2010 (11) TMI 811 - HC - Customs

Legality of the charge sheet issued against the respondent - Import of gold - duty free under Advance License Scheme under Foreign Trade Policy - adjudication order 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 - whether Shri H.V. Chauhan acting as a quasi-judicial adjudicating authority has relied on the copies of the Bills of Entry produced by the aforesaid exporters and gave no credence to the copies of Bills of Entry relied upon in SCN issued by the Department - Held that - 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. 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 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.

Summary

Issues Involved:
1. Validity of the DGFT Policy Circular No. 18/2004-09.
2. Legality of the adjudication order dated 31-1-2007 passed by the Commissioner of Customs, Bangalore.
3. Validity of the charge sheet issued against the Commissioner of Customs, Bangalore, for his adjudication order.
4. Powers of the Tribunal to quash the charge sheet at the threshold.

Issue-wise Detailed Analysis:

1. Validity of the DGFT Policy Circular No. 18/2004-09:
In 2004-2005, REL and AEL obtained Advance Licences from DGFT to import duty-free gold bars and export gold jewelry with a 7% value addition. On 11-2-2005, DGFT issued Policy Circular No. 18/2004-09, stating that the minimum value addition for studded jewelry should be 15%. REL challenged this circular before the Karnataka High Court, arguing that the required value addition was 7% as per the Handbook of Procedures. The Single Judge allowed REL's petition, directing DGFT to redeem the licenses based on 7% value addition.

2. Legality of the Adjudication Order Dated 31-1-2007:
After the Single Judge's decision, the Commissioner of Customs, Bangalore, issued a show-cause notice alleging duty evasion by REL and AEL. On 31-1-2007, the Commissioner dropped the demand, stating that the department failed to prove the charges. The Commissioner noted that the imported gold was used for manufacturing and exporting jewelry, and no misdeclaration occurred. He also stated that the Karnataka High Court's judgment on value addition was binding unless stayed.

3. Validity of the Charge Sheet Issued Against the Commissioner:
The department issued a charge sheet against the Commissioner, alleging undue favor to REL and AEL by dropping the duty demand. The charge sheet claimed that the Commissioner acted in haste, ignored evidence, and failed to follow departmental instructions. The Commissioner argued that his order was legally sound and upheld by CESTAT, thus disciplinary proceedings were unwarranted.

4. Powers of the Tribunal to Quash the Charge Sheet at the Threshold:
The Tribunal quashed the charge sheet, noting that the Commissioner's order was upheld by CESTAT, and no stay was granted by the Division Bench of Karnataka High Court. The Tribunal held that disciplinary action against a quasi-judicial officer should be taken with caution and only if there is prima facie evidence of misconduct. The Tribunal found no such evidence against the Commissioner, as his actions were in line with judicial and departmental guidelines.

Conclusion:
The High Court upheld the Tribunal's decision, stating that the charge sheet was unjustified. The court emphasized that disciplinary proceedings against quasi-judicial officers should be based on clear evidence of misconduct, not merely on the correctness of their decisions. The court dismissed the petition, affirming the Tribunal's judgment and protecting the independence of quasi-judicial authorities.