2015 (4) TMI 771 - AT - Customs

Benefit of Notification No.64/88-Cus. dated 1.3.88 - medical equipment imported without payment of duty on the basis of customs duty exemption certificate issued by DGHS - The said exemption certificate was withdrawn by DGHS vide letter dated 30.8.2000 for non-fulfilment of the conditions of grant thereof - Scope of paragraph 1 and / or paragraph 2 - Held that - For hospitals covered under paragraph 2 of the said Table if the duty exemption certificate is withdrawn by the DGHS, then on account of the continuing liability in the wake of Supreme Court s judgement in the case of Mediwell Hospital & Health Care Pvt. Ltd. (1996 (12) TMI 51 - SUPREME COURT OF INDIA), the duty liability would arise. We have perused the impugned order-in-appeal. The Commissioner (Appeals) has recorded a finding that the appellants are a charitable hospital run by a charitable trust and substantially run and funded by charitable organisation in the name of Moradabad Charitable Trust Health Research Centre as recognised by the DGHS to the Government of India and that this fact is clearly admitted in the Show Cause Notice as well as in the impugned order. It is nowhere admitted therein that M/s Moradabad Charitable Trust & Health Research Centre has been so certified/approved by the Ministry of Health and Family Welfare. Thus, the said observation of the Commissioner (Appeals) is devoid of any sustainable basis. Quite to the contrary, the letter of DGHS dated 30.8.2000 in terms of which the CDEC issued to the appellants was withdrawn as cancelled specifically noted that the appellants were issued CDEC as a hospital falling under para 2 of the Table attached to notification No. 64/88-Cus and that such hospital were required to fulfil the conditions contained in paras 2 (a), (b) & (c) of the Table in the said notification. - Thus, it is evident that DGHS had given the respondents CDEC treating their hospital as falling under paragraph 2 of the Table and not under the paragraph 1 thereof. - no hesitation to hold the impugned order in appeal as unsustainable and accordingly set aside the same - Decided in favour of Revenue.

Summary

Issues:
1. Duty demand confirmation against the respondents.
2. Benefit of Notification No.64/88-Cus availed by the respondents.
3. Withdrawal of Customs Duty Exemption Certificate (CDEC) by DGHS.
4. Classification of the hospital under the notification.
5. Arguments of Revenue and respondents regarding the hospital classification.
6. Analysis of the impugned order-in-appeal by the Commissioner (Appeals).
7. Supreme Court judgments on withdrawal of exemption certificates.
8. Decision on the sustainability of the impugned order-in-appeal.

Analysis:
1. The appeal was filed by Revenue against the Order-in-Appeal setting aside the duty demand confirmed against the respondents. The duty demand of Rs. 16,34,657/- was based on the withdrawal of the Customs Duty Exemption Certificate (CDEC) by DGHS for non-fulfillment of post-importation conditions.

2. The respondents had availed the benefit of Notification No.64/88-Cus on imported medical equipment without duty payment, based on a CDEC issued by DGHS. The withdrawal of this certificate led to the duty liability as per the Supreme Court judgment in Mediwell Hospital case.

3. The withdrawal of the CDEC by DGHS was crucial in determining the duty liability, following the continuing obligation principle established in the Mediwell Hospital case. The duty liability arose due to non-compliance with the conditions of the exemption certificate.

4. The classification of the hospital under the notification was contested, with Revenue arguing that the CDEC was issued for a hospital covered under a different paragraph than claimed by the respondents. The respondents contended that as a charitable institution, they fell under a specific category exempt from certain conditions.

5. Both sides presented arguments regarding the hospital's classification under the notification, with Revenue emphasizing the specific conditions attached to different categories. The respondents claimed charitable status exempted them from fulfilling certain obligations.

6. The Commissioner (Appeals) set aside the duty demand, considering the charitable nature of the hospital and its recognition by DGHS. However, discrepancies were found in the Commissioner's observation as the CDEC was issued for a hospital under a specific category.

7. Supreme Court judgments highlighted the consequences of withdrawal of exemption certificates, emphasizing the duty liability in case of non-compliance due to the absence of a valid certificate. The judgments supported the duty demand made by the authorities.

8. The Tribunal found the impugned order-in-appeal unsustainable, setting it aside and reviving the original duty demand. The decision favored Revenue, allowing the appeal and reinstating the duty liability on the respondents.