Customs penalty under section 112(b) fails without corroboration, admissible statements, and proof of conscious dealing with confiscable goods.

Penalty under section 112(b) of the Customs Act cannot be sustained on uncorroborated third-party records or statements recorded under section 108 unless the evidentiary requirements of section 138B are complied with. Where no independent material supports the alleged purchase, receipt, or dealing in goods, and the record does not establish conscious involvement or knowledge that the goods were liable to confiscation, the essential ingredients of section 112(b) remain unproved. On that basis, the penalty was set aside.

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Issues: (i) Whether statements recorded under section 108 of the Customs Act, 1962 could be relied upon without compliance with section 138B of the Customs Act, 1962; (ii) Whether third-party ledger entries and computer print-outs, unsupported by independent corroboration, could form the basis for penalty under section 112(b) of the Customs Act, 1962; (iii) Whether the ingredients of section 112(b) of the Customs Act, 1962, including dealing with goods liable to confiscation and knowledge or belief of such liability, stood satisfied.

Issue (i): Whether statements recorded under section 108 of the Customs Act, 1962 could be relied upon without compliance with section 138B of the Customs Act, 1962.

Analysis: The order under challenge relied upon statements recorded under section 108. No material showed that the statutory procedure under section 138B had been followed. In the absence of such compliance, the statements could not be treated as admissible or reliable for fastening penal liability.

Conclusion: The statements under section 108 could not be relied upon.

Issue (ii): Whether third-party ledger entries and computer print-outs, unsupported by independent corroboration, could form the basis for penalty under section 112(b) of the Customs Act, 1962.

Analysis: The only material against the appellant consisted of records recovered from a third party's premises. Those documents did not belong to the appellant and were not maintained by it. No independent evidence from the appellant's or otherwise corroborated the alleged purchase, receipt, or dealing in the goods.

Conclusion: The third-party records, by themselves, were insufficient to sustain penalty.

Issue (iii): Whether the ingredients of section 112(b) of the Customs Act, 1962, including dealing with goods liable to confiscation and knowledge or belief of such liability, stood satisfied.

Analysis: Penalty under section 112(b) requires proof that the person was concerned with or dealt in goods liable to confiscation and also had knowledge or belief of that liability. The record did not establish either conscious involvement or awareness that the goods were liable to confiscation under section 111.

Conclusion: The essential ingredients of section 112(b) were not proved.

Final Conclusion: The penalty imposed on the appellant could not be sustained and was set aside.

Ratio Decidendi: A penalty under section 112(b) of the Customs Act, 1962 cannot rest on uncorroborated third-party records or statements unless the statutory evidentiary requirements are met and the Department proves conscious dealing with goods liable to confiscation together with knowledge or belief of such liability.

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