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Issues: Whether penalty under section 112(b) of the Customs Act, 1962 could be sustained on the basis of transporter statements recorded under section 108 of the Customs Act, 1962 without compliance with section 138B of the Customs Act, 1962 and without proof that the appellant had acquired, possessed, dealt with, or had knowledge that the goods were liable to confiscation.
Analysis: The appeal turned on the evidentiary value of the transporter statements and the statutory preconditions for penalty. The statements recorded under section 108 were not shown to have been tested through the procedure contemplated by section 138B, and no independent corroboration was brought on record from the appellant's premises or from any statement of its directors or employees. For penalty under section 112(b), the person must be shown to have acquired possession of, been concerned in, or dealt with goods liable to confiscation, and must also have knowledge or reason to believe that the goods were so liable. The record did not establish either physical dealing with the goods or the requisite knowledge or belief. In the absence of any basis to connect the appellant with confiscable goods under section 111, the penalty could not be sustained.
Conclusion: The penalty under section 112(b) was unsustainable and was rightly set aside in favour of the appellant.
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