Customs penalty for abetment requires proof of knowledge, and statements under inquiry need mandatory admissibility procedure before use.

Penalty under section 112(a)(i) of the Customs Act, 1962 requires proof of abetment with knowledge or intentional aiding; mere facilitation is insufficient, and on the facts recorded no such knowledge or complicity was established, so the penalty could not be sustained. Statements recorded under section 108 cannot be relied on in adjudication unless the mandatory procedure in section 138B of the Customs Act, 1962, read with section 9D of the Central Excise Act, 1944, is followed by examining the maker and deciding admissibility before use, with cross-examination if sought; straight reliance on such statements was impermissible.

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Issues: (i) Whether penalty under section 112(a)(i) of the Customs Act, 1962 could be sustained on the facts found; (ii) Whether statements recorded under section 108 of the Customs Act, 1962 could be relied upon without complying with the statutory procedure governing admissibility and cross-examination.

Issue (i): Whether penalty under section 112(a)(i) of the Customs Act, 1962 could be sustained on the facts found.

Analysis: Penalty under section 112(a)(i) requires abetment with knowledge or intentional aiding. Mere facilitation is not enough. On the record, there was no finding that the appellant had knowledge that the documents were false or that he intentionally aided the smuggling activity. The basis of the penalty was the alleged admission and surrounding statements, but the substantive ingredients of abetment were not established.

Conclusion: The penalty under section 112(a)(i) of the Customs Act, 1962 could not be sustained and the finding was in favour of the assessee.

Issue (ii): Whether statements recorded under section 108 of the Customs Act, 1962 could be relied upon without complying with the statutory procedure governing admissibility and cross-examination.

Analysis: Statements recorded under section 108 of the Customs Act, 1962 and the corresponding provisions in section 14 of the Central Excise Act, 1944 become relevant only when the statutory procedure in section 138B of the Customs Act, 1962 and section 9D of the Central Excise Act, 1944 is followed. That procedure requires examination of the maker of the statement before the adjudicating authority and a reasoned decision on admissibility before the statement can be used, with cross-examination thereafter if sought. Straightaway reliance on such statements without following the mandatory procedure is impermissible.

Conclusion: The impugned penalty could not rest on the statements recorded under section 108 of the Customs Act, 1962 because the mandatory statutory procedure was not followed, and this issue was in favour of the assessee.

Final Conclusion: The penalty imposed on the appellant was set aside and the appeal succeeded.

Ratio Decidendi: Penalty for abetment under section 112(a)(i) of the Customs Act, 1962 cannot be sustained without proof of knowledge or intentional complicity, and statements recorded during customs inquiry are not relevant in adjudication unless the mandatory statutory procedure for admissibility is first complied with.

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