2016 (12) TMI 568 - AT - Customs

Import of medical equipment - fulfillment of export obligation - Exemption under Notification No.64/88-Cus dated 01/03/1998 - Held that - We find that in the case of Mediwell Hospital and Health Care Pvt. Ltd. 1996 (12) TMI 51 - SUPREME COURT OF INDIA , it was held that The competent authority, therefore, should continue to be vigilant and check whether the undertakings given by the applicants are being duly complied with after getting the benefit of the exemption notification and importing the equipment without payment of customs duty and if on such enquiry the authorities are satisfied that the continuing obligation are not being carried out then it would be fully open to the authority to ask the person who have availed of the benefit of exemption to pay the duty payable in respect of the equipments which have been imported without payment of customs duty. As regards redemption fine - Held that - the Hon ble Apex Court in the case of Fortis Hospital 2015 (4) TMI 348 - SUPREME COURT , has held that on a plain reading of the said provision, we are of the view that such a provision would not apply in case where option to pay fine in lieu of confiscation is not exercised by the importer. Trigger point is the exercise of a positive option to pay the fine and redeem the confiscated goods - imposition of fine upheld. Confiscation and imposition of redemption fine is upheld. However, the recovery of duty under Section 125 (2) or payment of redemption fine are subject to the appellant exercising their option to redeem - the penalty imposed in the original adjudication order was ₹ 10,000/-. However, in the second time a penalty of ₹ 25,000/- has been imposed. We find that the appellants have failed to fulfill the conditions of the notification and in view of facts of the case penalty of ₹ 10,000/- is sufficient - appeal disposed off - decided against appellant-assessee.

Summary

Issues:
1. Fulfillment of conditions under Notification No.64/88-Cus for imported medical equipment.
2. Applicability of demand under Section 125 (2) of the Customs Act.
3. Effect of rescinding notification on enforcement of import conditions.
4. Imposition of penalties in remand proceedings.
5. Continuing obligation under exemption notification for free treatment.
6. Confiscation and redemption fine imposition.
7. Enhancement of penalties in denovo proceedings.

Analysis:

Issue 1:
The appellant imported medical equipment under Notification No.64/88-Cus, claiming fulfillment of post-import conditions based on a State Government certificate and data submitted to the Rosha Committee. However, the Committee found non-compliance for the year 1994-95, leading to demand confirmation under Section 125 (2) of the Customs Act.

Issue 2:
The appellant argued that demand under Section 125 (2) can only be made upon redemption of goods. Citing the Fortis Hospital case, the appellant contended that penalties cannot be enhanced in remand proceedings.

Issue 3:
The Assistant Commissioner argued that the notification's conditions remain enforceable post-rescission, citing precedents like the Bombay Hospital Trust case. The obligation under the notification is deemed continuous, as observed in the Mediwell Hospital case.

Issue 4:
The imposition of penalties was contested by the appellant, claiming that penalties cannot be enhanced in remand proceedings. The Tribunal found the original penalty sufficient based on non-compliance with notification conditions.

Issue 5:
The continuing obligation under the exemption notification for providing free treatment was emphasized, with non-compliance leading to confiscation under Section 111 (o) of the Customs Act.

Issue 6:
Regarding the imposition of redemption fines and duty recovery under Section 125 (2), the Tribunal upheld confiscation and redemption fine but noted that these are subject to the appellant exercising their option to redeem the goods.

Issue 7:
The High Court's ruling in the Mehta Fine Arts case allowed for the imposition of enhanced penalties in denovo proceedings. In this case, the Tribunal found the original penalty of &8377; 10,000 sufficient given the non-compliance with notification conditions.

In conclusion, the Tribunal upheld the confiscation and redemption fine while maintaining the penalty at &8377; 10,000, emphasizing the continuing obligation under the exemption notification for free treatment and the enforceability of post-import conditions even after the rescission of the notification.