Customs penalty on uncorroborated third-party statements set aside for lack of examination and independent evidence.

Penalty under section 112A of the Customs Act could not be sustained where the appellant was not examined during investigation, no statement was recorded from the appellant, and no incriminating document or record was seized from it. The penalty was based only on statements recorded from the importer and another person under section 108, but those statements were uncorroborated by independent material particulars. Applying the principle that an accomplice or co-accused statement is not reliable without supporting evidence, the CESTAT held that the penalty was imposed without fair investigative basis. The penalty was therefore set aside with consequential relief.

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Issues: Whether penalty under section 112A of the Customs Act was sustainable when the appellant had not been examined during investigation and the action rested on statements of other persons without supporting material particulars.

Analysis: The penalty was founded on statements recorded from the importer and another person under section 108 of the Customs Act, while no statement of the appellant was recorded and no incriminating record or document was seized from the appellant. The decision also treated such uncorroborated material as insufficient, relying on the principle that a statement of an accomplice or co-accused is not worthy of credit unless supported by material particulars. On that basis, the imposition of penalty was held to have been made without fair opportunity at the investigation stage.

Conclusion: The penalty under section 112A was unsustainable and was set aside, with consequential relief.

Final Conclusion: The appeal succeeded and the confirmed penalty against the appellant was annulled.

Ratio Decidendi: A penalty under the Customs Act cannot be sustained solely on uncorroborated third-party statements when the person proceeded against was not examined during investigation and no independent incriminating material is brought on record.

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