Customs penalty requires reliable incriminating evidence; later CBI disclosure alone was insufficient to sustain liability.

Penalty under the Customs Act could not be sustained where the only incriminating material was a later disclosure statement made before the CBI by a co-noticee. No statement under Section 108 implicated the appellant, and no other reliable evidence connected the appellant with the alleged offence. A post-registration disclosure, by itself, was held insufficient to justify penal consequences. The penalty order was therefore set aside for want of adequate incriminating material.

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Issues: Whether a penalty under Sections 112(a) and 112(b) of the Customs Act could be sustained against the appellant on the basis of a disclosure statement made before the C.B.I. after registration of the case, when no incriminating statement was recorded against the appellant under Section 108 of the Customs Act and no other incriminating material was recovered.

Analysis: The only material relied upon against the appellant was a later disclosure made before the C.B.I. by a co-noticee, stating that the appellant had arranged some money for purchase of the gold. The statements recorded by the Customs authorities under Section 108 of the Customs Act did not implicate the appellant. A statement recorded by Customs under Section 108 is treated as substantive evidence, but the present case did not contain any such statement against the appellant. The later C.B.I. disclosure, by itself, was not found sufficient to establish the appellant's involvement for penal consequences.

Conclusion: The penalty could not be sustained on the available material and the order imposing penalty on the appellant was set aside.

Final Conclusion: The appeal succeeded and the penal order against the appellant was quashed for want of sufficient incriminating evidence.

Ratio Decidendi: For fastening penalty under the Customs Act, a later disclosure statement made after registration of the case is insufficient by itself when no incriminating statement under Section 108 or other reliable evidence connects the appellant with the offence.

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