IN THE HIGH COURT OF DELHI
S/SHRI Pradeep Nandrajog and Siddharth Mridul, JJ.
UNION OF INDIA Versus HARSH VARDHAN CHAUHAN
W.P. (C) No.5013 of 2010, decided on 24-11-2010
[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 Directorate General of Foreign Trade (hereinafter referred to as “DGFT”) under the provisions of Chapter 4 of Foreign Trade Policy 2004-2009 and paragraph 4.56.1(b) of Handbook of Procedures authorizing them to effect duty free import of gold bars having 99.5% purity, with an obligation to manufacture and export gold jewellery studded with synthetic semi-precious and imitation stones having 7% value addition. On the basis of advance licences granted to them, REL and AEL imported duty free gold manufactured the final product and exported the same; as claimed by them and in respect whereof they filed the necessary documents with the concerned department.
On 11-2-2005 DGFT issued Policy Circular No.18/2004-09, which reads as under:-
“Sub : Minimum Value addition norms and calculation of value addition for the studded jewellery items.
Letters have been received from the licensing and customs authorities about the appropriate minimum value addition required for the export of studded gold/silver/platinum jewellery and how the value addition for such export is to be calculated.
Handbook of Procedures Volume (2004-09) contains clear provisions regarding the above. These are reiterated for clarity.
Minimum value Addition
The studded Jewellery items falls under Para 4.56 1 (a) of Handbook of Procedures Volume I (2004-09), and accordingly the minimum value addition required for studded gold/silver/platinum jewellery of all types is 15%.
How to calculate Value Addition
Para 4.68 of the Handbook of Procedures Volume I (2004-09) is clear about how the value addition is to be calculated. It is reproduced here for ready reference.
“Value Addition- Under the scheme for export of Jewellery. The value addition shall be calculated with reference to the CIF value of gold/silver/platinum which shall be equivalent to the total outflow of foreign exchange on account of gold/silver/platinum content in the export product plus the admissible wastage. Wherever gold on loan basis has been given the CIF value shall also include interest paid in free foreign exchange to the foreign supplier.”
The above Para does not talk about CIF value of the imported gold only, rather it talks about total outgo of foreign exchange with reference to the gold content in export product plus the admissible wastage.
On the basis of above Para it is reiterated that the CIF value 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.”
On 21-12-2006, the Chief Commissioner Customs issued an office order relevant portion whereof reads as under;-
“At the Chief Commissioners Conference held on 15th and 16th December 2006, the Member (Customs) desired that a work Plan should be chalked out for disposal of pendency’s in key areas. Accordingly, I have devised a work Plan which is enclosed herewith. The Disposals are time-bound and the Member has stated that performance in these areas will be taken into account for assessing the Zonal/Commissionerate performance for the year.
I would therefore request you to make all out efforts to see that the time schedule for disposals is adhered to and disposals in all key areas are maximized.
Work Plan for Disposal of Pendency in Key Result Areas
“1. Adjudication
………………
WORK PLAN : The priority for disposal will be for cases pending over one year cases involving 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.
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 Jewellery where per gram value of precious metal is less than per gram value of gold-Regarding.
Sir,
Please refer to your letter dated 9-4-2007 referring to your earlier letters dated 19-1-2006 and 15-1-2007 on the above subject. The matter was deliberated upon in this Directorate in Detail taking into account the following facts furnished by Regional Authorities concerned:-
“1. M/s. Adani Exports have not availed any benefit under DFCB and Target Plus Scheme for the exports of studded Jewellery for the period of these exports under consideration under advance authorization scheme.
2. Orders of Hon’ble High Court of Karnataka directing the RA to consider value addition to be 7% against which no stay could be obtained till date.
………..
Accordingly, it is informed that for the exports of studded jewellery effected prior to 11-2-05 (i.e. prior to issuance of the Policy Circular No.18 dated 11-2-05) where per gram value of precious stones is less than per gram value of gold, the said minimum value addition will be 7% and not 15%, Pending Export Obligation discharge applications may be processed accordingly.” (Emphasis Supplied)
Vide order dated 10-2-2009 [2009 (243) E.L.T. 115 (Tri.-Bang.) CESTAT dismissed the appeal filed by the petitioner against the adjudication order dated 31-1-2007 passed by the respondent. The relevant 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 evidence adduced by the department in the form of report received from the Consulate of India Dubai….
“8.2 We would first deal with the issue of the revenue as to whether the Adjudicating Authority was in error to decide the show cause notice when an appeal is pending before the Division Bench of Hon’ble High Court of Karnataka…
It was submitted by the Special Counsel for revenue that revenue has challenged the above order in a writ Appeal and the same is admitted in the Hon’ble High Court of Karnataka. On a specific query from the bench, It was submitted that the Division Bench of Hon’ble High court of Karnataka has not stayed the order of the Hon’ble Single Judge. It is settled law, that unless there is a stay of the order by higher judicial forum, the order is binding. We note that in the absence of any stay of the order in W.P. No. 7256 of 2005, the learned Adjudicating Authority as not in error in taking up the matter for adjudication as the show cause notice is dated 18-11-2005. We note that the action of the Adjudicating Authority to take up the matter for disposal vide order-in-original dated 31-1-2007 cannot be faulted for the reason that writ Appeal is pending before Division Bench.
8.3 The next issue for disposal is whether the impugned order needs to be set aside and the matter should be remanded back to the Adjudicating Authority only on the ground that the Commissioner should have awaited the outcome of the writ Appeal filed by revenue. In our considered opinion this proposition does not contain any merit. On perusal of the impugned order we find that being a speaking order does not require any remand.
“9.1 We take up the challenge of the impugned order by the revenue on merits. We find that the grounds on which revenue has filed appeals are as under:-
It can be seen from the above reproduced grounds of appeal that the revenue’s challenge is only on the ground that the Adjudicating Authority has not considered the evidence produced by the revenue in form of report received from Consul (Economics), consulate General of India, Dubai, UAE. The importers at Dubai have cleared the consignment of gold scrap. Mis-declaration charges were dropped based on the documents submitted by the respondents without causing any verification and the importers were related to respondents. We gave anxious considerations to the oral and written 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 assesse. 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 noted that the relevant documents produced by the respondents to support their case were attested by an officer from Indian Consulate Dubai UAE while the very same documents produced by the revenue through Indian Consulate were not attested. Suffice to say that the documents produced by respondent has more evidentiary value, we hold that the reliance placed by Adjudicating Authority on such documents (as produced by the respondents) cannot be faulted with.
“10 In totality on the facts and circumstances of the case we find that impugned order passed by the Adjudicating Authority is correct legal and cannot be faulted with.
11. In view of the above reasonings, we are of the considered view that the impugned order needs to be upheld and we do so and reject the appeals filed by the revenue.”
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 21-1-2009 the Tribunal allowed the original Application filed by the respondent.
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 assesse 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 disciplinary action against the respondent. In appeal, the question formulated by Supreme Court for adjudication was whether an authority enjoys immunity from disciplinary proceedings with respect to matters decided by him in exercise of quasi-judicial functions. After examining ealy decisions of Supreme Court namely V.D. Trivedi v. union of India (1993) 2 SCC 55, union of India v. R.K. Desai-(1993) 2 SCC 49, union of India v. A.K. Saxena – (1992) 3 SCC 124 and S. Govinda Menon v. Union of India, AIR 1967 SC 1274, a three-Judge Bench allowed the appeal. The relevant observations made by the Court are being noted herein under as under:-
“28. Certainly, therefore the officer who exercises judicial or quasi-judicial powers acts negligently or recklessly or in order to confer undue favour on a person is not acting as a Judge. Accordingly, the contention of the respondent has to be rejected. It is important to bear in mind that in the present case, we are not concerned with the correctness or legality of the decision of the respondent but the conduct of the respondent in discharge of his duties as an officer. The legality of the orders with reference to the nine assessments may be questioned in appeal or revision under the Act. But we have no doubt in our mind that the Government is not precluded from taking the disciplinary action for violation of the Conduct Rules. Thus we conclude that the disciplinary action can be taken in the following cases:
“(i) Where the officer had acted in a manner as would reflect on his reputation or integrity or good faith or devotion to duty;
(ii) if there is prima facie material to show recklessness or misconduct in the discharge of his duty;
(iii) if he has acted in a manner which is unbecoming of a government servant;
(iv) if he had acted negligently or that he omitted the prescribed conditions which are essential for the exercise of the statutory powers;
(v) if he had acted in order to unduly favour a party;
(vi) if he had been actuated by corrupt motive however small the bribe may be because Lord Coke said long ago though the bribe may be small, yet the fault is great.’
29. The instances above catalogued are not exhaustive. However we may add that for a mere technical violation or merely because the order is wrong and the action not falling under the above enumerated instances, disciplinary action is not warranted. Here we may ufter a word of caution Each case will depend upon the facts and no absolute rule can be postulated.”
In the decision reported as Zunjarrao Bhikaji Nagarkar v. Union of India (1997) 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 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 judgmed, carelessness or negligence in performance of duty. In the case of K.K. Dhawan the allegation was of conferring undue favour upon the assesses. It was not a case of negligence as such…… In the present case it is not that the appellant did not impose penalty because of any negligence on his part but he said it was not a case of imposition of penalty. We are however, of the view that in a case like this which was being adjudicated upon by the appellant imposition of penalty was imperative. But then there is nothing wrong or improper on the part of the appellant to form an opinion that imposition of penalty was not mandatory. We have noticed that the Patna High Court while interpreting Section 325 IPC held that imposition of penalty was not mandatory which again we have said is not a correct view to take. A wrong interpretation of law cannot be a ground for misconduct. Of course it is a different matter altogether if it is deliberate and actuated by mala fides.
“4.1 When penalty is not levied the assesse certainly benefits. But it cannot be said that by not levying the penalty the officer has favoured the assesse or shown undue favour to him. There has to be some basis for the disciplinary authority to reach such a conclusion even prima facie. The record in the present case does not show if the disciplinary authority had any information within its possession from where it could form an opinion that the appellant showed “favour” to the assesse by not imposing the penalty. He may have wrongly exercised his jurisdiction. But that wrong can “be corrected in appeal. That cannot always form a basis for initiating disciplinary proceedings against an officer while he is acting as a quasi-judicial authority. It must be kept in mind that being a quasi-judicial authority, he is always subject to judicial supervision in appeal.
“42. Initiation of disciplinary proceedings against an officer cannot take place on information which is vague or indefinite. Suspicion has no role to play in such matter…..
43. If every error of law were to constitute a charge of misconduct, it would impinge upon the independent functioning of quasi-judicial officers like the appellant. Since in sum and substance misconduct is sought to be inferred by the appellant having committed an error of law, the charge-sheet on the face of it does not proceed on any legal premise rendering it liable to be quashed. In other words to maintain any charge-sheet against a quasi-judicial authority something more has to be alleged than a mere mistake of law, e.g., in the nature of some extraneous consideration 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 where under 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.”
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 Judicial/quasi-judicial unless there was an element of Moral turpitude. After placing reliance upon the decision of Supreme Court in Nagarkar’s case (supra), the Tribunal allowed the application filed by the respondent on the ground that disciplinary proceedings would not lie against an officer discharging quasi-judicial functions unless it was established that the officer concerned had obtained an undue advantage thereby or in connection therewith. The appellant challenged the decision of the Tribunal before the High Court. The High Court came to the conclusion that since no ulterior motive was alleged against the respondent the Tribunal was correct in quashing the disciplinary proceedings initiated against the respondent. In appeal Supreme Court set aside the decisions passed by the Tribunal and the High Court. In coming to the said conclusion, Supreme Court overruled the ratio laid down in Nagarkar’s case (supra). The relevant observations made by the Court are being noted herein under:-
“8. In 1999 another Bench of two Judges in Zunjarrao Bhikaji Nagarkar considered and referred to these earlier decisions. However the Court appears To have reverted back to the earlier view of the matter where disciplinary action could be taken against an officer discharging Judicial functions only where there was an element of culpability involved. Since in that particular case there was no evidence whatsoever that the employee had shown any favour to the assesse to whom refund had been made, it was held that the proceedings against him would not lie. In fact the Court set aside the disciplinary proceedings at the stage of the issuance of charge-sheet to the charged officer.
“9. In our opinion, Nagarkar case was contrary to the view expressed in K.K. Dhawan case. The decision in K.K. Dhawan Being that of a Larger bench would prevail. The decision in Nagarkar case therefore does not correctly represent the law. Inasmuch as the impugned orders of the Tribunal and the High Court were passed on the law enunciated in Nagarkar case this appeal must be allowed. The impugned decisions are accordingly set aside and the order of punishment upheld. There will be no order as to costs.”
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 representation made by the respondent. In such circumstances, the Tribunal was well-Justified in testing the correctness of the charge sheet issued against the respondent.
It is apparent that an adjudication order passed by the respondent while exercising quasi-judicial power was the foundation of the charge sheet and show of technicalities at the heart of the charge was the allegation that the order was passed contrary to law to confer benefit upon the assesses. Meaningfully read the charge sheet seeks to inculpate the respondent with reference to his acts performed in a quasi-judicial functioning and thus we hold that the Tribunal has returned a correct verdict.
taxind_2010_hc_del_wpc_5013
SUPREME COURT JUDGEMENTS
