2026 (2) TMI 1214 - AT - FEMA

Retracted statement admissibility upheld when voluntary and corroborated; confiscation under foreign exchange contravention affirmed, penalty moderated.

Retracted statements may be treated as admissible evidence if voluntariness is established and independent, cogent corroboration exists; the tribunal ... Voluntariness and admissibility of statements - Retraction of confession and its treatment - Corroboration of retracted statement by independent evidence - Section 3(c) of FEMA contravention - Confiscation of seized currency - Penalty reduction and pre-deposit adjustment - HELD THAT:- The claim of the Appellant is falsified because 24 carat gold cannot be from gold ornaments, which are never made from 24 carat gold. Ld. AA has also rejected the retraction dated 09.05.2012 of the Appellant as the same was made after almost 1½ month. Moreover, no supporting evidences for the retraction have been advanced. It is also matter of record that the statement tendered by Shri Shihab was never retracted and brings out the corroboration of the statements made by the Appellant and Shri Abhilash on 19.03.2012. The recovery of Rs. 56,30,000/- and its seizure from the residential premises of Shri Shihab has not been denied. The Appellant has failed to produce evidences to establish that he legally imported gold to India while he was living abroad. This Tribunal vide Order dated 15.03.2018 disposed of the Application for waiver of pre-deposit of penalty amount with direction to the Appellant to deposit 20% of the penalty viz Rs. 2,01,000/- within three months of the Order. Keeping in view that the amount of Rs. 56,25,000/- stands confiscated to the Central Government and the same has been claimed by the Appellant in Appeal, we find that the ends of justice will be met with the reduction of penalty to Rs. 2,01,000/-. The pre-deposit already made, subject to verification, shall be adjusted against the reduced penalty. We uphold the confiscation of Rs.56,25,000/- to the Central Government. Thus, we partly allow the Appeal filed by Shri K. V. Abdul Khader. Applications pending, if any, are disposed of accordingly. Issues: (i) Whether the retracted statement dated 19.03.2012 could be treated as admissible and relied upon despite subsequent retraction; (ii) Whether the confiscation of Rs.56,25,000/- and the penalty imposed under Section 3(c) of the Foreign Exchange Management Act, 1999 should be upheld or modified.Issue (i): Whether the retracted statement dated 19.03.2012 is admissible and can be relied upon despite subsequent retraction.Analysis: The statement was in the declarant's handwriting; supporting statements from other witnesses and recovery of cash provided corroboration; competent authority examined and rejected the retraction after inquiries; relevant precedents permit reliance on a retracted statement when independently corroborated and when voluntariness is established.Conclusion: The retracted statement is admissible and may be relied upon as corroborated evidence.Issue (ii): Whether the confiscation of Rs.56,25,000/- and the monetary penalty under Section 3(c) of the Foreign Exchange Management Act, 1999 should be upheld or modified.Analysis: Independent evidence failed to establish lawful import or provenance of the alleged gold sale proceeds; corroborative witness statements and recovery of the cash supported contravention under Section 3(c) of the Foreign Exchange Management Act, 1999; however, the monetary penalty amount was reconsidered in light of the confiscation already effected and procedural relief previously directed regarding pre-deposit.Conclusion: The confiscation of Rs.56,25,000/- to the Central Government is upheld; the monetary penalty is reduced to Rs.2,01,000/-.Final Conclusion: The appeal is partly allowed by upholding the confiscation while reducing the penalty, reflecting a split outcome on evidentiary admissibility versus quantum of penalty.Ratio Decidendi: A statement retracted by its maker may be acted upon if it is shown to be voluntary and is substantially corroborated by independent and cogent evidence; where confiscation of alleged illegally obtained foreign exchange is supported by corroboration and recovery, confiscation may be upheld while penalty may be moderated on equitable grounds.