2007 (4) TMI 112 - AT - Customs

Confiscation fine and penalty -Alleged that appellant violated the post import conditions laid down in Notification No. 64/88 and accordingly redemption fine and penalty imposed on appellant - Held that allegation was correct but penalty amount set aside

Summary

Issues:
1. Denial of customs duty exemption for imported medical equipment.
2. Validity of C.D.E. Certificate and time limitation for demand of duty.
3. Classification of appellant as a diagnostic center and entitlement to exemption notification.
4. Confiscation of goods and imposition of redemption fine and penalty.

Analysis:

Issue 1: Denial of customs duty exemption
The appellant imported medical equipment under an exemption notification requiring free treatment for patients meeting specific income criteria. The Directorate General of Health Services rejected the exemption certificate request, leading to a Show Cause Notice for violation of post-import conditions. The Commissioner held the equipment liable for confiscation under Section 111(o) of the Customs Act, 1962, but imposed a redemption fine and penalty. The appellants challenged this decision.

Issue 2: Validity of C.D.E. Certificate and time limitation
The appellant argued that the cancellation letter from DGHS did not relate to the impugned item, and they possessed a valid C.D.E. Certificate during the Show Cause Notice issuance. The appellant contended that the demand was time-barred. However, the Tribunal found that the withdrawal of the C.D.E. Certificate and violation of post-import conditions justified the duty demand without a time limit.

Issue 3: Classification of appellant as a diagnostic center
The Revenue argued that the appellant, being a diagnostic unit and not a hospital, was not entitled to the exemption notification. Citing relevant case laws, the Revenue contended that diagnostic centers are ineligible for such benefits. The Tribunal agreed, emphasizing that being classified as a diagnostic center was sufficient to deny the exemption, regardless of technicalities regarding specific equipment.

Issue 4: Confiscation, redemption fine, and penalty
After reviewing the case records, the Tribunal found the appellant's defense weak due to being classified as a diagnostic center without in-patient facilities. The Tribunal upheld the confiscation of goods but reduced the redemption fine. The imposition of the penalty was set aside as the appellants had a valid exemption certificate. The Tribunal disposed of the appeal by modifying the redemption fine and canceling the penalty.

In conclusion, the Tribunal upheld the denial of customs duty exemption, justified the duty demand without a time limit, confirmed the classification of the appellant as a diagnostic center, and modified the redemption fine and penalty imposed in the original order.