2005 (12) TMI 426 - AT - Customs

Issues Involved:
1. Cancellation of Customs Duty Exemption Certificate (CDEC) without a hearing.
2. Definition of "hospital" under Customs Notification No. 64/88-Cus.
3. Eligibility of diagnostic centers for Customs Notification No. 64/88-Cus.
4. Requirement of in-patient facilities for availing Customs Notification No. 64/88-Cus.
5. Effect of rescinding Customs Notification No. 64/88-Cus. on accrued benefits and liabilities.
6. Continuous obligation to fulfill conditions of Customs Notification No. 64/88-Cus. post-repeal.

Detailed Analysis:

1. Cancellation of Customs Duty Exemption Certificate (CDEC) without a hearing:
The appellant argued that the DGHS cancelled the CDEC without granting an opportunity to explain their case, thus violating the principles of natural justice. The Commissioner did not address this contention. Reference was made to the decision in Apollo Hospitals Enterprise Limited v. Union of India, which supports the need for a hearing before cancellation.

2. Definition of "hospital" under Customs Notification No. 64/88-Cus.:
The Commissioner held that the appellants were not a hospital but only a diagnostic center. However, it was argued that for the purpose of extending the benefit of Notification No. 64/88-Cus., the term "hospital" includes diagnostic centers. This interpretation is supported by the case of Gujarat Imaging & Research Institute v. Collector of Customs, Bombay, where it was held that diagnostic centers are eligible for the benefits of the notification.

3. Eligibility of diagnostic centers for Customs Notification No. 64/88-Cus.:
The case of Gujarat Imaging & Research Institute v. Collector of Customs, Bombay was cited to argue that diagnostic centers are entitled to the benefits of Notification No. 64/88-Cus., provided they satisfy the conditions of the notification. The appellants claimed they provided free diagnostic services and had 10 beds available for in-patients, thus meeting the notification's requirements.

4. Requirement of in-patient facilities for availing Customs Notification No. 64/88-Cus.:
One ground for denying the notification benefit was the lack of in-patient facilities. However, inspection reports indicated that the appellants provided free OPD services, including CT scans and X-rays. The appellants also claimed to provide 10 free beds for in-patients, challenging the assertion that they lacked in-patient facilities.

5. Effect of rescinding Customs Notification No. 64/88-Cus. on accrued benefits and liabilities:
Notification No. 64/88-Cus. was rescinded on 1-3-1994, but the CDEC was cancelled on 12-12-1997. The appellants argued that the demand for duty does not survive post-repeal, as the benefits accrued during the notification's operative period. This argument is supported by the decision in Apollo Hospitals, which states that the repeal of a statute does not affect the previous operation of the law during its operative period.

6. Continuous obligation to fulfill conditions of Customs Notification No. 64/88-Cus. post-repeal:
The Adjudicating Authority demanded duty based on the cancellation of the CDEC and the continuous obligation to fulfill the notification's conditions, as per the Mediwell Hospital case. However, the appellants argued that the obligation does not extend beyond the notification's repeal. The Madras High Court's decision in Apollo Hospitals supports this view, stating that liabilities can only be enforced for the period during which the notification was in force.

Conclusion:
The Tribunal noted that simply upholding the Adjudicating Authority's order based on the CDEC cancellation may not serve justice without addressing the interpretation of the Mediwell decision in light of the notification's repeal. Therefore, the Tribunal recommended referring the issue to a larger bench for clarification. The appeal was disposed of accordingly, and the case file was directed to be placed before the Hon'ble President for further action.

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