Knowledge for Customs Penalty: Local purchaser escaped penalty because no proof showed awareness that goods were liable to confiscation.

Penalty under section 112(b) of the Customs Act could not be sustained against a local purchaser absent proof that it knew the watches were liable to confiscation under section 111. The record showed only local purchase invoices, with no documentary link to the import declaration or evidence that the purchaser knew of the importer's declaration or the goods' confiscability. The finding of knowledge was based on assumption rather than proof, and the communication dated 07.06.2017 did not establish awareness attracting penal liability. The penalty order was set aside.

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Issues: Whether penalty under section 112(b) of the Customs Act, 1962 could be sustained against a local purchaser in the absence of evidence that it knew the watches were liable to confiscation under section 111 of the Customs Act, 1962.

Analysis: The appellant had purchased the watches locally and the invoices did not show any basis to connect it with the import declaration or the retail sale price declared at the time of import. The record did not contain documentary evidence showing that the appellant knew of the importer's declaration or that the goods were liable to confiscation. The finding of knowledge in the impugned order was based on assumption rather than proof, and the letter dated 07.06.2017 did not establish awareness of any confiscability attracting penal liability.

Conclusion: Penalty under section 112(b) of the Customs Act, 1962 could not be imposed on the appellant, and the order sustaining the penalty was set aside.

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