2016 (6) TMI 1003 - HC - Customs

Benefit of Exemption Notification No.64/88, dated 01.03.1988 after repealed by Notification No.99/1994, dated 01.03.1994. - Import of certain sophisticated machines for the Hospital and installation thereof - the appellant / respondent withdrew and cancelled all Customs Duty Exemption Certificate issued to the respondent / petitioner under Notification No.64/88-Cus, dated 01.03.1988 and also rejected the request for issuance of installation certificate. The respondent / petitioner, who benefited the tax exemption are bound to discharge their liability during the period when the said Notification No.64/88 was in force. The authorities can enforce such obligation only during that period when the notification was in force and not for the subsequent period. - In this case, notification was rescinded on 01.03.1994. The authorities are not correct in cancelling the Customs Duty Exemption Certificates issued under Notification No.64/88, dated 01.03.1988, saying that the respondent / petitioner had not complied with the conditions for the subsequent period, namely 1994 to 1998. - Decided in favor of assessee and against the revenue.

Summary

Issues:
- Compliance with conditions of Customs Notification No.64/88 for duty exemption
- Enforcement of liability post-rescission of Notification No.64/88

Compliance with conditions of Customs Notification No.64/88 for duty exemption:
The case involved a public limited company operating a hospital seeking benefit under Notification No.64/88 for duty exemption on sophisticated machines. The company fulfilled conditions like providing free treatment to a percentage of patients based on income levels and bed reservations. However, a change in management led to challenges in maintaining records. Despite efforts to comply and conduct awareness programs, a field inquiry in 1998 revealed non-compliance for the years 1995 to 1998. The company's Customs Duty Exemption Certificates were canceled, leading to a legal challenge.

Enforcement of liability post-rescission of Notification No.64/88:
The central issue was whether authorities could enforce liabilities after the rescission of Notification No.64/88. Citing Supreme Court judgments, the court clarified that obligations under the notification were binding only during its enforcement period (1988-1994). The court referred to cases emphasizing that the substitution of statutory provisions repeals the old rule and introduces a new one. Therefore, the authorities erred in canceling the duty exemption certificates for non-compliance post-rescission in 1994. The court dismissed the appeal, upholding the single judge's decision based on previous legal precedents.

In conclusion, the judgment focused on the company's compliance with Customs Notification No.64/88 conditions for duty exemption and the enforcement of liabilities post-rescission. The court emphasized the binding nature of obligations during the notification period and dismissed the appeal, affirming the single judge's decision based on legal precedents.