Corroboration for alleged illegal imports was required, making penalties based solely on a retracted coerced statement unsustainable.

Penalties for alleged illegal importation cannot rest solely on a subsequently retracted statement where no imported goods are recovered and no independent investigation or corroborative evidence establishes the allegation. The notes state that the alleged import of Chinese firecrackers was founded only on the appellant's statement, which was later asserted to have been obtained under coercion and duress. As the retraction was not properly addressed and the allegation remained unproved, penalties under Sections 112(a), 112(b) and 114AA were unsustainable.

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Issues: Whether penalties for alleged illegal importation could be sustained solely on a subsequently retracted statement allegedly obtained under coercion, without evidence of recovery of imported Chinese firecrackers or other corroborative investigation.

Analysis: The allegation of illegal import was founded only on the appellant's statement. No Chinese-origin firecrackers imported by the appellant were recovered, and no independent investigation or corroborative evidence established illegal importation. The subsequent retraction of the statement, asserted to have been procured under coercion and duress, was not duly addressed by the lower authorities. The allegation consequently remained unproved.

Conclusion: The penalties under Sections 112(a), 112(b) and 114AA were unsustainable; the issue was decided in favour of the assessee.

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