1999 (8) TMI 142 - SC - Central Excise

Penalty - Words and Phrases - Adjudication - Error of law - Customs and Excise officers - Posting and transfer of officers

Summary

Issues Involved:
1. Whether the initiation of disciplinary proceedings against the appellant for not imposing a penalty under Rule 173Q of the Central Excise Rules, 1944 was justified.
2. Whether the levy of penalty under Rule 173Q was obligatory.
3. Whether there was sufficient material for the Central Government to form a prima facie opinion to proceed against the appellant on the charge of misconduct.

Detailed Analysis:

1. Initiation of Disciplinary Proceedings:
The appellant, while serving as Collector of Central Excise, Nagpur, passed an adjudication order where he confirmed the excise duty and confiscation of goods but did not impose any penalty on the assessee. This led to the issuance of a memorandum under Rule 14 of the Central Civil Services (Classification, Control, and Appeal) Rules, 1965, proposing an inquiry against him. The appellant challenged this initiation of disciplinary proceedings before the Central Administrative Tribunal (CAT) and subsequently in the Bombay High Court, both of which dismissed his challenge. The appellant then approached the Supreme Court.

2. Levy of Penalty under Rule 173Q:
The appellant argued that the adjudication order was quasi-judicial in nature, and he exercised his discretion in not imposing a penalty. He contended that the provisions of Rule 173Q were not mandatory and that the discretion vested with the adjudicating authority. The court examined Rule 173Q and Section 11AC of the Central Excise Act, 1944, noting that both provisions used the term "liable," indicating a legal obligation to impose a penalty. The court concluded that while the amount of the penalty was discretionary, the imposition of a penalty was obligatory under Rule 173Q.

3. Sufficient Material for Prima Facie Opinion:
The court scrutinized the material presented, including the adjudication order, the explanation provided by the appellant, and the direction of the Board to file an appeal. The court noted that the appellant had provided reasons for not imposing a penalty, citing a lack of conclusive evidence and the potential for the department to lose the case on appeal. The court emphasized that mere non-imposition of a penalty, without evidence of corrupt motive or extraneous consideration, could not constitute misconduct. The court further highlighted that the disciplinary authority must have reasonable basis and sufficient material to proceed against the officer, which was lacking in this case.

Conclusion:
The court held that the initiation of disciplinary proceedings against the appellant was not justified. It emphasized that quasi-judicial officers must be allowed to function independently without the constant threat of disciplinary action for errors in judgment. The charge of misconduct against the appellant was quashed, and the appeal was allowed with costs. The court also made observations on the language used in the counter affidavit by the Union of India and the paradoxical situation of transferring the appellant to an academy while disciplinary proceedings were pending against him.