Retraction and lack of corroboration cannot support a foreign exchange penalty without independent evidence linking the accused.

Penalty under the Foreign Exchange Regulation Act, 1973 cannot be sustained solely on retracted statements or a co-accused's confession unless independent corroborative evidence links the appellant to the alleged contravention. Where the alleged foreign-exchange transaction is not clearly identified, the co-accused's statement does not describe the nature or details of the sale, and no identification parade or other material connects the appellant to the transaction, the evidentiary basis is insufficient to uphold penalty. The appeal was allowed and the penalty set aside.

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Issues: Whether the penalty under the Foreign Exchange Regulation Act, 1973 could be sustained on the basis of retracted statements of the appellant and a co-accused without independent corroboration and where the alleged foreign-exchange transaction was not clearly identified.

Analysis: The statements relied upon by the adjudicating authority had been retracted. In the absence of independent corroborative evidence, a retracted statement could not safely form the sole basis for imposing penalty under the Foreign Exchange Regulation Act, 1973. The statement of the co-accused was also found insufficient because it did not give the nature or details of the foreign exchange allegedly sold and referred to a different name from that of the appellant. No identification parade or other material linked the appellant to the alleged transaction. A confession of a co-accused, by itself, was not substantive evidence unless supported by independent evidence.

Conclusion: The penalty could not be sustained and the appeal was allowed.

Ratio Decidendi: A penalty under the Foreign Exchange Regulation Act, 1973 cannot rest solely on retracted statements or a co-accused's confession unless there is independent corroborative evidence linking the appellant to the alleged contravention.

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