2002 (8) TMI 619 - AT - Customs

Demand and confiscation - Jurisdiction - Import of Hospital equipments - Hospital equipments - Demand - Limitation - Relevant date - Confiscation of goods

Issues Involved:
1. Jurisdiction for Recovery of Duty
2. Jurisdiction for Levy of Penalty and Payment of Fines
3. Time-barred Demands under Section 28 of the Customs Act

Detailed Analysis:

1. Jurisdiction for Recovery of Duty:
The primary issue was whether the action for recovery of customs duty for violation of the conditions of Notification No. 64/88-Cus. should be initiated by the Ministry of Health and Family Welfare (MOH) or by the Commissioner of Customs. The Tribunal concluded that the Customs authorities have jurisdiction to initiate proceedings for demanding duty and confiscating goods for violation of the conditions of the exemption notification. The Tribunal emphasized that the role of the MOH/DGHS was limited to pre-import conditions, such as issuing certificates for exemption. Post-importation conditions, including the use of imported hospital equipment, fall under the jurisdiction of the Customs authorities. The Tribunal referenced the judgment of the Apex Court in the case of Mediwell Hospital & Healthcare Pvt. Ltd., which held that the obligation under the exemption notification is continuous and that Customs authorities have the right to enforce the realization of customs duty if the conditions are violated.

2. Jurisdiction for Levy of Penalty and Payment of Fines:
The Tribunal examined whether the action initiated by the Commissioner of Customs towards the levy of penalties and payment of fines in lieu of confiscation of offending goods was within their jurisdiction. It was determined that the Customs authorities have the power to confiscate goods and impose penalties if the conditions of the exemption notification are violated. The Tribunal cited Section 111(o) of the Customs Act, which states that goods exempted from duty subject to any condition are liable to confiscation if the condition is not observed. The Tribunal also referenced the judgment of the Karnataka High Court in the case of Medical Relief Society of South Kanara, which supported the position that Customs authorities could initiate recovery proceedings and confiscate equipment if the conditions of the exemption notification were not met.

3. Time-barred Demands under Section 28 of the Customs Act:
The Tribunal addressed whether the demands raised by the Commissioner of Customs were barred by time in terms of the proviso to Section 28 of the Act. It was argued that the demands were time-barred as they were issued beyond the permissible period under Section 28. However, the Tribunal held that the obligation under Notification No. 64/88 is a continuous obligation, and the demand for recovery of customs duty could be enforced at any time during the availment of the exemption. The Tribunal referenced the judgment of the Apex Court in the case of Mediwell Hospital & Healthcare Pvt. Ltd., which held that the obligation to comply with the conditions of the exemption notification is continuous. Therefore, the demands for recovery of duty were not time-barred, as they arose from post-importation conditions and could be raised when the infringement was observed.

Conclusion:
The Tribunal held that the Customs authorities have jurisdiction to initiate proceedings for recovery of duty, levy penalties, and confiscate goods for violation of the conditions of the exemption notification. The demands for recovery of duty were not time-barred, as the obligation to comply with the conditions of the exemption notification is continuous. The appeals were sent back to the concerned Bench for further proceedings based on these findings.

← Previous Next →