The cabinet paper had proposed retired Rear Admiral Sharmal Fernando in her position.
Samaraweera said Charles, whom he had appointed, was an honest officer, but that he decided to remove her after considering certain of her administrative deficiencies.
He explained that Charles, as well as other top officials of the Customs and the Finance Ministry, had failed to achieve the revenue targets for the Customs last year.
The minister said a proper investigation would be conducted into the alleged frauds in the re-exportation of pepper, areca nuts and tobacco leaves, and in the importation of vehicles.
Meanwhile, a top finance ministry official, speaking to Sri Lanka Mirror, rejected claims by certain media that Charles had been reinstated for a three month period only.
Her appointment is unconditional, he said.