2015 (11) TMI 1231 - HC - Customs

Confiscation of the goods - import of medical equipments by Diagnostic Centre - benefit of Notification 64/88 - Seizure of duty free equipment - Held that - The import must be in consonance with the notification and of the goods permitted thereunder so also of the description set out therein. The further conditions are imposed and in larger public interest. The exemption itself is granted in public interest and with an intention to obtain medical equipment which may be state of the Art and ultra modern for proper and correct diagnosis and treatment of complicated medical ailments. The poor and down trodden section of the society also requires medical aid. Therefore such medical aid with the assistance of these equipments should be extended and with that purpose and object the conditions have been imposed. The fulfillment of these conditions have to be monitored and that is the duty of the customs authority. In these circumstances and the additional doubt created by the view taken by the Tribunal that even a Diagnostic Centre would qualify for exemption that in this case the Tribunal did not uphold the Commissioner s view and set aside the adjudication order. We do not find anything erroneous or patently illegal in such a course. It is not perverse either. Given the peculiar facts and circumstances and the long time gap the Tribunal has taken this view. We do not think that setting aside of the confiscation order and imposition of penalty in these circumstances really gives rise to any substantial question of law. - Decided against Revenue.

Summary

Issues Involved:
1. Whether the Tribunal was right in law in setting aside the order for imposition of penalty on the importer and the proprietor.
2. Whether the Tribunal was right in law in setting aside the order for confiscation of the goods.
3. Whether the importers are liable to pay duty due to the violation of notification conditions and utilization of imported items for their full life.

Issue-wise Detailed Analysis:

1. Imposition of Penalty on the Importer and Proprietor:
The Tribunal set aside the penalty imposed on the importer and the proprietor by the Commissioner of Customs. The Commissioner had imposed penalties under section 112(a) of the Customs Act, 1962, for non-fulfillment of the conditions of Notification No.64/88 dated 1st March 1988. The Tribunal reversed this decision, emphasizing that the importer's Diagnostic Centre fell within the explanation to the Notification granting exemption from customs duty. The Tribunal noted that the withdrawal of the Customs Duty Exemption Certificate by the Director General of Health Services (DGHS) was effective from 17th December 1997, long after the importation in 1990. Therefore, the Tribunal concluded that the conditions for penalty under section 111(o) of the Customs Act were not met.

2. Confiscation of the Goods:
The Tribunal also set aside the order for confiscation of the imported medical equipment. The Commissioner had ordered the confiscation under section 111(o) of the Customs Act, 1962, allowing the goods to be redeemed on payment of a fine. The Tribunal found that the withdrawal of the Customs Duty Exemption Certificate by the DGHS in 1997 did not affect the importation that took place in 1990. The Tribunal held that the confiscation was not justified because the import was sanctioned based on the notification and the certification by the DGHS, which was valid at the time of importation. The Tribunal also noted that a Diagnostic Centre, even without indoor patient facilities, could qualify for the exemption under the Notification.

3. Liability to Pay Duty:
The High Court noted that the demand for duty was not confirmed by the Commissioner while adjudicating the show cause notice, and this part of the order was not challenged by the Revenue before the Tribunal. Therefore, question no.3 was deleted from consideration. The High Court observed that the Tribunal's decision was based on the fact that the import was made relying on a valid exemption notification and certification at the time. The subsequent withdrawal of the certificate did not retroactively affect the importation. The High Court agreed with the Tribunal's view and found no substantial question of law arising from the Tribunal's decision.

Conclusion:
The High Court dismissed the Revenue's appeal, upholding the Tribunal's decision to set aside the confiscation and penalties imposed by the Commissioner of Customs. The High Court found that the Tribunal's conclusions were based on the materials produced and the undisputed factual circumstances, and there was no error or illegality in the Tribunal's order. The appeal was dismissed with no order as to costs.