2005 (12) TMI 40 - HC - Customs

Petitioner, a society under Societies Act, using Hospital equipments Such society is entitled to get benefit of Not. 63/88 even if it is controlled by State Govt., not by Central Govt. Even if post importation conditions as per Not. 64/88 violated, benefit of Not. 63/88 cannot be denied

Summary

Issues:
Challenge to order by Deputy Director General of Health Services regarding customs duty exemption for hospital equipment.

Analysis:
The petitioner, a society operating a hospital for cancer patients, sought customs duty exemption under Notification No. 63/88-Customs. The certificate issued by the Directorate General of Health Services confirmed the petitioner's eligibility under the notification. However, subsequent inspections led to the withdrawal of Customs Duty Exemption Certificates (CDECs) by the authorities, citing non-compliance with post-importation conditions. The petitioner contested this decision, highlighting discrepancies in the interpretation of Notification No. 63/88 and 64/88 by the authorities.

The impugned order dated 24th August, 2004, focused on the petitioner's alleged default under Notification No. 64/88-Customs, with limited references to Notification No. 63/88. The critical paragraphs addressing the petitioner's entitlement under Notification No. 63/88 were 10 and 12 of the order. These paragraphs emphasized the requirement for a hospital to be controlled by the government for eligibility, misinterpreting the clause (c) of the notification. The court noted that the petitioner did not fall under clauses (a) or (b) but fulfilled the conditions of clause (c), which necessitated the hospital to be run by a society controlled by government authorities.

The court analyzed the language of Notification No. 63/88, emphasizing the independent applicability of each clause in the Table. It clarified that the petitioner's society did not need to be controlled by the government directly but by a society controlled by government entities. The court highlighted the error in linking the conditions of Notification No. 64/88 to the eligibility criteria of Notification No. 63/88, asserting that the benefit under the latter could not be withdrawn based on the former's violations. Consequently, the court quashed the impugned order and allowed the petition, with no costs imposed.

In conclusion, the judgment clarified the misinterpretation of eligibility criteria under Notification No. 63/88-Customs for customs duty exemption, emphasizing the distinct requirements of each clause in the notification's Table. The court's decision favored the petitioner's entitlement under the notification, highlighting the authorities' errors in applying post-importation conditions of another notification to withdraw benefits granted under Notification No. 63/88.