TMI Blog2010 (11) TMI 811X X X X Extracts X X X X X X X X Extracts X X X X ..... the department and REL & AEL, the department was wholly unjustified in issuing a charge sheet against the respondent in respect of Article II, adjudication order passed by the respondent while exercising quasi-judicial power was the foundation of the charge sheet and shorn of technicalities, at the heart of the charge was the allegation that the order was passed contrary to law to confer benefit upon the assessees. Meaningfully read, the charge sheet seeks to inculpate the respondent with reference to his acts performed in a quasi-judicial functioning and Tribunal has returned a correct verdict, petition is dismissed. - W.P. (C) No. 5013 of 2010, - - - Dated:- 24-11-2010 - Pradeep Nandrajog and Siddharth Mridul, JJ. S/Shri R.V. Sinha, A.S. Singh and R.N. Singh, Advocates, for the Petitioner. S/Shri Kailash Vasdev, Sr. Advocate with Priyadarshi Manish, Ms. Anjali Manish, Advocates, for the Respondent. [Judgment per : Pradeep Nandrajog, J.]. In the financial year 2004-2005, two companies namely Rajesh Exports Limited (hereinafter referred to as REL ) and Adani Exports Limited (hereinafter referred to as AEL ) obtained Advance Licences from the office of the Di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of gold will be equivalent to the total outflow of foreign exchange on account of gold content in the export product plus the admissible wastage and this will include imported gold and gold procured from other sources used in the export product. 3. Being aggrieved by the aforesaid circular issued by DGFT, REL filed a petition bearing No. 7256/2005 (GM-RES) under Articles 226 and 227 of Constitution of India before High Court of Karnataka, seeking quashing of the said policy circular and sought issuance of a direction to DGFT to redeem the licences in respect of which REL had completed exports in accordance with Foreign Trade Policy 2004-2009 by achieving the required value addition. In the said petition, it was contended on behalf of REL that studded gold jewellery items fall within paragraph 4.56.1(a) of Handbook of Procedures Volume I (2004-09) and therefore minimum value addition required for studded gold jewellery items is 7%; that they had utilized gold which was purchased locally from the open market in manufacturing studded gold jewellery items and that the value of local gold should also be taken into consideration in determining the value addition in terms of the policy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... revenue over Rs. one crore and cases pending over six months. The plan for disposal is as under :- All cases over one year to be disposed of by 31-12-2006. All cases involving revenue over Rs. 1 crore by 31-3-2007 with a minimum disposal of six cases per month. 50% of the cases pending over six months to be disposed of by 31-3-2007. .. 9. Disposing of the show cause notice, vide order dated 31-1-2007, the respondent who was then posted as Commissioner Customs, Bangalore determined that the department has not been able to prove the charges levelled by it against REL and AEL in the show cause notice dated 18-11-2005 and thus consequently the demand of customs duty raised in the said show cause notice was dropped. The operative portion of the order dated 31-1-2007 reads as under :- 79. In view, of the above it is held and Ordered as below:- I(1) The imported gold as per description and condition of the Advance Licence and has been utilized for manufacture and export of gold jewellery. The said exported jewellery has also not been misdeclared at the time of export. Hence, no case is made out for confiscation of imported gold i.e. 21428.643 kgs of gold under Section 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd., Ahemdabad, in case of any adverse judgment delivered by the Division Bench of Hon ble Karnataka High Court, in respect of the points/issues raised in the writ petition No. 7256 of 2005 (GM-RES), (against which a Writ Appeal against the present judgment of the Karnataka High Court has been filed) and the same would be released only after the judgment is received and/or on receipt of directions from the joint DGFT Bangalore/Ahemdabad. (Emphasis Supplied) 10. On the next day i.e. 1-2-2007, the respondent got transferred to DRI, Bangalore. 11. Aggrieved by the order dated 31-1-2007 passed by the respondent in his capacity as Commissioner Customs, Bangalore the department filed an appeal under Section 129A(1) of Customs Act, 1962 before Customs, Excise, Sales Tax Appellate Tribunal (hereinafter referred to as CESTAT ), South Zonal Branch, Bangalore. 12. On 24-8-2007 Deputy Director General of Foreign Trade issued a letter to Joint Director General of Foreign Trade regarding the value addition required in case of AEL, the relevant portion whereof reads as under :- Subject : Clarification on the applicable Value Addition against export of Studded ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e case of M/s. Rajesh Exports Ltd, Bangalore and M/s. Adani Exports Ltd., Ahemdabad dropping the proceedings initiated against the aforesaid exports for recovery of Customs duty foregone on 21428.693 KGs Gold imported by them duty free under Advance License Scheme under Foreign Trade Policy. Bangalore Customs (C.I.U.) investigated this case relating to the irregularities in exports made by the above firms and on completion of this investigation, a Show Cause Notice C. No. VIII/10/56/2005-Cus. Adj. dated 18-11-2005 was issued to M/s. Rajesh Exports Ltd., Bangalore and M/s. Adani Exports Ltd., Ahemdabad demanding Customs duty of Rs. 54,64,31,672/-, besides proposals for imposition of fine and penalties under various provisions of the Customs Act, 1962. Shri H.V. Chauhan at the time of adjudication was fully aware of the fact that the Department s appeal is pending in this matter before the Hon ble High Court of Karnataka. Further Shri H.V. Chauhan went ahead and adjudicated the case instead of transferring it to Call Book as per CBEC Circular No. 162/73/95 CX., dated 14-12-95 and 719/35/2003 CX., dated 28-5-2003. The hasty action on the part of Shri H.V. Chauhan, in dropping the proc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f dropping the case led to loss of revenue of Rs. 54,64,31,672/- to the Government. By the aforesaid commissions and omissions, Shri H.V. Chauhan while working as Commissioner of Customs, Bangalore failed to maintain absolute integrity, devotion of duty and acted in a manner unbecoming of a Government servant and thereby violated the provisions of Rule 3(l)(i), (ii) and (iii) of C.C.S. (Conduct) Rules, 1964. STATEMENT OF IMPUTATION IN SUPPORT OF ARTICLES OF CHARGES FRAMED AGAINST SHRI H.V. CHAUHAN, THE THEN COMMISSIONER OF CUSTOMS, BANGALORE Articles I II .. 5. As the said matter is pending before the Division Bench of High Court, it was not legal and proper on the part of Shri H.V. Chauhan to take a final decision with regard to the value addition or other matters in the light of instructions issued by Central Board of Excise and Customs in their Circular No. : 162/73/95/CX., dated 14-12-95 and 719/35/2003 CX., dated 28-5-2003 warranting such categories of cases to be transferred to call book pending decision or proceedings before the Court. Shri H.V. Chauhan as Commissioner of Customs was bound to follow the aforesaid instructions of the Board directing that cases w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt portion of the appellate order reads as under :- . 4. Learned Special Counsel Shri P.R.V. Ramanan appearing for the revenue would submit that the impugned order is not correct for more than one reason. It is his submission that the Adjudicating Authority should have waited for the outcome of the appeal filed by the revenue before Division Bench of Hon ble High Court of Karnataka. It is his submission that the Adjudicating Authority has overlooked para 28 of the Show Cause Notice, wherein it is indicated that the revenue reserves right to add/alter/amend/modify the Show Cause Notice.... 4.3 It was submitted that the Commissioner accepted the evidentiary value of the copies of Bills of Entry purported to have been filed by the importers at Dubai, which were submitted at the time of the personal hearing, without causing any enquiries as to their veracity. In fact prima facie comparison of the said copies with the copies of Bills of Entry forwarded by the Indian Consulate revealed many discrepancies such as : . 7 Learned counsel for revenue in rejoinder would submit that the Adjudicating Authority has not appreciated the entire evidence on record and rejected the eviden ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submissions made by the learned Special Counsel for revenue. We find that the Adjudicating Authority, on the facts that exports were of gold jewellery manufactured/made of imported gold, has held as under :- . 9.2 The next contention of the revenue is that the Adjudicating Authority has not properly considered the evidence adduced by the revenue in form of report received from the Indian Consulate, Dubai, UAE.... 9.3 We find that the present case before us, revenue has not given the copy of the report received from Indian Consulate to establish that the declarations before the Customs Authorities at Dubai were from authentic source and further, the said documents were copies of the copies obtained from some sources. We are of the considered view that unauthenticated documents cannot be relied upon for pressing home charges of mis-declaration on an assessee. On the contrary, we find that the respondents have produced certified copies of the Bills of Entry filed by the importer before Customs authorities at Dubai. We are of the view that the finding of the Adjudicating Authority on this point is very relevant, which are as under : . It is to be noted that the relevant do ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... being stayed by the Division Bench he was fully justified in proceeding ahead with the matter. He highlighted before the Tribunal that his representations to the competent authority to decide whether the charge sheet should be withdrawn in light of the submissions made by him have not even been responded to, much less considered. The petitioner opposed the Original Application filed by the respondent by urging that the charge sheet could not be interdicted till the disciplinary proceedings concluded for the reason merits of the controversy would be decided only after the inquiry was completed. It was thus urged that the Original Application merited dismissal. 20. After holding that the Tribunal has ample powers to test the correctness of the act of the disciplinary authority of issuing the charge sheet to an employee in respect of an order passed by him in his capacity as quasi-judicial authority and holding that there was no occasion for the department to issue a charge sheet to the respondent in respect of an adjudication order passed by him when CESTAT had repelled the challenge of the department against the said adjudication order, vide impugned judgment and order dated 21-1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... view of his order being upheld by CESTAT the charge sheet should be withdrawn. 24. The first and foremost question which has arisen for consideration in the present case is when can an action be taken against an officer with respect to his performing quasi-judicial functions. 25. The leading decision on the point is the decision of Supreme Court reported as Union of India v. K.K. Dhawan - (1993) 2 SCC 56. In the said case, the respondent was working as an Income-Tax Officer. A charge sheet was issued to him proposing to hold disciplinary inquiry against him under Rule 14 of Central Civil Services (Classification, Control and Appeal) Rules 1965. In the statement of charges framed against the respondent it was alleged that the respondent completed assessment of nine firms in an irregular manner, in undue haste and apparently with a view to conferring undue favor upon the assesses concerned . An application was filed by the respondent before the Tribunal against the proposed inquiry, which application was allowed on the ground that since the assessment orders passed by the respondent as Income-Tax Officer were quasi-judicial the same could not have formed the basis of disciplinar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y action is not warranted. Here, we may utter a word of caution. Each case will depend upon the facts and no absolute rule can be postulated. (Emphasis Supplied) 26. In the decision reported as Zunjarrao Bhikaji Nagarkar v. Union of India - (1999) 7 SCC 409 = 1999 (112) E.L.T. 772 (S.C.) the appellant who was posted as Collector of Central Excise, Nagpur challenged the charge sheet issued against him in respect of an adjudication order passed by him, which charge sheet was quashed by Supreme Court. After examining its earlier decision in K.K. Dhawan s case (supra) and the other decisions on the point, the Court observed as under :- When we talk of negligence in a quasi-judicial adjudication, it is not negligence perceived as carelessness inadvertence or omission but as culpable negligence. This is how this Court in State of Punjab v. Ex-Constable Ram Singh interpreted misconduct not coming within the purview of mere error in judgment, carelessness or negligence in performance of duty. In the case of K.K. Dhawan the allegation was of conferring undue favour upon the assessees. It was not a case of negligence as such . In the present case, it is n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion influencing the quasi-judicial order. Since nothing of the sort is alleged herein the impugned charge-sheet is rendered illegal. The charge-sheet, if sustained, will thus impinge upon the confidence and independent functioning of a quasi-judicial authority. The entire system of administrative adjudication whereunder quasi-judicial powers are conferred on administrative authorities, would fall into disrepute if officers performing such functions are inhibited in performing their functions without fear or favour because of the constant threat of disciplinary proceedings. (Emphasis Supplied) 27. In the decision reported as Union of India v. Duli Chand - (2006) 5 SCC 680 = 2007 (207) E.L.T. 166 (S.C.) the question which has arisen for consideration before a three-Judge Bench of Supreme Court was whether disciplinary action can be taken against an employee on the ground that the employee had been found to be grossly negligent while discharging quasi-judicial functions. The respondent challenged the initiation of disciplinary proceedings against him before the Tribunal on the ground that no disciplinary proceedings would lie against an officer discharging ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inst the respondent are that while passing adjudication order dated 31-1-2007 he unduly favored AEL REL. Be it noted here that In K.K. Dhawan s case (supra) wherein similar allegations were leveled against the officer therein it was held by Supreme Court that such allegations can form the basis of initiation of disciplinary proceedings against the officer discharging quasi-judicial functions. 30. Whether the Tribunal was justified in quashing the charge sheet issued against the respondent at the very threshold? 31. As already noted herein above, the respondent made a representation dated 24-2-2009 to the department challenging the validity of the charge sheet issued against him by bringing a subsequent development to the notice of the department, which development had a very material bearing on the validity of the said charge sheet. The development pointed out by the respondent was that the CESTAT had dismissed the appeal preferred by the department against the adjudicating order dated 31-1-2007 passed by the respondent, which order formed the basis of disciplinary action initiated against the respondent. However, the department chose not to pay any heed to the said represent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t acted in a haste manner in proceeding with the matter in question and not awaiting the outcome of the appeal filed by the department. Consequently, the department was wholly unjustified in issuing a charge sheet against the respondent in respect of Article I. 35. As regard Article II framed against the respondent is concerned, suffice would it be to state that grounds similar to irregularity (ii) were raised by the department before the CESTAT. (See the contents of paras 4.3, 7, 9.1 and 9.2 of the order of the CESTAT, noted in foregoing paras). After examining the adjudicating order passed by the respondent in great detail, the CESTAT did not find any merit in the said grounds raised by the department and held that the respondent had correctly appreciated the documentary evidence adduced by the department and REL AEL. (See the contents of para 9.3 of the order of the CESTAT, noted in foregoing paras). In such circumstances, the department was wholly unjustified in issuing a charge sheet against the respondent in respect of Article II. 36. It is apparent that an adjudication order passed by the respondent while exercising quasi-judicial power was the foundation of the charge ..... X X X X Extracts X X X X X X X X Extracts X X X X
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