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Issues involved: The judgment involves the interpretation of Customs Notification No. 64/88 regarding the import of medical equipment by a hospital certified by the Director-General of Health Services (DGHS), compliance with conditions for duty exemption, liability for duty payment, confiscation of goods, and imposition of penalty under the Customs Act, 1962.
Interpretation of Customs Notification No. 64/88: The appellants imported a Hitachi Whole Body CT Scanner under Bill of Entry dated 17-8-1992 without duty payment based on a Customs Duty Exemption Certificate (CDEC) from the DGHS. The Customs Notification required hospitals certified by DGHS to provide free treatment to outdoor and indoor patients meeting specific criteria. However, subsequent investigations revealed that the appellants did not meet these criteria, leading to a demand for duty payment and proposed confiscation of the goods. Compliance with Conditions for Duty Exemption: The Commissioner of Customs, relying on a Supreme Court judgment, denied the duty exemption to the appellants, demanded duty payment, and imposed a penalty for non-compliance with the Notification's conditions. The appellants contested the decision, arguing that the withdrawal of the CDEC by DGHS was set aside by the High Court, and they should not be liable for duty when the CDEC was in force. Liability for Duty Payment and Confiscation: The Tribunal rejected the argument that duty demand was not sustainable as long as the CDEC was in operation. It emphasized that the hospital must meet the conditions specified in the Notification to claim duty exemption, which the appellants failed to do. The Tribunal upheld the Commissioner's decision that the appellants were not entitled to the exemption and sustained the duty demand. Continuing Liability and Penalty Imposition: The Tribunal held that hospitals claiming duty exemption under the Notification had a continuing liability to comply with its conditions, even after its rescission. The demand for duty was deemed valid, and the penalty imposed by the Commissioner was reduced from Rs. 9 lakhs to Rs. 1 lakh due to excessive quantum. The goods were held liable for confiscation under the Customs Act, and the penalty under Section 112(a) was upheld with a reduced amount. Conclusion: The appeal was dismissed, but the quantum of penalty was reduced. The impugned order was sustained with a modification in the penalty amount. The judgment was pronounced on 12-2-2007 by the Appellate Tribunal CESTAT, CHENNAI.
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