2010 (11) TMI 747 - AT - Customs

Import of medical equipment without payment of duty - Customs Duty Entitlement Certificate (CDEC) issued by the Director General of Health Services in terms of Notification No. 64/88-Cus., dated 1-3-1988 - CDECs issued by DGHS were withdrawn/cancelled by Authorities (DGHS) as per the letter dated 2-2-2001 on the ground that the appellant has failed to fulfill the conditions of the Notification - Held that - free treatment of 40% of the patients out-door patients and reserving of 10% of the beds for the poor people whose monthly income is less than Rs. 500/-, the verification caused by the adjudicating authority does indicate that the appellant has not been doing it so. In the absence of fulfillment of the conditions of the said Notification No. 64/88-Cus, the appellant is not eligible for the benefit of the Notification. Having not fulfilled the condition, the hospital equipment imported claiming the benefit of Notification No. 64/88-Cus. are liable for confiscation. The duty liability is also to be discharged, redemption fine in lieu of confiscation should be 10% of the value. Adjudicating authority will also consider this decision while coming to the conclusion for imposition of redemption fine on the appellants for the goods imported under Notification No. 64/88 and also will decide the penalties to be imposed on the appellants. The appeal disposed off in the above terms.

Issues:
1. Duty liability arising from imported medical equipment without payment of duty.
2. Cancellation of Customs Duty Entitlement Certificates (CDECs) by the Director General of Health Services.
3. Failure to fulfill conditions of Notification No. 64/88-Cus.
4. Confiscation of imported goods under Section 111(o) of the Customs Act 1962.
5. Appeal against order-in-original confirming demand of duties, confiscating goods, and imposing penalty.
6. Verification of claims by the adjudicating authority.
7. Eligibility for benefits under alternative notifications.
8. Compliance with conditions for free treatment and bed reservation for poor patients.
9. Requirement to discharge duty liability foregone by revenue authorities.
10. Imposition of redemption fine and penalties.

Analysis:
1. The case involves the duty liability arising from the import of medical equipment without payment of duty, based on Customs Duty Entitlement Certificates (CDECs) issued by the Director General of Health Services. The cancellation of CDECs led to a show cause notice, resulting in the confirmation of duties, confiscation of goods, and imposition of penalties by the Commissioner of Customs Hyderabad.

2. The appellant appealed the decision, citing the cancellation of CDECs and the failure to fulfill conditions of Notification No. 64/88-Cus. The Tribunal remanded the matter back to the adjudicating authority, emphasizing consideration of all connected issues. The adjudicating authority confirmed the demand and confiscation, leading to the current appeal.

3. The appellant argued for the eligibility of certain items under alternative notifications, which the adjudicating authority failed to address. The Tribunal found this omission unsustainable and set aside the order, remanding the matter for reconsideration based on the appellant's claims under different notifications.

4. Regarding the compliance with conditions for free treatment and bed reservation for poor patients under Notification No. 64/88-Cus, the adjudicating authority found the appellant had not fulfilled these requirements. The cancellation of CDECs and the failure to meet conditions rendered the appellant ineligible for the benefits of the notification, leading to confiscation of the imported goods and duty liability.

5. The adjudicating authority allowed redemption of the confiscated goods on payment of a fine, which included items the appellant claimed benefits under different notifications. The Tribunal directed a reevaluation of the redemption fine and penalties imposed, considering recent judgments on the matter. The case was disposed of with these terms, emphasizing adherence to principles of natural justice in the adjudication process.

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