From Form to Substance: Reinterpreting Electronic Evidence under Section 138-C, Customs Act, 1962

Digitalisation of trade records and the evidentiary dilemma

With the rapid advancement of technology, commercial and trade records are now predominantly maintained in electronic form. The digitalisation of such records has significantly enhanced efficiency, traceability and the ease of access. However, this transition has also introduced complex evidentiary and legal concerns. Unlike traditional paper records, electronic data is inherently susceptible to manipulation, alteration or selective extraction, often without leaving visible traces, thereby raising serious questions regarding its authenticity and integrity. It is this inherent vulnerability that necessitates the development of a specialised statutory framework governing the admissibility of electronic evidence, ensuring that such material remains reliable and capable of being tested in legal proceedings.

Electronic evidence in customs proceedings

Section 105, Customs Act, 1962 (Customs Act) empowers the proper officer to seize documents and things which may be useful or relevant in proceedings under the Customs Act. Such seizures may include not only physical documents but also devices and storage media such as laptops, desktops, mobile phones, hard drives, servers and USB devices containing digital records. In practice, a substantial portion of evidence is derived from the extraction and analysis of data contained in such electronic devices. These records are frequently relied upon by the authorities to substantiate allegations concerning non-payment or short-payment of duty under Section 28, Customs Act.

While physical documents may ordinarily be produced in their original form and proved through conventional modes of evidence, electronic records stand on a different footing. Their extraction, reproduction, and presentation introduce additional layers of complexity, thereby necessitating safeguards to ensure their evidentiary reliability.

Section 138-C: The statutory framework for electronic evidence

The admissibility of electronic records in proceedings under the Customs Act is governed by Section 138-C, which sets out the conditions under which such records may be treated as “documents” and relied upon as evidence. The provision permits reliance on computer outputs, including printouts and other reproductions of data, in situations where the original electronic source is not produced, subject to the prescribed conditions.

In substance, Section 138-C enables electronic records to be admitted despite their non-production in original form by prescribing a framework to establish their authenticity and reliability. Recognising the distinct nature of electronic data, the provision requires that such evidence be supported by safeguards relating to the manner in which it is generated, stored, and reproduced. Central to this framework is the requirement of certification, which serves as the foundational safeguard enabling reliance on such records.

Certification as the cornerstone of admissibility

Section 138-C, Customs Act mandates that electronic records, particularly computer outputs, must be accompanied by a certificate as a condition precedent to their admissibility. The certificate is required to identify the electronic record, describe the manner of its production, provide particulars of the device or system used, and confirm compliance with statutory conditions, including proper functioning and regular use.

This requirement serves as a substantive safeguard ensuring authenticity, preserving the integrity of the data extraction process, and establishing a reliable link between the original data and the output relied upon. In effect, the certificate operates as a surrogate for the original electronic source.

Section 138-C, Customs Act is pari materia to Section 65-B, Evidence Act, 1872 (Evidence Act) (now Section 63, Sakshya Adhiniyam, 2023). Consequently, judicial interpretation of Section 65-B assumes direct relevance in determining the nature and extent of compliance required for admissibility of electronic evidence.

From certainty to confusion: The judicial drift

The position on admissibility of electronic evidence was initially articulated in State (NCT of Delhi) v. Navjot Sandhu¹, wherein the Supreme Court permitted electronic records to be proved through the general provisions governing secondary evidence, holding that even in the absence of compliance with Section 65-B, Evidence Act, such evidence could be admitted if otherwise duly proved through oral and documentary evidence.

This position was subsequently and decisively overturned in Anvar P.V. v. P.K. Basheer², where the Supreme Court held that Section 65-B constitutes a complete code governing admissibility of electronic evidence. The Court clarified that electronic records, when produced in the form of computer outputs, are inadmissible in the absence of a certificate under Section 65-B(4), thereby excluding recourse to the general law of secondary evidence.

However, following Anvar P.V. case, a degree of divergence emerged in the judicial approach. In Tomaso Bruno v. State of U.P.³, the Supreme Court, while dealing with non-production of CCTV footage, emphasised the significance of electronic evidence as the best evidence available in appropriate cases. Although the decision did not directly dilute the mandatory requirement of certification under Section 65-B, its observations were perceived as introducing a degree of flexibility where the authenticity of electronic evidence could otherwise be established. This approach was carried further in Shafhi Mohammad v. State of H.P.⁴, wherein the Court held that the requirement of a certificate under Section 65-B(4) is procedural and may be dispensed with in cases where the party seeking to rely on electronic evidence does not have control over the device, thereby permitting proof through alternate means.

These decisions introduced a conflicting line of authority, creating uncertainty as to whether compliance with Section 65-B(4) was mandatory or capable of being relaxed depending on the facts and circumstances of each case.

Restoring doctrinal clarity: The reassertion of mandatory certification

The larger Bench of the Supreme Court in Arjun Panditrao Khotkar v. Kailash Kushanrao Gorantyal⁵ resolved the aforesaid divergence by reaffirming that Section 65-B, Evidence Act constitutes a complete code governing the admissibility of electronic evidence, and that compliance with the certificate requirement is a mandatory condition precedent. The Court expressly overruled the judgments of Shafhi Mohammad case⁶ and Tomaso Bruno case⁷ and clarified that any earlier contrary observations could not be regarded as laying down the correct position of law.

The Court further held that electronic records produced as computer outputs are inadmissible unless the requirements of Section 65-B are satisfied, thereby excluding recourse to the general provisions governing secondary evidence. At the same time, it clarified the distinction between the production of the original electronic device and the production of a copy or output derived therefrom. The Court held that where the original electronic device itself is produced and proved in accordance with law, the requirement of a certificate under Section 65-B(4) may not arise; however, where reliance is placed on a printout or other computer output, statutory compliance is mandatory.

While recognising limited procedural flexibility, the Court clarified that where a certificate cannot be secured despite best efforts, the Court may permit its production at a later stage, subject to the facts of the case and the exercise of judicial discretion.

From form to substance: Reinterpreting certification requirements

Following Arjun Panditrao Khotkar case, the legal position stood settled in principle that compliance with the certificate requirement under Section 65-B, Evidence Act is mandatory, subject to limited flexibility in cases of practical impossibility. This flexibility was further examined in Revenue Intelligence Directorate v. Suresh Kumar & Co. Impex (P) Ltd.⁸, wherein the Supreme Court was called upon to consider whether the absence of a formal certificate is necessarily fatal to admissibility.

At the lower stage, the Tribunal had proceeded on the basis that non-compliance with Section 138-C, Customs Act (pari materia with Section 65-B, Evidence Act) rendered the electronic evidence inadmissible. Reversing this view, the Supreme Court held that “due compliance” with Section 138-C(4) does not mandate a certificate in a rigid or stricto sensu form. The Court undertook a fact-based assessment of the manner in which the electronic records were generated and relied upon, noting that the data was extracted from seized devices in the presence of the persons concerned, the process was contemporaneously recorded and the contents of such records were duly acknowledged in statements recorded under Section 108, Customs Act, which were never retracted.

In these circumstances, the Court held that the requirements of Section 138-C(4) stood substantially complied with, and the absence of a formal certificate was not fatal. Thus, the emphasis shifted from rigid procedural compliance to a contextual evaluation of authenticity and reliability of electronic records, marking a subtle yet significant development in the law governing admissibility of electronic evidence.

Recalibrating practice: Implications for investigations and defence

The decision in Suresh Kumar case⁹ introduces a more flexible evidentiary standard, placing emphasis on the overall integrity of electronic records rather than rigid adherence to formal certification requirements. This marks a shift from a document-centric approach to one that evaluates admissibility in light of the surrounding factual matrix.

From an investigative perspective, the judgment underscores the significance of the manner in which electronic data is accessed and documented. The presence of the importer or their representatives during data extraction, the recording of such processes in panchanamas, and the systematic identification and authentication of extracted material assume critical importance in establishing evidentiary reliability. Equally, statements recorded under Section 108, Customs Act acknowledging the contents of such electronic records may, in appropriate cases, operate as a decisive factor in demonstrating “due compliance” with the statutory requirements. Where such statements remain uncontroverted, they may substantially reinforce the evidentiary value of the material relied upon and can be used against the parties.

From the perspective of the notice/co-noticee, the manner in which such electronic evidence is engaged with assumes equal significance. The absence of timely objection to the process of extraction, failure to dispute the authenticity of records, or lack of retraction of statements may, cumulatively, be construed as lending support to the admissibility of such evidence, notwithstanding the absence of a formal certificate.

While this approach reduces technical barriers that may otherwise impede adjudication, it simultaneously introduces a degree of subjectivity in assessing compliance under Section 138-C. The determination of what constitutes “due compliance” is thus likely to depend increasingly on the factual context, thereby expanding the evaluative role of adjudicating and appellate authorities.

Conclusion: Towards a pragmatic evidentiary standard

The law governing admissibility of electronic evidence has evolved from a regime of strict formal compliance to a more pragmatic and context-driven approach. While the Supreme Court in Arjun Panditrao case¹⁰ reaffirmed certification as a foundational safeguard, its observations in Suresh Kumar case demonstrate that compliance may, in appropriate cases, be inferred from the surrounding factual matrix.

This evolution reflects the practical realities of handling electronic evidence in contemporary investigations. At the same time, it necessitates careful calibration. The balance between flexibility and the preservation of evidentiary safeguards remains delicate, particularly in a regime where electronic records increasingly form the backbone of proceedings under the Customs Act.

The emerging trajectory suggests a shift towards substantive assurance of authenticity over rigid procedural form, with the focus likely to remain on whether the process of seizure, extraction, reproduction and reliance provides sufficient assurance of authenticity, integrity and reliability under Section 138-C.

From principle to practice: Key takeaways

From the perspective of assessees, Suresh Kumar case¹¹ highlights the need for a proactive response at the stage of search, seizure and investigation. Since “due compliance” under Section 138-C, Customs Act may be assessed from the surrounding factual matrix, assessees should ensure that the panchanama accurately records the devices seized, the persons present, the manner of sealing, and the process by which data is accessed or extracted. Where electronic data is copied, cloned or printed, objections regarding selective extraction, absence of forensic safeguards, incomplete data sets, or lack of independent verification should be raised contemporaneously.

Assessees must also exercise caution while making statements under Section 108, Customs Act. If electronic records are shown during examination, assessees should peruse and verify their contents, authorship, or authenticity, and remain mindful while making any admissions. Thus, timely objections, qualified statements, and requests for complete copies of the extracted documents may materially affect whether electronic evidence is ultimately treated as admissible and reliable.