Electronic Evidence

Source: Supreme Court  

Why in News? 

Recently, Justices JB Pardiwala and KV Viswanathan held that electronic evidence seized by the Directorate of Revenue Intelligence (DRI) can be admissible without a certificate under Section 138C(4) of the Customs Act if the assessee has acknowledged the documents in statements recorded under Section 108. This ruling clarifies that strict compliance with certificate requirements can be relaxed when the evidence is duly admitted by the assessee. 

• The Supreme Court held this in the matter of Additional Director General Adjudication, Directorate Of Revenue Intelligence v. Suresh Kumar And Co. Impex Pvt. Ltd. & Ors. (2025). 

What was the Background of Additional Director General Adjudication, Directorate of Revenue Intelligence v. Suresh Kumar And co. Impex Pvt. Ltd. & Ors. (2025)? 

• The respondents were engaged in importing branded food items from various countries for sale in Delhi and Mumbai. The Directorate of Revenue Intelligence alleged that the respondents had under-declared the Retail Sale Price/Maximum Retail Price (RSP/MRP) while filing Bills of Entry, resulting in evasion of customs duties. 
• DRI conducted raids on business and residential premises, seizing electronic devices including laptops and hard drives. The investigation revealed evidence of short-payment of customs duty through mis-declaration of actual selling prices. 
• A show cause notice dated 06.06.2016 demanded differential duties of Rs. 9,24,50,644/- from respondent no.1 and Rs. 9,83,614/- from respondent no.2, along with interest and penalty. 
• The Additional Director General confirmed the demands vide order dated 17.07.2017. The CESTAT allowed the respondents' appeals, holding that electronic evidence was inadmissible due to non-compliance with Section 138C(4) of the Customs Act, 1962.

What were the Court’s Observations?

• The Court identified whether the Tribunal erred in allowing appeals solely on grounds of non-compliance with Section 138C(4) of the Customs Act, 1962. 
• The Court observed that Section 138C(4) of the Customs Act is pari materia to Section 65B(4) of the Indian Evidence Act. While acknowledging the mandatory nature of certificate requirements for electronic evidence, the Court applied legal maxims "impotentia excusat legem" and "lex non cogit ad impossibilia" - establishing that law does not compel performance of impossible acts. 
• The Court held that due compliance does not necessarily require a certificate stricto senso under Section 138C(4). The Record of Proceedings and statements recorded under Section 108 of the Customs Act could constitute due compliance with Section 138C(4). 
• The Court noted that electronic documents were collected in the presence of company directors who signed every page of printouts and acknowledged their authenticity in unretracted statements under Section 108. The respondents confirmed accuracy of records and their presence during the printing process from seized hard drives. 
• The Court clarified that while acknowledgment in Section 108 statements determines compliance with Section 138C(4), their evidentiary value in other proceedings must be considered in accordance with law, including compliance with Section 138B of the Customs Act. 

What is Electronic Evidence? 

• Electronic evidence has become fundamental to modern legal proceedings, necessitating robust statutory frameworks for admissibility and authentication. Under the Indian Evidence Act, 1872, Sections 65A and 65B governed electronic records, requiring strict compliance with certificate provisions under Section 65B(4). This provision mandated certificates from responsible officials identifying electronic records, describing production methods, and confirming operational conditions. 
• The Bhartiya Sakshya Adhiniyam, 2023 has modernised electronic evidence rules through Sections 62 and 63. Section 63 expands the scope beyond traditional computers to include communication devices and semiconductor memory storage. The new framework recognises electronic records stored in multiple formats and locations as primary evidence, addressing contemporary digital practices like cloud storage and network-based systems. 
• Key improvements include broader definitions encompassing communication devices, recognition of multiple storage formats, and standardised certificate requirements with expert validation. The BSA mandates certificates in prescribed schedule format with dual verification - Part A completed by the producing party and Part B by technical experts. 
• However, challenges remain regarding undefined terms like "electronic records" and "electronic form," creating potential ambiguities. The relationship between substantial compliance principles established in Arjun Panditrao Khotkar and strict certificate requirements under the new framework requires judicial interpretation. 
• Electronic evidence provisions aim to balance technological advancement with evidentiary reliability, ensuring authentic documentation while recognising practical limitations in obtaining formal certificates in complex digital environments.

What is Section 138C of Customs Act ?

• Overview of Section 138C: 
  • Section 138C of the Customs Act, 1962 governs the admissibility of electronic records, micro films, facsimile copies, and computer printouts as documentary evidence in customs proceedings. This provision was inserted by Act 29 of 1988 with effect from 1st July 1988 to address the growing use of electronic documentation in commercial transactions. 
• Key Provisions: 
  • Scope of Admissibility: Section 138C(1) declares that micro films, facsimile copies, and computer printouts shall be deemed documents under the Customs Act and admissible as evidence without production of originals, provided specified conditions are satisfied. 
  • Mandatory Conditions for Computer Printouts: Sub-section (2) establishes four essential conditions for admitting computer printouts: the computer must have been used regularly for storing information during relevant activities; information must have been regularly supplied in ordinary course of activities; the computer must have operated properly throughout the material period; and the statement must reproduce information supplied in ordinary course. 
  • Certificate Requirement: Sub-section (4) mandates production of a certificate from a person in responsible official position identifying the document, describing production manner, providing device particulars, and dealing with conditions in sub-section (2). The certificate serves as evidence of matters stated therein. 
  • Practical Definitions: The section defines "computer" broadly as any device receiving, storing and processing data, and clarifies that information derivation includes calculation, comparison or other processes. 
• Legal Significance: 
  • Evidentiary Framework: Section 138C creates a comprehensive framework for electronic evidence admissibility in customs proceedings, balancing technological advancement with evidentiary reliability. The provision ensures authenticity while recognising practical challenges in electronic documentation. 
  • Relationship with Evidence Act: Section 138C(4) is pari materia to Section 65B(4) of the Indian Evidence Act, maintaining consistency in electronic evidence standards across different statutory frameworks. 
  • Compliance Requirements: The section establishes that while certificate requirements are mandatory, courts may consider substantial compliance where strict technical compliance becomes impossible due to circumstances beyond the party's control, as recognised in recent judicial pronouncements.