2019 (6) TMI 222 - AT - Customs

Exemption from Customs Duty - benefit of N/N. 63/88-Cus - purchase of hospital equipment (C.T. Scanner) - Double Jeopardy - HELD THAT - Going by N/N. 63/88-Cus dated 1st march 1988, it can be seen that exemption is provided to the hospital equipment when imported by Central, State Government hospitals etc. or society registered under any law for the time being relating to registration of societies, which are being controlled by any of the authorities of the Central Government, State government, Union Territory Administration or local authorities. The meaning of word control is the power to influence or direct or supervise the behaviour and conduct of people or organization in the course of event and government control signifies the control exercised over the action or affairs by the State. The Commissioner of Customs (Import) had given his views that such control by Government authorities requires managerial control on day to day functioning of such society, which is admittedly found absent in the case of the appellant. Apparently therefore, he had given his finding that requirements of exemption notification was not fulfilled in that aspect. Furthermore another condition available in notification 63/88 that the hospital, which includes expression like trust or society, had to produce a certificate from the Director of Health Services of the Government of India or the Ministry of Health and Family welfare in the Government of India to the effect that the said hospital falls in either of the categories specified in the table (which includes registered society). Such certificate was not produced by the appellant to make it eligible for exemption under notification no. 63/88-Cus. Appellant failed to substantiate that Commissioner s finding was wrong in respect of production of such certificate and in respect of exercise of Government control over its functioning that would necessitate interference of the Tribunal in the order passed by the Commissioner (Appeals). Moreover double jeopardy is a protection against punishment for more than one occasion and not against repeated intimation for action/proceedings. Appeal dismissed - decided against appellant.

Summary

Issues Involved:
1. Rejection of appellant's claim for exemption of customs duty under Notification No. 63/88-Cus against the purchase of hospital equipment (C.T. Scanner).
2. Interpretation of the conditions for availing duty exemption under Notification No. 63/88-Cus.
3. Examination of the control required by government authorities for availing the exemption.
4. Consideration of the requirement for producing a certificate from the Director of Health Services for eligibility under the notification.
5. Analysis of the concept of double jeopardy in the context of customs proceedings.

Analysis:

Issue 1: Rejection of appellant's claim for exemption of customs duty under Notification No. 63/88-Cus:
The appellant, a charitable trust, purchased hospital equipment in 1989 and availed duty exemption under Notification No. 63/88. However, subsequent show cause notices led to a demand for duty payment and penalties. The CESTAT upheld the duty demand and directed scrutiny of the exemption claim. The Commissioner of Customs later found the appellant ineligible for exemption, leading to the current appeal challenging the order.

Issue 2: Interpretation of the conditions for availing duty exemption under Notification No. 63/88-Cus:
Notification No. 63/88 provides exemption to hospital equipment imported by specified entities, including societies controlled by government authorities. The term 'control' implies influence or supervision over an organization. The Commissioner found that the appellant failed to demonstrate sufficient government control over its operations beyond filing returns, as required for exemption eligibility. Additionally, the appellant did not produce the necessary certificate from the Director of Health Services, further undermining its claim.

Issue 3: Examination of the control required by government authorities for availing the exemption:
The Commissioner emphasized the need for government authorities to exercise managerial control over the day-to-day operations of a society to qualify for exemption. In the absence of such control, the Commissioner deemed the appellant ineligible for the exemption under Notification No. 63/88.

Issue 4: Consideration of the requirement for producing a certificate from the Director of Health Services for eligibility under the notification:
The notification mandates the production of a certificate from the Director of Health Services to confirm the hospital's eligibility for exemption. The appellant's failure to provide this certificate further weakened its case for exemption under the notification.

Issue 5: Analysis of the concept of double jeopardy in the context of customs proceedings:
The concept of double jeopardy was raised concerning the appellant facing multiple show cause notices from different Customs authorities. The judgment clarified that double jeopardy protects against multiple punishments, not repeated proceedings. Therefore, the appeal was dismissed, confirming the Commissioner's order.

This detailed analysis of the judgment highlights the key issues involved in the appellant's claim for customs duty exemption under Notification No. 63/88-Cus and the subsequent legal interpretation and findings leading to the dismissal of the appeal.