Retracted confession needs voluntariness and corroboration before foreign exchange penalty can stand

Penalty for contravention of section 9(1)(d) of the Foreign Exchange Regulation Act, 1973 could not rest on a retracted inculpatory statement unless the authority first found the statement voluntary, applied its mind to the retraction, and had adequate corroborative support from surrounding material. On the record, there was no sufficient basis showing meaningful consideration of the retraction or independent assurance for the confession. The penalty order was therefore held unsustainable and set aside, with relief granted to the appellant.

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Issues: Whether the penalty for contravention of section 9(1)(d) of the Foreign Exchange Regulation Act, 1973 could be sustained on the basis of a retracted confessional statement without sufficient corroboration and without a finding that the statement was voluntary.

Analysis: The adjudicating authority had relied on the appellant's inculpatory statements and seized documents to hold that he had made payments in India on the instructions of a person resident outside India. The governing principle applied was that a retracted confession can be acted upon only if the statement is shown to be voluntary and the authority applies its mind to the retraction; prudence also requires corroboration from surrounding evidence. On the record, there was no material showing due consideration of the retraction or independent assurance supporting the inculpatory statement.

Conclusion: The penalty order was unsustainable and was set aside; the appeal succeeded.

Final Conclusion: The adjudication based on the retracted statement could not stand in law, and the appellant was entitled to relief.

Ratio Decidendi: A retracted inculpatory statement can support liability only if its voluntariness is affirmatively considered in light of the retraction and the record provides adequate corroborative assurance.

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