Electronic records and corroborated retracted statements can support foreign exchange contraventions; penalty was reduced on appeal.

Electronic records seized during investigation were treated as admissible when supported by statutory presumptions, the seizure record, the panchnama and contemporaneous extraction material; the challenge to tampering was rejected. A retracted statement was also held usable because it was independently corroborated by documentary records, electronic data and witness statements, and no convincing material showed it was involuntary. Section 16(6) of FEMA was treated as directory, so the alleged delay or non-compliance did not vitiate the adjudication. The contraventions were upheld, while the penalties were reduced on the facts and circumstances.

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Issues: (i) Whether the data retrieved from the seized pen drive was admissible and reliable evidence; (ii) whether the appellant's retracted statement could be acted upon when corroborated by other material; (iii) whether Section 16(6) of the Foreign Exchange Management Act, 1999 was mandatory; and (iv) whether the penalties required interference.

Issue (i): Whether the data retrieved from the seized pen drive was admissible and reliable evidence.

Analysis: The statutory presumption under Section 39 of the Foreign Exchange Management Act, 1999 was applied to documents produced or seized from custody or control, and the evidentiary presumption under Section 132(4A) of the Income-tax Act, 1961 was treated as applicable to electronic records as well. The retrieval of data from the pen drive was supported by the seizure record, the panchnama, and the contemporaneous extraction of information during the investigation. The challenge of tampering was rejected in view of the surrounding circumstances and corroborative material.

Conclusion: The pen drive data was held to be admissible and authentic, against the appellant.

Issue (ii): Whether the appellant's retracted statement could be acted upon when corroborated by other material.

Analysis: The retraction was found insufficient to displace the earlier statement because there was no convincing material showing that the statement was involuntary. The statement was also supported by the documentary record, the seized electronic data, and the statements of other witnesses. A retracted statement can be relied upon when it is corroborated by independent material, and that principle was applied here.

Conclusion: The retracted statement was held to be usable against the appellant, as it stood corroborated.

Issue (iii): Whether Section 16(6) of the Foreign Exchange Management Act, 1999 was mandatory.

Analysis: The provision was treated as directory rather than mandatory, so delay or non-compliance of that nature did not vitiate the adjudication. On that footing, the complaint of procedural illegality was rejected.

Conclusion: No infirmity in the proceedings was found on the alleged breach of Section 16(6) of the Foreign Exchange Management Act, 1999.

Issue (iv): Whether the penalties required interference.

Analysis: The findings on the electronic record, the statements, and the surrounding evidence established contraventions of the foreign exchange restrictions alleged in the proceedings. At the same time, the quantum of penalty was reconsidered on the facts and circumstances, and the adjudicated penalties were scaled down to twenty per cent of the original amounts.

Conclusion: The contraventions were upheld, but the penalties were reduced.

Final Conclusion: The appeal succeeded only to the limited extent of reduction in penalty, while the findings of contravention under the foreign exchange law were maintained.

Ratio Decidendi: Electronic records seized during investigation may be relied upon when supported by statutory presumptions and contemporaneous corroboration, and a retracted statement can sustain adverse findings if independently corroborated.

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