Customs penalty under Section 112(b) fails without proof of acts making goods liable to confiscation.

Penalty under Section 112(b) of the Customs Act was held unsustainable where the goods were confiscated only for breach of exemption conditions and Chapter IVA requirements, and not for prohibited import under Section 111(d). Although the import was arranged through the appellant firm and the consignee filed the bill of entry on a high sea sale basis, the record did not establish beyond doubt any act or omission by either appellant that rendered the goods liable to confiscation under the invoked provisions. There was also no clear finding that the high sea sale was fictitious or that the appellants had stored or disposed of the goods in Bombay. The penalties were therefore set aside.

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Issues: Whether penalty under Section 112(b) of the Customs Act was sustainable against the appellants when the goods were confiscated only for violation of exemption conditions and Chapter IVA requirements, and there was no finding of confiscation for prohibited import or of proved acts by the appellants rendering the goods liable to confiscation.

Analysis: The goods had been confiscated under Sections 111(o) and 111(p) of the Customs Act, but not under Section 111(d). The adjudication record showed that the import had been arranged through the appellant firm and that the consignee had filed the bill of entry on a high sea sale basis, yet there was no evidence establishing beyond doubt that either appellant had committed or omitted any act that attracted confiscation under the invoked provisions. The record also did not contain a clear finding that the alleged high sea sale was fictitious or that the appellants had actually stored or disposed of the goods in Bombay so as to justify penalty.

Conclusion: Penalty under Section 112(b) of the Customs Act was not payable by either appellant, and the penalties were set aside.

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