Penalty under section 112(b) requires proof of knowledge or reason to believe goods were liable to confiscation; penalty set aside.

Penalty under section 112(b) of the Customs Act requires proof that the person concerned knew or had reason to believe that the goods were liable to confiscation under section 111. On the facts, the goods were booked by a common carrier in the ordinary course of business, and there was no material linking him to the alleged illegal import or showing knowledge of smuggling. His statement also did not admit such knowledge. The penalty was therefore not sustainable and was set aside.

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Issues: Whether penalty under section 112(b) of the Customs Act was sustainable against a common carrier in the absence of evidence that he knew or had reason to believe that the goods were liable to confiscation under section 111 of the Customs Act.

Analysis: The goods were booked in the ordinary course of the appellant's business as a common carrier, and there was no material showing that he had any connection with their alleged illegal import. The appellant's statement did not admit knowledge of smuggling or of the goods being liable to confiscation. For penalty under section 112(b), the essential element is knowledge or reason to believe that the goods are liable to confiscation under section 111, and the record did not establish that element.

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

Final Conclusion: The appeal succeeded and the impugned penalty order was quashed.

Ratio Decidendi: Penalty under section 112(b) of the Customs Act requires proof that the person concerned knew or had reason to believe that the goods were liable to confiscation under section 111; absent such evidence, the penalty cannot be sustained.

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