2007 (12) TMI 85 - AT - Customs

Assessee, hospital cleared certain equipments like computerized gas electrolyte analyzer system claiming benefit of exemption from Customs duty u/not. 64/88 non-compliance of condition free treatment to on an average 40% patient - . On an average , needn t be on daily or monthly basis but at least on a yearly basis, they should show that they had treated 40% of the outpatients free condition not fulfilled - Demand sustainable but penalty reduced

Summary

Issues:
1. Claim of exemption from Customs duty under Notification 64/88-Cus.
2. Allegations of non-fulfillment of post importation conditions.
3. Adjudication of duty demand and penalties imposed.

Analysis:

1. Claim of Exemption: The appellants, a hospital, imported certain equipment claiming exemption from Customs duty under Notification 64/88-Cus. The High Court's order directed Customs authorities to investigate cases of non-fulfillment of conditions for availing the exemption. The appellants produced documents to support their claim of treating more than 40% of outpatients freely. However, the Commissioner found discrepancies in the documents, indicating that the conditions of the Notification were not satisfied.

2. Non-Fulfillment of Conditions: The Commissioner's findings revealed that the hospital did not meet the required criteria for free treatment under the Notification. Investigations showed that the hospital treated only an average of 32% of outpatients freely, falling short of the mandated 40%. Specific instances were cited where the hospital failed to provide free treatment to indoor patients from the specified income group. Despite the appellants' arguments based on selective time blocks, the Commissioner concluded that the overall compliance was lacking.

3. Adjudication and Penalties: The Original Authority upheld the duty demand of Rs.3,96,660/- and imposed penalties on the importer and the Medical Director. The Tribunal remanded the case for further examination, leading to the confirmation of duty amount and a reduced penalty of Rs.10,000/- on the appellant. The Tribunal agreed with the Commissioner's assessment that the conditions of the Notification were not met, thereby upholding the duty demand. However, considering the circumstances, the penalty on the appellant was reduced.

In conclusion, the Tribunal affirmed the duty demand due to non-fulfillment of conditions under the Notification. The penalties imposed were adjusted, with the appellant facing a reduced penalty of Rs.10,000/-. The judgment highlighted the importance of adhering to post importation conditions for availing duty exemptions, emphasizing the need for thorough compliance with regulatory requirements in such cases.