Your contract with the customer has nothing to do with who was actually using the internet at the time. What do you really not understand about that?
Listen man, you can pinpoint that one specific customer of your services had that IP/MAC at that time, you have NO IDEA who was actually sitting at that computer(s) behind that mac address. What SLA do you have that states that only the persons name on the contract can use the computer, not their relatives, the baby sitter, the neighbor over their wireless (hacked or open AP), their kids friends, etc? This was a CRIMINAL case, not a contract violation. It really should not be that hard to comprehend.
Another car analogy... I can rent a car and be the only authorized driver by contract. If I lend it to someone and they commit a crime, the police still have to PROVE who was driving the car. Sure, the rental place can charge me for the damages to the car under that contract and I can sue the real driver to get my money back from him but do you see the difference?