2010 (1) TMI 456 - HC - Customs

Hospital equipment - Exemption under Notification Nos. 64/88-cus. and 140/90-Cus. - the applicant imported two machines availing exemption Notification. A Show Cause notice alleging that the applicant has failed to comply with the condition Nos. 2(a) and 2(b) of the Notification. It was also alleged that the applicant failed to attain prescribed percentage of giving free treatment to indoor and outdoor patients, as required by the said Notification. Exemption denied by Tribunal on one item by order dated 13.12.2004. Exemption held as admissible to impugned goods in de novo order passed on remand by Tribunal vide its order dated 18.06.2008. Present application dismissed by High Court when appeal against adjudication order pending before Tribunal. Appeal not filed by Department against de novo order. Order passed by High Court revoked. Held that - respondent directed to consider eligibility of exemption.

Summary

Issues Involved:
1. Eligibility for customs duty exemption under Notification No. 64/88.
2. Compliance with conditions stipulated in Notification No. 64/88.
3. Legal validity of the Show Cause Notice and subsequent orders.
4. Applicability of other notifications (No. 65/88 and 140/90) for customs duty exemption.
5. Review of the High Court's previous order dated 7-10-2008.

Detailed Analysis:

1. Eligibility for Customs Duty Exemption under Notification No. 64/88:
The applicant imported two medical machines and claimed total exemption from customs duty under Notification No. 64/88 dated 1-3-1988. The exemption was initially granted based on a Custom Duty Exemption Certificate (CDEC) issued by the Director General of Technical Development.

2. Compliance with Conditions Stipulated in Notification No. 64/88:
A Show Cause Notice was issued on 14-7-2000 alleging that the applicant failed to comply with Condition Nos. 2(a) and 2(b) of Notification No. 64/88, which required a certain percentage of free treatment to indoor and outdoor patients. The Additional Commissioner of Customs, New Delhi, passed an order on 20-9-2002 confiscating the equipment, imposing a redemption fine, demanding duty, and levying a penalty.

3. Legal Validity of the Show Cause Notice and Subsequent Orders:
The applicant's appeal to the Commissioner of Customs (Appeals) was allowed on 31-3-2004, which held that the demand for duty was time-barred under Section 28 of the Customs Act. However, the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), New Delhi, reversed this decision on 13-12-2004, reinstating the demand and penalties.

4. Applicability of Other Notifications (No. 65/88 and 140/90) for Customs Duty Exemption:
The applicant argued that another machine, Echo Cardiograph with Colour Mapping, imported under similar conditions, was granted exemption under Notification Nos. 65/88 and 140/90 by the Commissioner of Customs, Mumbai, on 3-6-2009. This decision was not appealed by the department. The applicant sought similar treatment for the Computerized Stress System with Tread Mill, arguing that the factual and legal situations were identical.

5. Review of the High Court's Previous Order Dated 7-10-2008:
The applicant filed a review application to reconsider the High Court's order dated 7-10-2008, which dismissed the applicant's Civil Application No. 5561 of 2008. The review was sought in light of the subsequent order dated 3-6-2009 by the Commissioner of Customs, Mumbai, which was favorable to the applicant.

Conclusion:
The High Court considered the changed circumstances and the fact that the department did not appeal against the favorable order dated 3-6-2009. The Court revoked its previous order dated 7-10-2008 and directed the Commissioner of Customs, Delhi, to consider the applicant's eligibility for exemption under Notification Nos. 65/88 and 140/90. The Court clarified that it did not adjudicate on the merits of the eligibility but left it to the Commissioner of Customs, Delhi, to decide in accordance with the law. The order dated 13-12-2004 by CESTAT, New Delhi, would not impede this reconsideration. The review application was allowed, and no costs were imposed.