Customs penalty requires specific evidence of involvement; general allegations and uncorroborated statements are insufficient

Penalty under the Customs Act could not be sustained where the Department relied on broad allegations, Section 108 statements and an inference that seized foreign currency represented sale proceeds of smuggled gold, without specific material linking the noticee to the disposal of the gold or to possession or dealing in the currency. The burden of proving actual involvement was not discharged, and the statutory presumption under Section 123 was held inapplicable on the facts. The impugned penalty was therefore set aside.

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Issues: Whether the penalty imposed on the appellant under the Customs Act was sustainable on the evidence relating to alleged financing of the gold transaction and the seized foreign currency.

Analysis: The Department's case rested substantially on the statements recorded under Section 108 and on a general inference that the seized foreign currency represented the sale proceeds of smuggled gold. The charge against the appellant was found to be broad and not supported by specific material linking him to the alleged disposal of the gold biscuits or to possession or dealing in the recovered currency. The statements relied on did not establish that the appellant was concerned with the transaction in question, and the burden of proving the appellant's involvement was not discharged. Section 123 was held to be inapplicable on the facts, and the presumption sought to be drawn by the Department was not accepted.

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

Final Conclusion: The appellant was held not liable to penalty on the materials relied upon by the Department, and the impugned order could not be maintained against him.

Ratio Decidendi: Penalty under the Customs Act cannot be sustained unless the Department proves by specific and cogent evidence that the noticee was actually concerned with the smuggled goods or their sale proceeds; general allegations and uncorroborated statements are insufficient, especially where the statutory presumption is inapplicable.

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