2015 (2) TMI 177 - AT - Customs

Import of hospital equipments - import by third party - Denial of benefit of Customs Notification No. 21/2002 as amended vide Sl. No. 362 read with Condition No. 77 - Held that - The grounds taken by the Revenue is that only hospitals which are listed in Sl. No. (a) could have imported the equipment but not a third party. For this purpose other notifications have been compared wherein end use conditions have been prescribed and it has been stated that in the absence of end use conditions and in view of the clauses (a) and (c) of Condition No. 17, third party import was not permissible and therefore the assessment order issued by the original authority is sustainable. However we find ourselves unable to agree with this submission in view of the fact that if the import was to be made only by hospital or the Government the word importer would not have been used in clause (b). In fact clause (b) was not required at all if third party import was not permissible. In our opinion the manner in which the notification has been worded and the conditions have been stated is quite clear and there cannot be another interpretation possible other than the one reached by the learned Commissioner (Appeals) in the impugned order. In any case it is not the case of the Revenue that the equipments imported have not been used by the Government hospitals and conditions of end use have been followed in any manner. - Decided against Revenue.

Issues:
1. Interpretation of Customs Notification No. 21/2002 regarding the exemption for hospital equipment import.
2. Whether the benefit of the notification is limited to equipment imported directly by government hospitals.
3. Validity of the assessment order denying the benefit of the notification.

Analysis:

Issue 1: Interpretation of Customs Notification No. 21/2002
The case involved the interpretation of Customs Notification No. 21/2002 concerning the import of hospital equipment falling under Chapter 90 of the Customs Tariff. The notification provided for a 5% duty rate for hospital equipment for use in specified hospitals. The condition for availing this benefit required the importer to produce a certificate from the relevant health authorities certifying the hospital's category and the necessity of the equipment for hospital operations.

Issue 2: Benefit limited to government hospitals?
The Commissioner's findings emphasized that the notification did not explicitly restrict the benefit to equipment imported directly by government hospitals. The condition only required the equipment to be used in specified hospitals, with certificates from relevant authorities confirming the hospital's category and the necessity of the equipment. The appellants had provided the required certificates, supporting their eligibility for the exemption.

Issue 3: Validity of the assessment order
The Revenue contended that the exemption under the notification was only applicable when equipment was imported by hospitals as defined in the notification, not by third parties. They argued that the absence of explicit provisions for exemptions to entities other than hospitals meant that third-party imports were ineligible. However, the Tribunal disagreed, noting that the notification's wording and conditions were clear. The presence of the term "importer" in the condition indicated that third-party imports were permissible. Additionally, there was no evidence to suggest that the imported equipment was not used by government hospitals or that end-use conditions were violated. Consequently, the Tribunal rejected the Revenue's appeals, upholding the decision in favor of the appellants.

Overall, the Tribunal's decision favored the appellants, emphasizing the clear language of the notification and the fulfillment of required conditions for the exemption, thereby dismissing the Revenue's arguments against the eligibility of third-party imports for the benefit under Customs Notification No. 21/2002.

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