1992 (10) TMI 199 - AT - Customs

Refund - Exemption to hospital equipment on production of essentiality certificate from Ministry of Health/D.G.H.S.

Issues Involved:
1. Entitlement to duty refund under Notification No. 64/88-Cus.
2. Timing and necessity of producing the essentiality certificate.
3. Applicability of procedural requirements under Notification No. 64/88-Cus.
4. Relevance of prior case law and judgments.

Detailed Analysis:

1. Entitlement to Duty Refund under Notification No. 64/88-Cus.
The appellants imported medical equipment and paid the duty amounting to Rs. 68,30,310/-. They subsequently sought a refund under Notification No. 64/88-Cus., claiming the benefit based on an essentiality certificate from the Directorate General of Health Services (DGHS), West Bengal. The Assistant Collector rejected their claim on the basis that the essentiality certificate was not produced at the time of clearance, nor was the duty paid under protest. The appellants appealed to the Collector of Customs (Appeals), who upheld the rejection, emphasizing the necessity to produce the essentiality certificate at the time of clearance.

2. Timing and Necessity of Producing the Essentiality Certificate
The appellants argued that they had initiated the process to obtain the essentiality certificate before the importation of the goods. They submitted a letter to the Collector on 20th December 1988, indicating their intention to claim the benefit of Notification No. 64/88-Cus. and had applied for the essentiality certificate accordingly. The essentiality certificate was received on 22nd February 1989, after the goods had been cleared. They contended that the procedural delay in obtaining the certificate should not disqualify them from the benefit of the notification.

3. Applicability of Procedural Requirements under Notification No. 64/88-Cus.
The Tribunal examined the relevant provisions of Notification No. 64/88-Cus., particularly the conditions specified in paragraph 4 and its provisos. It was noted that proviso (a) applied to existing hospitals, while provisos (b) to (d) applied to hospitals yet to start functioning. The appellants argued that their case fell under proviso (b), as the hospital was inaugurated after the clearance of the equipment. The Tribunal agreed that the appellants had complied with the procedural requirements by setting the process in motion before the goods' arrival and informing the Customs authorities of their intention to claim the benefit.

4. Relevance of Prior Case Law and Judgments
The appellants cited several judgments to support their claim:
- HMT v. Collector of Customs (1990 (46) E.L.T. 434): The Tribunal held that the certificate could be produced after importation if the process had been initiated before.
- Birla Institute of Technology v. Collector of Customs (1991 (56) E.L.T. 753): The Tribunal ruled that the benefit of the notification should not be denied due to procedural delays in obtaining the necessary certificates.
- Auto Tractors Ltd. v. Collector of Customs (1989 (39) E.L.T. 494 (SC)): The Supreme Court held that the production of certificates at the time of clearance was sufficient for claiming benefits under a notification, even if claimed subsequently.
- L.M. VEN Moppes Diamond Tools India Ltd. v. Government of India (1981 (8) E.L.T. 165 (Mad.)): The Madras High Court ruled that non-production of an end-use certificate at the time of filing a refund application did not disqualify the claimant from the benefit of the notification.

The Tribunal concluded that the appellants' failure to produce the essentiality certificate at the time of clearance was a forgivable procedural lapse and not an insurmountable obstacle. The substantive benefit of the notification should not be denied due to procedural delays beyond the appellants' control.

Judgment:
The Tribunal allowed the appeal with consequential relief to the appellants, stating that the overall trend of judgments indicated that non-production of the essentiality certificate at the time of clearance was a forgivable failure. The appellants had set in motion the process for obtaining the necessary certificate before the arrival of the goods and had informed the Customs authorities of their intention to claim the benefit of Notification No. 64/88-Cus. Therefore, the duty refund claim was valid, and the appeal was allowed.

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