Customs penalty requires admissible corroboration; untested statements and unproven recovery cannot establish conscious involvement in smuggling.

Penalties under Section 112(a) and Section 112(b) of the Customs Act require cogent evidence showing an act or omission rendering goods liable to confiscation, or conscious dealing with such goods with knowledge or reason to believe they were liable to confiscation. Untested witness statements, when not subjected to cross-examination under Section 138B, and an unsubstantiated alleged recovery from a third party's premises were held insufficient. No reliable seizure record or independent material established the appellant's involvement in smuggling, concealment, removal, or dealing with confiscable goods. Mere acquaintance or suspicion could not support penal liability, and the penalties were set aside for want of admissible corroboration.

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Issues: Whether the penalties imposed under Section 112(a) and Section 112(b) of the Customs Act, 1962 were sustainable in the absence of admissible corroborative evidence, particularly where the principal statement relied upon was not tested through cross-examination under Section 138B of the Customs Act, 1962, and whether the alleged association and alleged recovery from the premises of a third party established conscious involvement of the appellant in the smuggling activity.

Analysis: The foundation of the penalty was the untested statement of a witness and an alleged recovery of a bag said to connect the appellant with smugglers. The statement was not relied upon by the adjudicating authority, the witness was not produced for cross-examination, and no reliable seizure record substantiated the alleged recovery of the bag. No independent material established the appellant's role in improper importation, concealment, removal, or dealing with goods liable to confiscation. The legal ingredients for penalty under Section 112(a) and Section 112(b) require proof of an act or omission rendering goods liable to confiscation, or conscious dealing with such goods with knowledge or reason to believe that they were liable to confiscation. Mere acquaintance or suspicion was insufficient, and penal liability could not rest on conjecture or unverified allegations.

Conclusion: The penalties were not sustainable and were set aside for want of cogent, admissible, and corroborative evidence establishing the appellant's conscious involvement.

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