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Issues: (i) Whether penalty under Section 112 of the Customs Act was sustainable when the notice was issued under Section 117 and abetment was not established; (ii) Whether the jeep used to transport contraband was liable to confiscation and redemption fine when it had already been released on bond.
Issue (i): Whether penalty under Section 112 of the Customs Act was sustainable when the notice was issued under Section 117 and abetment was not established.
Analysis: The show cause notice called upon the appellant to answer a proposed penalty under Section 117, but the adjudicating authority imposed penalty under Section 112. The basis for penalty therefore did not match the notice. In any event, penalty under Section 117 required proof of abetment, and the record did not show that the appellant had knowledge of or participation in the smuggling. The alleged confession relied upon in the adjudication order was not properly linked to the seizure and was not disclosed in the notice.
Conclusion: The penalty was unsustainable and was set aside in favour of the appellant.
Issue (ii): Whether the jeep used to transport contraband was liable to confiscation and redemption fine when it had already been released on bond.
Analysis: The vehicle was found carrying contraband ganja, and in such circumstances a presumption arose that the person in charge knew of the smuggling, placing the burden on the appellant to explain absence of knowledge under Section 106 of the Indian Evidence Act, 1872. On that basis, the vehicle was liable to confiscation. However, the vehicle had already been released to the appellant on bond and was no longer available for confiscation. In such a situation, the proper course was enforcement of the bond and not confiscation or redemption fine.
Conclusion: The confiscation and redemption fine were unsustainable and were set aside in favour of the appellant.
Final Conclusion: The appeal succeeded, with both the penalty and the confiscation-related orders annulled, leaving the department to proceed only in accordance with the bond mechanism.
Ratio Decidendi: A penalty cannot be sustained when it is imposed under a provision not covered by the notice and without proof of the statutory ingredient of abetment, and confiscation with redemption fine cannot be ordered against goods or a vehicle no longer available, in which case enforcement of the bond is the proper remedy.
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