2018 (8) TMI 1347 - AT - Customs

Import of medical equipments duty free - benefit of N/N. 64/88 dated 01.03.1988 - end use exemption - Subsequently since the Appellant did not fulfill the conditions as prescribed by the notification, the said Certificate issued by DGHS was cancelled and withdrawn - Demand under section 125(2) of the Customs Act, 1962. Held that - It is an admitted fact that for non fulfillment of the conditions of exemption notification No 64/88-Cus, DGHS has withdrawn the certificate issued by them for claiming the benefit under the said exemption notification - Since the conditions of exemption notification are not fulfilled by the Appellant the benefit of exemption Notification No 64/88-Cus is not admissible to them and accordingly the goods are liable for confiscation under section 111(0) of the Customs Act, 1962. Hon ble Supreme Court has in case of Commissioner of Customs (Import) Mumbai Vs Jagdish Cancer Research Centre 2001 (8) TMI 113 - SUPREME COURT OF INDIA has upheld the confiscation of the goods for non fulfillment of the conditions prescribed even after importation and clearance of the goods. In the said judgment they have also held that duty in terms of section 125(2) of the Customs Act, 1962 is also payable in case Appellant opts to redeem the confiscated goods. Appeal dismissed - decided against appellant.

Summary

Issues Involved:
1. Demand of duty under Section 28 and Section 125(2) of the Customs Act, 1962.
2. Confiscation of imported goods under Section 111(o) of the Customs Act, 1962.
3. Imposition of penalty under Section 112(a) of the Customs Act, 1962.
4. Payment of interest for deferred payment of duty under Section 28AA of the Customs Act, 1962.
5. Validity of the show cause notice issued beyond the statutory period.
6. Applicability of Notification No. 64/88-Cus post-rescission.
7. Enhancement of fines and penalties in remand proceedings.

Detailed Analysis:

1. Demand of Duty:
The Commissioner confirmed a duty demand of ?89,18,793 under Section 28 and Section 125(2) of the Customs Act, 1962, citing non-fulfillment of conditions for duty exemption under Notification No. 64/88-Cus. The Appellant argued that the conditions were pre-import and had been fulfilled at the time of import. However, the court held that post-importation conditions must also be met, and failure to do so justifies the duty demand.

2. Confiscation of Imported Goods:
The imported equipment was ordered for confiscation under Section 111(o) of the Customs Act, 1962, with an option to redeem by paying a fine of ?20,00,000. The Appellant contended that confiscation was unjust as conditions were met at import. The court upheld confiscation, referencing the Supreme Court's decision in Mediwell Hospital, which stated that non-fulfillment of exemption conditions post-import renders goods liable for confiscation.

3. Imposition of Penalty:
A penalty of ?20,00,000 was imposed under Section 112(a) of the Customs Act, 1962. The Appellant argued against the penalty, claiming no contravention of the Act. The court, referencing the Jagdish Cancer Research Centre case, upheld the penalty, emphasizing that non-compliance with exemption conditions warranted such penalties.

4. Payment of Interest:
The order included payment of interest for deferred duty under Section 28AA of the Customs Act, 1962. The Appellant contended that no interest was recoverable as the duty demand was unsustainable. The court dismissed this argument, affirming the interest demand as part of the deferred duty payment.

5. Validity of Show Cause Notice:
The Appellant argued that the show cause notice issued on 18th January 2001 for goods imported on 3rd August 1992 was beyond the statutory period, thus barred by limitation. The court referenced the Supreme Court's ruling in Mediwell Hospital, establishing that the obligation to fulfill exemption conditions is continuous, thereby validating the notice.

6. Applicability of Notification No. 64/88-Cus Post-Rescission:
The Appellant claimed that post-rescission of Notification No. 64/88-Cus on 01.03.1994, they were not required to meet its conditions. The court rejected this, citing that obligations under the notification persist beyond its rescission if the benefits were availed during its validity.

7. Enhancement of Fines and Penalties in Remand Proceedings:
The Appellant contested the higher fines and penalties imposed in remand proceedings compared to original proceedings. The court upheld the enhanced penalties, referencing judicial precedents that supported such enhancements upon remand.

Conclusion:
The court dismissed the appeal, upholding the Commissioner’s order in entirety, including duty demand, confiscation, penalties, and interest. The judgment reinforced the principle that compliance with exemption conditions must be continuous and failure to do so justifies enforcement actions under the Customs Act, 1962.