.

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Issues: Whether the penalty imposed under Section 112 of the Customs Act, 1962 was sustainable on the findings recorded, and whether the matter required fresh adjudication on the aspect of penalty.

Analysis: The seized cameras were not confiscated, but non-confiscation by itself did not eliminate the possibility of penalty under Section 112. For penalty under clause (a), there was no allegation of abetment in the show cause notice. For clause (b), the finding had to show that the appellant knowingly acquired, possessed, or dealt with goods known or believed to be liable to confiscation. The finding of collusion and the alleged failure to maintain proper accounts and obtain proper vouchers were not supported by a discussion of evidence and were recorded in vague terms. The conclusion that the cameras were not liable to confiscation was also not challenged by the department, but the penalty finding still had to rest on clear and specific evidence and definite conclusions.

Conclusion: The penalty order could not be sustained on the existing findings and the matter was required to be adjudicated afresh on the question of penalty alone.

Ratio Decidendi: A penalty under Section 112 of the Customs Act, 1962 must rest on clear findings that the person knowingly dealt with goods liable to confiscation or abetted such conduct, and vague or unsupported findings are insufficient.

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