Customs penalty requires proof of culpability; mere suspicion and equivocal circumstances were insufficient to sustain liability.

Penalty under the Customs Act was held unsustainable where the only link to the smuggled gold was the appellant's position as bosun and the discovery of gold in an empty grease drum in the ship's cargo hold. The evidence did not establish that the drum was in his custody when used to conceal the gold, that it remained so throughout the voyage, or that he alone could access it. As the surrounding circumstances were equivocal, mere suspicion and conjecture could not justify imposition of penalty, and the penalty was set aside.

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Issues: Whether penalty under Section 112 of the Customs Act, 1962 was sustainable on the facts of the case.

Analysis: The only material relied upon to connect the appellant with the smuggled gold was his position as bosun and the circumstance that the gold was found in an empty grease drum kept in the ship's cargo hold. The evidence did not show that the gold had been placed in the drum while it was in the appellant's custody, that the drum remained so used throughout the voyage, or that it was accessible only to him. The other circumstances relied upon were found to be equivocal and incapable of supporting an inference of culpability. Mere suspicion and conjecture were held insufficient for imposition of penalty.

Conclusion: The penalty under Section 112 of the Customs Act, 1962 was not justified and was set aside, in favour of the assessee.

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