2026 (2) TMI 344 - AT - Customs

Electronic evidence admissibility in Customs penalty proceedings: unreliability of unverified DVDs leads to penalty quashed.

Electronic records recovered as a reconstructed DVD were held inadmissible because their source, authenticity and reliability were not verified from the ... Admissibility of electronic records - seized/reconstructed DVD - Compliance with Section 138C of the Customs Act, 1962 and Section 65B of the Evidence Act - Reliability of reconstructed electronic evidence - Evidentiary value of retracted statements recorded under investigation - Penalty for use of false and incorrect material u/s 114AA - Maintainability of appeals u/s 129A - Whether, the electronic record in the form of the so-called DVD in the instant case can be admissible as evidence for imposition of penalty under Section 114AA of the Customs Act, 1962 on the appellant in this case, without verifying its genuineness, veracity or reliability from the original electronic device by/from which these are created, or not. - HELD THAT:- It is well settled that the source and authenticity of electronic records, such as the said DVD in this case, are required to be ensured, in order to be used as evidence. Since electronic records are more susceptible to tampering, alteration, transposition, excision, etc., without such safeguards, an order based on unproved or unverified electronic records like DVDs can lead to travesty of justice. Admittedly, in the present case, the evidence, i.e., the so-called DVD, was never there in existence to support the case of the respondents and not available from the beginning of its recovery for appellant to refute, in spite of his request. We also take note of submission that the Hard Disk of the said computer utilised for creation of the said DVD, taken possession of by the DRI officers, was not placed before original authority before finalization of the adjudication orders. In fact, the appellant has pointed out that the said DVD was admittedly found to be broken inside a sealed cover, under DRI custody. It is a fact on record that no certificate under Section 138C of the Customs Act, 1962 read with Section 65B of the Indian Evidence Act, 1872 has been procured by DRI while seizing the DVD or documents derived from such DVD. The originals of the export documents, which were actually utilized in the export proceedings and for passing through Customs authorities of Kolkata Port are not in the possession of DRI. Under such circumstances, computer printouts taken from the so-called DVD recovered during the search cannot be relied upon as evidence to impose penalty on him, in the absence of a certificate as prescribed under Section 138C of the Customs Act, 1962. The Hon’ble Supreme Court in the case of M/s. Jeen Bhavani International Versus Commissioner of Customs, Nhava Sheva-III [2022 (8) TMI 237 - CESTAT MUMBAI]. Therefore, by applying the ratio laid down in the decisions cited supra, we are also of the view that the information available in the said DVD cannot be relied upon as admissible evidence against the appellant in the impugned proceedings in the absence of compliance of the provisions of Section 138C ibid. Thus, we hold the electronic record, in the form of the so-called DVD in the present case, cannot be treated as admissible evidence, in the absence of any verification as to its genuineness, veracity or reliability from the original electronic device by/from which these are created, for the purpose of imposition of penalty under Section 114AA of the Customs Act, 1962 on the appellant. The said issue is therefore answered in favour of the appellant. Whether, the statement(s) recorded under the stress of investigation from Shri Jyoti Biswas, co-accused, which was retracted before the Court of the Ld. CMM by serving the copy to Respondents on the same day in Court on 22.09.2016, can be relied upon to implicate the appellant in this case, or not. - HELD THAT:- Since the statement of Shri Jyoti Biswas has been retracted, we agree with the contention of the appellant that the same cannot be relied upon as evidence for implicating the appellant in the alleged offence, in the absence of any corroborative evidence. Hence, we find that relevancy of the above retracted statement of Shri Jyoti Biswas has not been proved by Revenue. Consequently, in the absence of any concrete evidence being adduced by the Revenue, we hold that the statement recorded from Shri Jyoti Biswas, which has been retracted before a court of law, cannot be relied upon in the instant proceedings against the appellant. Accordingly, the Issue No. (2), as framed under paragraph 11 of this Order, stands answered in favour of the appellant. Applicability of the relevant statutory provisions invoked - There is also nothing on record to show that the appellant was in any manner concerned with the export of goods. Since the above ingredients, which are essential for imposing penalty under Section 114AA of the Act, are absent in the case, we do not find any justification for imposition of penalty under Section 114AA of the Customs Act on the appellant. It is also relevant to note that in the earlier Show Cause Notices issued to the various exporters in the course of investigation, the name of the appellant was not mentioned. In fact, as pointed out by the appellant, the appellant was brought in these proceedings only at a later stage, although he was neither posted / holding any supervisory post of Customs at the relevant point of time where the exporters exported their goods, nor was any nexus found to establish his involvement in the alleged fraudulent exports by means of independent and concrete evidence. Therefore, even on this count, we agree with the submission of the appellant that under such circumstances, the provisions of Section 114AA of the Act cannot be invoked against the appellant. Thus, we hold that the penalties imposed on the appellant under Section 114AA of the Customs Act, 1962, as upheld vide the impugned orders, are not sustainable. Consequently, the said penalties imposed on the appellant are set aside. Issues: (i) Whether the electronic record in the form of the seized/reconstructed DVD can be treated as admissible evidence to impose penalty under Section 114AA of the Customs Act, 1962 without verification of its genuineness from the original electronic device; (ii) Whether the statements recorded from Shri Jyoti Biswas, subsequently retracted before the Court of the Ld. CMM, can be relied upon to implicate the appellant for imposition of penalty under Section 114AA of the Customs Act, 1962.Issue (i): Whether the electronic record (DVD) is admissible evidence for imposing penalty under Section 114AA without verification from original electronic device.Analysis: The Tribunal examined record showing the original DVD was not available, the seized DVD was broken in DRI custody, the hard disk/computer device used for creation was not produced, and no certificate under Section 138C of the Customs Act, 1962 (parimateria to Section 65B of the Evidence Act) was furnished. Prior decisions and the principles governing admissibility of electronic records were applied to conclude that reconstructed or secondary electronic evidence absent statutory certification and source verification is unreliable. The Tribunal also relied on admissions in investigation records and CFSL communications indicating non-acceptance/return of original media and departmental failure to produce original devices or required certificates.Conclusion: The information in the reconstructed DVD cannot be treated as admissible evidence to impose penalty under Section 114AA in the absence of verification from the original electronic device and compliance with Section 138C; Issue (i) answered in favour of the appellant.Issue (ii): Whether the retracted statement(s) of Shri Jyoti Biswas can be relied upon to implicate the appellant.Analysis: The Tribunal noted that the statements were retracted before the CMM and that Shri Jyoti Biswas is a co-accused. There was no independent, cogent or corroborative evidence to support the retracted statement(s). Authorities regarding the evidentiary value of retracted confessional statements and the necessity for corroboration and examination under Section 138B were applied to assess relevance and probative value.Conclusion: The retracted statement(s) of Shri Jyoti Biswas cannot be relied upon to implicate the appellant in the absence of corroborative evidence; Issue (ii) answered in favour of the appellant.Final Conclusion: Applying the above conclusions and statutory requirements, penalties imposed under Section 114AA of the Customs Act, 1962 on the appellant are unsustainable and are set aside.Ratio Decidendi: Electronic records or computer printouts cannot be admitted as reliable evidence for adjudication under the Customs Act unless produced with the statutory certificate and source verification required by Section 138C of the Customs Act (and Section 65B of the Evidence Act); retracted statements of co-accused lack probative value absent independent corroboration.