Personal penalty on a director requires proof of specific involvement, knowledge, or active participation in the customs offence.

Personal penalty on a company director under the Customs Act cannot be sustained unless the department produces material showing the director's specific role, knowledge, or active participation in the offending transaction. Mere association with the company is insufficient where the adjudication order records no finding of personal involvement and the record discloses no evidence of conscious contravention. A resignation from directorship after the offence further weakens the basis for fastening individual liability. On these facts, the penalty was set aside.

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Issues: Whether personal penalty under section 112 of the Customs Act, 1962 could be sustained against a director in the absence of material showing his personal knowledge or active involvement in the offence committed by the company.

Analysis: The imposition of penalty on an individual director requires material showing the specific role played by him in the offending transaction. Where the adjudication order does not record any finding of personal involvement, and the record does not disclose evidence of active participation or knowledge of the contravention, penalty on the director cannot be justified merely because he was associated with the company. The fact that the appellant had resigned from the directorship after the offence had been committed further weakens the basis for fastening personal liability.

Conclusion: The personal penalty was held unsustainable and was set aside in favour of the assessee.

Ratio Decidendi: Personal penalty on a company director cannot be imposed under section 112 of the Customs Act, 1962 unless the department establishes, with supporting material, the director's specific role, knowledge, or active participation in the offence.

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