2016 (12) TMI 1503 - HC - Customs

Public charitable trust - import of equipments for diagnostic centre - benefit of Customs Notification No.64/88, dated 1.3.1988 - Held that - from a reading of the annexures to the writ petition it is apparent that the demand has been raised after a factual satisfaction. That satisfaction is based on inspection, scrutiny and verification of the records and documents provided by the petitioner itself - A conditional exemption is available and can be availed of on tendering proof of satisfaction of the terms and conditions thereof, else the exemption cannot be availed of. In the instant case, all the terms and conditions of the exemption Notification were made known and voluntarily accepted by the petitioner. It even executed a Bond and also submitted a Bank Guarantee and as noted by us hereinabove - Once being aware of the clear stipulations in the exemption Notification, but failing to satisfy them, the petitioner was not entitled to any exemption. The demand is rightfully raised and deserves to be confirmed. Petition dismissed - decided against petitioner.

Summary

Issues:
Challenge to decision and demand notice under Article 226 of the Constitution of India regarding customs duty exemption for medical diagnostic center operated by a charitable trust.

Analysis:
1. The petitioner, a charitable trust running a medical diagnostic center, challenged a decision and demand notice related to customs duty exemption. The petitioner argued compliance with Customs Notification No.64/88 and being a charitable trust providing free treatment to referred outdoor patients.

2. The respondents contended that the exemption was conditional and not met due to violations. They argued that the demand for customs duty should be upheld as the terms and conditions were not fulfilled for claiming the exemption.

3. The petitioner, registered under the Bombay Public Trust Act, imported medical equipment under exemption Notification after due verification by authorities. The petitioner later imported spare parts, including an X Ray Tube, and applied for Customs Duty Exemption Certificate, complying with all terms and conditions.

4. The Court examined the Notification exempting hospital equipment import approved by the Ministry of Health and Family Welfare, subject to specific conditions for charitable organizations providing free treatment to patients. The Court noted the necessity to meet the conditions for claiming the exemption.

5. Despite the petitioner's argument that diagnostic treatment institutions were covered under the exemption, the Court emphasized the need to satisfy the conditions stipulated in the Notification. The Court highlighted the requirement of providing free treatment to a certain percentage of patients and reserved beds for specific income groups.

6. The Court found that the petitioner failed to meet the conditions for exemption, as evidenced by inspection and verification of records. The demand for customs duty was based on factual satisfaction and not vitiated by any legal error, leading to the dismissal of the writ petition.

7. The Court concluded that since the petitioner did not satisfy the stipulated conditions for exemption, the demand for customs duty was valid. The dismissal of the writ petition was upheld, and the interim relief was vacated. The Court discharged the rule without costs, confirming the validity of the demand for customs duty.