2014 (8) TMI 809 - AT - Customs

Medical equipments were imported availing the benefit of Notification No.64/88-CUS, dated 01.03.1988 on the basis of certificate of DGHS - allegation that no free services being provided and hence not entitled for exemption - show cause notice was issued on the basis that appellant was charging nominal fee towards registration - Held that - Law is well settled that adjudication should base only on the allegation made in the show cause notice but not beyond that and denovo adjudication should not travel beyond the scope of the remand. The show cause notice being the foundation of adjudication that is required to expose the allegation in clear terms to enable an assessee to lead defence. Failure to do so, makes the adjudication fatal. Liability being intended to be determined, Show cause notice is the first course of natural justice. That should clearly bring out the allegation. Such proposition of law is laid down in the case of CCE Nagpur vs. Ballarpur Industries Ltd. 2007 (8) TMI 10 - SUPREME COURT OF INDIA and the CCE Mumbai vs. Toyo Engg. India Ltd. 2006 (8) TMI 184 - SUPREME COURT OF INDIA . The proposition of law in Brindawan Beverages Pvt. Ltd. Vs. Commissioner reported in 2007 (6) TMI 4 - SUPREME COURT OF INDIA and Metal Forging vs. Union of India reported in 2002 (11) TMI 90 - SUPREME COURT OF INDIA is also to the said effect. - Decided in favour of assessee.

Summary

Issues involved:
Challenge to order levying custom duty, denial of benefit of Notification No.64/88-CUS, confiscation of medical equipments, redemption opportunity, penalty imposition under Section 112(a) of the Customs Act, 1962.

Detailed Analysis:

1. Challenge to Order Levying Custom Duty:
The appeal contested an adjudication order imposing custom duty of Rs. 35,21,456, denying the benefit of Notification No.64/88-CUS, dated 01.03.1988, and confiscating medical equipments. The Show Cause Notice alleged non-fulfillment of conditions despite importing medical equipments under the said Notification based on a DGHS certificate. The appellant argued that the nominal fee charged was not for treatment, citing precedents like M.S. Ramaiah Medical Teaching Hospital Vs. CC, Bangalore. The appellant maintained that the adjudication order exceeded the scope of the Show Cause Notice, violating natural justice principles.

2. Denial of Benefit of Notification No.64/88-CUS:
The appellant asserted compliance with the notification by reserving beds and providing free treatment to outdoor patients. The appellant contended that the adjudication order went beyond the Show Cause Notice's allegations, which only mentioned nominal fees charged to outdoor patients. The appellant emphasized that the adjudication lacked a specific cause to deny the notification's benefits, citing instances of circulars issued to inform about reserved beds for the poor.

3. Penalty Imposition under Section 112(a) of the Customs Act, 1962:
The appellant argued that the adjudication order failed to specify the alleged violation of the notification's conditions, depriving the appellant of a proper defense opportunity. The appellant highlighted that the Tribunal's observations indicated a deviation from the Show Cause Notice's allegations, rendering the adjudication unsustainable and violative of natural justice principles.

4. Confiscation of Medical Equipments and Redemption Opportunity:
The appellant's defense centered on the contention that the nominal fee charged did not disqualify them from the notification's benefits. The appellant relied on legal precedents to support their argument that the adjudication order strayed beyond the Show Cause Notice's scope, leading to an unjust denial of the notification's benefits.

5. Legal Precedents and Principles of Natural Justice:
The appellant referenced various legal judgments to support their contentions regarding the violation of natural justice principles and the importance of adherence to the allegations in the Show Cause Notice. The appellant emphasized that adjudication should be based solely on the allegations in the notice and should not exceed its scope, as established by legal precedents such as CCE Nagpur vs. Ballarpur Industries Ltd. and CCE Mumbai vs. Toyo Engg. India Ltd.

In conclusion, the Tribunal found the re-adjudication order unsustainable as it exceeded the scope of the Show Cause Notice and failed to adhere to the principles of natural justice. The order was set aside, and the appeal was allowed, emphasizing the importance of maintaining the foundation of adjudication on the allegations in the notice and not deviating beyond its scope.