Electronic evidence and retracted statements require lawful proof, corroboration, and cross-examination before penalties can stand.

Electronic WhatsApp messages and call data could not be relied on for penalty purposes where statutory requirements for proving electronic evidence were not satisfied. Denial of cross-examination of persons whose statements were used against the noticees was treated as a breach of natural justice, especially where those statements were retracted. A retracted statement of one appellant required independent and cogent corroboration, which was absent once the electronic and oral evidence was found unreliable. As no admissible independent evidence connected the second appellant to the alleged misconduct, the penalty against him also could not be sustained.

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Issues: (i) whether WhatsApp messages and other electronic material relied upon in the adjudication were admissible in the absence of compliance with the statutory requirements for electronic evidence; (ii) whether denial of cross-examination of the persons whose statements were relied upon vitiated the proceedings; (iii) whether the retracted statement of the first appellant was sufficiently corroborated by independent evidence to sustain penalties; and (iv) whether the material on record was sufficient to uphold the penalty against the second appellant.

Issue (i): whether WhatsApp messages and other electronic material relied upon in the adjudication were admissible in the absence of compliance with the statutory requirements for electronic evidence.

Analysis: The electronic material was relied upon as a major basis for fastening liability, but the procedural safeguards governing electronic records were not followed. The evidence was not shown to have been produced in the manner required for admissibility of electronic records, and no proper foundation was laid to establish reliability of the retrieved messages and call data.

Conclusion: The electronic material could not be relied upon to sustain the penalties.

Issue (ii): whether denial of cross-examination of the persons whose statements were relied upon vitiated the proceedings.

Analysis: The adjudication rested substantially on statements of co-noticees and other persons, yet the request for cross-examination was rejected without adequate justification. Where statements are used as incriminating evidence, the affected noticee must ordinarily be given a fair opportunity to test their credibility, particularly when the statements are retracted and prejudice is shown.

Conclusion: The denial of cross-examination constituted a violation of natural justice and vitiated the findings based on those statements.

Issue (iii): whether the retracted statement of the first appellant was sufficiently corroborated by independent evidence to sustain penalties.

Analysis: A retracted confession cannot by itself form the sole basis for penalty unless it is supported by independent and cogent corroboration. Once the electronic evidence and the statements relied upon were found unreliable for the purpose of sustaining the case, no adequate independent corroboration remained to prove intentional aiding or abetment.

Conclusion: The retracted statement was not sufficiently corroborated, and the penalty on the first appellant could not stand.

Issue (iv): whether the material on record was sufficient to uphold the penalty against the second appellant.

Analysis: No statement was recorded from the second appellant, and the case against him rested on the same disputed electronic material and the retracted statements of others. In the absence of admissible independent evidence connecting him to the alleged illegal import, the finding of involvement could not be sustained.

Conclusion: The penalty against the second appellant was not sustainable.

Final Conclusion: The penalties imposed on both appellants were set aside and the appeals were allowed on the basis that the evidentiary foundation of the adjudication was not legally sustainable.

Ratio Decidendi: Penalties under the Customs Act cannot be sustained on the basis of retracted statements and electronic material unless the electronic evidence is lawfully proved and the statements are independently corroborated by admissible evidence, with cross-examination afforded where the statements are relied upon.

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