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2008 (6) TMI 118 - AT - CustomsHospital equipment exemption under Notification No. 64/88 condition of providing free treatment to 40% of out patients violated - Violation of post-import conditions imposed under Notification No. 64/88, leading to confiscation and demand contravention occurred before rescission of notification Custom Duty Exemption Certificates (CDEC) were withdrawn subsequently order of cancelling CDECs not challenged - exemption was rightly denied
Issues Involved:
1. Whether the decision of the Bombay High Court in the case of Wockhardt Hospital and Bombay Hospital have been rendered per incuriam. 2. Whether obligations imposed under Notification No. 64/88 regarding provision of free treatment are a continued obligation. 3. Whether the demands of duty were sustainable even though the original show cause notice either did not seek to recover any duty whatsoever or the original show cause notice did not identify or invoke any specific provision to sustain the proposed demand. 4. Whether the cancellation of Customs Duty Exemption Certificates (CDECs) can apply retrospectively. 5. Whether receipt of token amount like registration fee can be considered as breach of conditions of notification. 6. Whether treatment provided in free camps can be taken into account while calculating the limit of 40%. Issue-wise Detailed Analysis: Issue No. (i): Per Incuriam Decisions The appellants contended that the judgments of the Bombay High Court in Wockhardt Hospital and Bombay Hospital were rendered per incuriam as the court did not consider Section 130 of the Customs Act, 1962, which ousts its jurisdiction in matters involving the rate of duty. The appellants cited decisions of the Supreme Court to support their argument that decisions rendered without considering statutory provisions are per incuriam. However, the Tribunal held that it does not have the authority to declare a decision of the High Court as per incuriam and that the decisions in Wockhardt Hospital and Bombay Hospital were binding. Issue No. (ii): Continued Obligation The Tribunal held that the obligations under Notification No. 64/88 are continuous, as supported by the Supreme Court decision in Mediwell Hospital and subsequent High Court decisions. The Tribunal also held that the obligations continue even after the rescission of the notification on 1-3-94, as per the Bombay High Court decision in Shah Diagnostic Centre, and Section 159A of the Customs Act. Issue No. (iii): Sustainability of Duty Demands The Tribunal found that once an order of confiscation with an option to redeem is issued, duty automatically becomes payable, even if not specifically demanded in the show cause notice. This was supported by the Supreme Court decision in Jagdish Cancer and the Bombay High Court decisions in Wockhardt Hospital and Bombay Hospital. The Tribunal also noted that the limitation under Section 28 does not apply to duty demands arising from post-import violations of notification conditions. Issue No. (iv): Retrospective Cancellation of CDECs The Tribunal held that the withdrawal of CDECs can have retrospective effect, resulting in the denial of exemption ab initio. This was supported by the Supreme Court decision in Jaslok Hospital and other High Court decisions. The Tribunal also noted that the Customs authorities have no jurisdiction to question the validity of the cancellation of CDECs by the DGHS. Issue No. (v): Receipt of Token Amount The Tribunal held that charging a registration fee amounts to a violation of the conditions of the notification, as per the Karnataka High Court decision in Medical Relief Society of South Kanara. Therefore, the exemption was rightly denied in cases where registration fees were charged. Issue No. (vi): Treatment in Free Camps The Tribunal held that treatment provided in free camps cannot be taken into account while calculating the 40% limit for free treatment of outdoor patients. This was supported by the Kerala High Court decision in Maulana Hospital and the Karnataka High Court decision in Medical Relief Society of South Kanara. Individual Appeals: The Tribunal addressed each individual appeal based on the common issues and specific facts of each case. In cases where the appellants admitted to violations or where CDECs were withdrawn, the Tribunal upheld the orders of the Commissioner, including confiscation, duty demands, and penalties. In some cases, the Tribunal remanded the matter back to the Commissioner to consider the eligibility of other notifications such as Notification No. 65/88. Conclusion: The Tribunal provided a comprehensive analysis of the issues, upheld the binding nature of the High Court decisions, and confirmed the continuous obligations under Notification No. 64/88. The Tribunal also emphasized the applicability of duty demands upon confiscation and the retrospective effect of CDEC cancellations. Each individual appeal was addressed based on the specific facts and common issues, with some cases being remanded for further consideration of alternative notifications.
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