Customs penalty fails where seizure is unproven and no reliable link connects the recovered chit to the appellant.

Personal penalty under the Customs Act was held unsustainable because the department failed to establish a reliable nexus between the recovered chit and the appellant. The record showed no credible link between the name in the chit and the appellant's identity, and the alleged seizure was not supported by a proper mahazar or satisfactory proof of where and by whom the chit was recovered. In the absence of compliance with the statutory search-and-seizure procedure and without reliable evidence connecting the appellant to the seized material, the foundation for penalty was not made out, and the penalty was set aside.

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Issues: Whether the personal penalty imposed under the Customs Act was sustainable when the department failed to establish a reliable link between the recovered chit and the appellant and did not prove lawful seizure of the chit.

Analysis: The chit was said to refer to a person named Prem Pathan, while the appellant was Prem Kumar Chadha, and no evidence connected the two identities. The record did not show a proper mahazar or any satisfactory proof as to from where and by whom the chit was seized. In the absence of compliance with the statutory procedure governing search and seizure and without credible material linking the appellant to the seized contraband, the foundation for imposing penalty was not established.

Conclusion: The penalty was unsustainable and was set aside in favour of the assessee.

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