Penalty under Customs law fails where circumstantial evidence does not prove a direct link to seized contraband.

Penalty under section 112 of the Customs Act was held unsustainable where the department relied on an informer's statement and surrounding circumstances, but failed to establish any direct or credible link between the appellants and the seized contraband. The presence of a van, the conduct of a brother in occupation of the flat, and reluctance to accommodate baggage were found insufficient to prove involvement in smuggling. The inference of liability rested on speculation rather than evidence, and the penalty was set aside.

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Issues: Whether the penalty imposed under section 112 of the Customs Act, 1962 was sustainable on the evidence relied upon by the department.

Analysis: The material relied upon consisted of the informer's statement, the ownership and presence of a van, the conduct of a brother occupying the flat, and the appellant's reluctance to accommodate baggage. The evidence did not establish any direct or credible link between either appellant and the seized contraband. The circumstances were found insufficient to support an inference of involvement in smuggling, and the case rested on speculation rather than proof.

Conclusion: The penalty was not sustainable and was set aside in favour of the appellants.

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