2006 (11) TMI 78 - AT - Customs

Medical Eqipment Alleged that appellant is not entitle for the benefit of Notification No. 64/88-Cus and accordingly demandfor duty and penalty After considering all the factor authority find the allegation right

Issues Involved
1. Validity of the Customs Duty Exemption Certificate (CDEC) post-rescission of Notification No. 64/88-Cus.
2. Legal implications of the repeal of Notification No. 64/88-Cus. on accrued rights and obligations.
3. Applicability of Section 6 of the General Clauses Act and Section 159A of the Customs Act.
4. Whether Diagnostic Centres are entitled to the benefits under Notification No. 64/88-Cus.
5. Legality of actions taken post-rescission of Notification No. 64/88-Cus.

Detailed Analysis

1. Validity of the Customs Duty Exemption Certificate (CDEC) Post-Rescission of Notification No. 64/88-Cus.
The appellants imported medical equipment availing the benefit of Notification No. 64/88-Cus., based on the CDEC issued by DGHS. The CDEC was later canceled by DGHS citing the Supreme Court's decision in 'Mediwell Hospital and Health Care Pvt. Ltd. v. UOI and Others.' The appellants argued that the cancellation of the CDEC after the repeal of Notification No. 64/88-Cus. was invalid. The Tribunal noted that the obligations under the notification subsisted beyond its rescission, and the cancellation of the CDEC was justified due to non-compliance with the notification's conditions.

2. Legal Implications of the Repeal of Notification No. 64/88-Cus. on Accrued Rights and Obligations
The appellants contended that the repeal of Notification No. 64/88-Cus. by Notification No. 99/94-Cus. meant that no action could be taken against them post-repeal. They cited various case laws, including the decision of the Hon'ble High Court of Madras in Apollo Hospitals Enterprises Ltd. v. UOI, to support their claim. However, the Tribunal observed that the repeal of the notification did not obliterate the obligations and liabilities incurred during its effective period. The Tribunal referred to multiple Supreme Court decisions affirming that repeal does not affect previous operations or liabilities incurred under the repealed notification.

3. Applicability of Section 6 of the General Clauses Act and Section 159A of the Customs Act
The Tribunal discussed the applicability of Section 6 of the General Clauses Act, which preserves rights, obligations, and liabilities accrued under a repealed enactment unless a contrary intention is evident. Additionally, Section 159A of the Customs Act, introduced with retrospective effect, was highlighted. This section ensures that the repeal of a notification does not affect any obligation or liability incurred under it. The Tribunal concluded that both these provisions supported the enforcement of obligations under Notification No. 64/88-Cus. even after its repeal.

4. Whether Diagnostic Centres are Entitled to the Benefits under Notification No. 64/88-Cus.
The Tribunal noted that the Supreme Court, in the Mediwell Hospital case, had held that Diagnostic Centres are not entitled to the benefits of Notification No. 64/88-Cus. This position was reaffirmed by a three-judge bench in the Faridabad CT Scan Centre case. The Tribunal emphasized that the appellant, being a Diagnostic Centre, was not entitled to the exemption from the beginning and had violated the notification's conditions by selling the imported equipment.

5. Legality of Actions Taken Post-Rescission of Notification No. 64/88-Cus.
The Tribunal examined whether actions could be taken against the appellants for violations detected after the rescission of Notification No. 64/88-Cus. It was argued that obligations under the notification should have been enforced before its repeal. However, the Tribunal clarified that the obligations incurred during the notification's effective period could be enforced even after its repeal. The Tribunal cited the Hon'ble Bombay High Court's decision in M/s. Shah Diagnostic Institute Private Limited v. UOI, which upheld the applicability of Section 159A of the Customs Act, allowing for post-rescission enforcement of obligations.

Conclusion
The Tribunal upheld the order of the Original Authority, confirming the demand for duty, confiscation of the medical equipment, and imposition of fines and penalties. The appeal was dismissed, affirming that actions for violations of Notification No. 64/88-Cus. could be taken even after its rescission, and Diagnostic Centres were not entitled to the benefits of the said notification.

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