Admissibility of Section 108 statements in FERA adjudication upheld where corroborated and retraction was unproved.

Statements recorded under Section 108 of the Customs Act were treated as admissible material in FERA adjudication where they concerned the same transaction and were supported by surrounding evidence, because adjudicatory use was distinguished from criminal proof. A belated or unproved retraction did not automatically displace that reliance, especially where corroborative material existed, including seizure and other persons' statements. On the facts, the record was found to establish contravention of Section 8(1) and Section 9(1)(a) of FERA through acquisition, routing and delivery of foreign currency without permission. Objections based on non-service of notice and the alleged sunset period were also rejected.

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Issues: (i) Whether statements recorded under Section 108 of the Customs Act, 1962 could be relied upon in adjudication under the Foreign Exchange Regulation Act, 1973; (ii) whether the appellant's alleged retraction displaced reliance on those statements in the absence of credible material showing timely retraction or lack of corroboration; (iii) whether the material on record established contravention of Section 8(1) and Section 9(1)(a) of the Foreign Exchange Regulation Act, 1973; and (iv) whether the proceedings were vitiated by non-service of notice or by expiry of the sunset period under the Foreign Exchange Management Act, 1999.

Issue (i): Whether statements recorded under Section 108 of the Customs Act, 1962 could be relied upon in adjudication under the Foreign Exchange Regulation Act, 1973.

Analysis: The statements recorded under Section 108 were treated as part of the material available for adjudication and not as evidence for criminal conviction. The legal distinction between prosecution and adjudication was emphasized, and reliance on such statements was held permissible in adjudicatory proceedings, especially where they related to the same transaction and were supported by surrounding material.

Conclusion: The reliance on statements recorded under Section 108 of the Customs Act, 1962 was held to be permissible in the adjudication under the Foreign Exchange Regulation Act, 1973.

Issue (ii): Whether the appellant's alleged retraction displaced reliance on those statements in the absence of credible material showing timely retraction or lack of corroboration.

Analysis: The record did not establish a proved retraction by acceptable documentary material. Even otherwise, a retracted statement was not automatically unreliable; its effect depended on the circumstances of retraction, the explanation for delay, and the existence of corroborative material. The Tribunal found supporting material in the seizure of foreign exchange and the statements of other persons involved.

Conclusion: The alleged retraction did not prevent reliance on the statements, and the appellant's challenge on this ground was rejected.

Issue (iii): Whether the material on record established contravention of Section 8(1) and Section 9(1)(a) of the Foreign Exchange Regulation Act, 1973.

Analysis: The evidence showed that foreign currency was acquired, routed, and carried for delivery to a person outside India without the requisite permission. The Tribunal held that the facts satisfied both the restriction on acquisition or transfer of foreign exchange and the restriction on payment to a person resident outside India.

Conclusion: Contravention of Section 8(1) and Section 9(1)(a) of the Foreign Exchange Regulation Act, 1973 was established.

Issue (iv): Whether the proceedings were vitiated by non-service of notice or by expiry of the sunset period under the Foreign Exchange Management Act, 1999.

Analysis: The notice had been issued and attempts at service were made. The appellant's wife received one notice, and an adjournment request was sent by telegram, which supported the inference that the appellant was aware of the proceedings. The Tribunal also held that initiation of proceedings occurred on issuance of the show-cause notice within the relevant period, so the sunset-period objection failed.

Conclusion: The objections based on non-service and limitation were rejected.

Final Conclusion: The Tribunal upheld the penalty and found no merit in the appeal, leaving the adjudication order undisturbed.

Ratio Decidendi: Statements recorded under Section 108 of the Customs Act, 1962 may be relied upon in foreign exchange adjudication when they relate to the same transaction and are supported by surrounding material, and a belated or unproved retraction does not by itself nullify their evidentiary value.

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