Retracted statement and uncorroborated evidence cannot sustain foreign exchange penalty or confiscation without a properly investigated evidentiary chain.
Penal action for alleged contravention of foreign exchange law could not be sustained where the statement relied on was promptly retracted, recorded in suspicious circumstances, and not supported by independent corroboration. The Tribunal found that the alleged chain linking the seized currency to instructions from persons abroad was not properly investigated, no effective enquiry was made from the named persons, and the nexus between the persons referred to in the statements remained unproved. It also noted that the respondent's cash book and accounts were not satisfactorily addressed. The appellate order setting aside the penalty and confiscation was therefore left undisturbed.
Issues: Whether the penalty and confiscation imposed for alleged contravention of Section 3(c) of the Foreign Exchange Management Act, 1999 were sustainable in the absence of independent corroboration, proper investigation, and in view of the respondent's prompt retraction of the statement recorded by the enforcement authorities.
Analysis: The Appellate Tribunal noted that the alleged chain of events linking the seized currency to instructions from persons in the United Kingdom and the United States was not verified by investigation. No enquiry was shown to have been made from the named persons whose contact numbers were available in the respondent's statement, and the nexus between the persons referred to in the statements remained unestablished. The Tribunal also found that the respondent retracted the statement within two days, that the statement had been recorded in the police station in the presence of police officers, and that there was no material showing rejection of the retraction by the competent authority. The cash book and accounts produced by the respondent were also not satisfactorily dealt with by the adjudicating authority.
Conclusion: The Tribunal held that the impugned adjudication could not be sustained on the available material and declined to interfere with the appellate order setting aside the penalty and confiscation.
Ratio Decidendi: A retracted statement, especially one recorded in suspicious circumstances, cannot by itself sustain penal action unless it is supported by independent corroboration and a properly investigated chain of evidence.
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