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TMI Blog2010 (9) TMI 482X X X X Extracts X X X X X X X X Extracts X X X X ..... d Research Centre (DUIRC) was issued an import licence for importing one Lithostar Universal Urological Workstation for therapy and diagnostics and one Ultrasound Sonolines. On 19th April 1987, DUIRC applied for a CDEC for import of two equipments, i.e., one Lithotriptor and one ultrasound equipment. On 27th June 1988, the DGHS issued a CDEC in respect of the Lithostar Universal Urological Workstation in favour of DUIRC. On 3rd January 1989, CDEC was granted to DUIRC for the spare parts with respect to the above equipments. 3. On 6th/11th July 1989, the DUIRC informed the Joint Secretary (Medical), Delhi Administration of the fact that it had installed the Lithostar equipment and enclosed a copy of the installation certificate from the suppliers. The address of DUIRC was shown as Bansal Nursing Home Complex - 3590, Sita Ram Bazar, Delhi-110006 and its Centre at F-12, East of Kailash, New Delhi- 110065. On 7lh August 1989, in reply to the above letter the Directorate of Health Services, Delhi Administration called for an explanation of the circumstances under which the installation of the equipment had taken place on a site other than that mentioned in the undertaking given by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submission of your quarterly reports. (i) Your quarterly statement have been inspected and found in order till dated 30th June 1992. (ii) You are also requested to intimate the Directorate regarding the change in premises from Bazar Sita Ram to F-12, East of Kailash, New Delhi. Vide paras 4 (B) of N.N. 64/88 as to why it was deemed necessary to change the premises. Yours faithfully, -Sd- (Dr. S.C. Mahajan) Medical Superintendent Nursing Homes (II)" 7. The DUIRC, by a separate letter dated 15th September 1992, again furnished the reasons for the change in the place of installation of the equipment. According to the Petitioner, nothing was heard in response thereto. The DUIRC also submitted a Proforma in compliance with Notification No. 64/88 dated 1st March 1988 in terms of which the CDEC had been granted. The figures of total number of patients treated in OPD, the number of patients treated free for the years 1992, 1993 and 1994, and the details of indoor treatment provided during these three years were given. As regards indoor patients under the column "No. of admissions given to patients with less than Rs. 500/- p.m.", the DUIRC indicated 'Nil'. However, under the col ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Director, Lok Nayak Hospital, New Delhi. The postal proof of the above letter having been dispatched to the Deputy Director, DGHS is also enclosed. 11. Thereafter on 20th November 2000, the impugned order came to be passed by the DGHS without referring to the Petitioner's letters dated 15th November 2000 and 18th November 2000. The DGHS observed that since the Petitioner had failed to furnish any information "to substantiate continuous discharge of the post import obligations, it has been concluded that your institution is not eligible to retain the benefits of customs duty exemption availed under the said notification. Therefore, the CDEC referred to in annexure are, hereby withdrawn as cancelled." 12. The Petitioner states that in the impugned order dated 20th November 2000, a reference was made to a report prepared by the State Government. However, copy of the said report was not furnished to the Petitioner. On 25th November 2000, the Director (Administration), Lok Nayak Hospital asked the Petitioner to furnish information as regards Columns G & H of point 3 of the Proforma. On 28th November 2000, the Petitioner wrote to the DGHS requesting revocation of the impug ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oner's unit was located at East of Kailash. (iv) The DUIRC and later the Petitioner continued to provide free concessional treatment to poor patients between 1992 and 1999. It also organised free camps at several places outside Delhi. (v) The impugned order of 20th November 2000 was issued by the DHS despite being aware of the fact that the investigations by the Delhi Government were in progress and that the details were to be submitted after the conclusion of such investigations. The reasons given in the impugned order were also assailed. 19. In the amended writ petition, additional grounds of challenge were also raised. The Petitioner, on 26th August 2002, filed a photocopy of the inspection report dated 3rd January 2001 of the Director (Administration), Lok Nayak Hospital. Reply of the Respondents 20. A counter affidavit was filed to the amended writ petition by Respondents 1 to 3. While it was not denied that the State Government had given a report dated 3rd January 2001, it was stated that such report was received belatedly "i.e. much after the impugned order, which included the information for the years 1995 to 1999." It was pointe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d not received the Petitioner's letters dated 11th March 2000, 15th November 2000 and 18th November 2000. Although it is not denied that the report of the Delhi Government of 3rd January 2001 was received by the DGHS only on 15th January 2001, it was not in dispute that no patient with the income of less than Rs. 500/- per month came to the Petitioner for indoor treatment. It was submitted that the voluminous documents submitted and the various concessions given to patients was not information sought for "in terms of the notification requirement." Submissions of Counsel 24. Apart from reiterating the facts narrated hereinbefore, Mr. Jeevan Prakash learned counsel appearing for the Petitioner referred to the fact that by a Notification No. 98/94 dated 1st March 1994, the Notification No. 64/88, dated 1st Mach 1988 had been rescinded. He, therefore, submitted that in any event after 1st March 1994 there was no obligation on the Petitioner to continue to comply with the obligation under Notification No. 64/88. He referred to the decision of the Supreme Court in Faridabad CT Scan Centre v. D.G. Health Services (1997) 7 SCC 752) = 1997 (95) E.L.T. 161 (S.C.) which overruled a cer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sp; free to all indoor patients belonging to families with an income of less than rupees five hundred per month, and keeping for this purpose at least 10 per cent of all the hospital beds reserved for such patients; and (c) at reasonable charges, either on the basis of the income of the patients concerned or otherwise, to patients other than those specified in clauses (a) and (b)." 27. Para 4 of the Table to the said notification, which is relevant for the present purposes, reads as under : "4. Any such hospital which is in the process of being established and in respect of which the said Ministry of Health and Family Welfare is of opinion- (i) that there is an appropriate programme for establishment of the hospital, (ii) that there are sufficient funds and other resources required for such establishment of the hospital, (iii) that such hospital would be in a position to start functioning within a period of two years, and (iv) that such hospital, when it starts functioning would be relatable t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ates to hospitals which are in the process of being established. This clause certainly applies to the Petitioner since at the time it obtained the CDEC, it was in the process of being established. Nevertheless under Para 4(iv), such hospitals which start functioning "would be relatable to a hospital specified in paragraph 1, 2 or 3 of this Table." Therefore, once the Petitioner Hospital commenced its functioning, it had to comply with the requirement of Para 2. No objection by Respondents to explanation given by Petitioner for shifting the site of installation of equipment 29. An analysis of the above narrative reveals that the Petitioner, on its part, had given a satisfactory explanation why it had to shift the place of installation of the equipment from Sita Ram Bazar to East of Kailash. There is no denial by the Respondents that it gave such an explanation. There is also no denial of the fact that at no point in time was the Petitioner informed that its explanation was unacceptable. Therefore, any objection raised about the Petitioner having shifted the place of installation without seeking prior permission is not a tenable one. At no point in time, till the passing of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ort equipments without payment of customs duty? 2. Whether in the facts and circumstances of the present case, more particularly in the absence of any denial of the allegations made by the appellant it is possible for the Court to come to the conclusion that there has been a discriminatory treatment between appellant and persons similarly situated, and if so, whether there is any nexus for the same. 3. Whether the appellant had complied with all the preconditions stipulated in the exemption notification for being entitled to the issuance of a certificate by the Respondent No. 2 for import of the equipment in question without payment of customs duty." 33. What is relevant, as far as the present case is concerned, is the answer to Question No. 3. The Supreme Court observed that while Mediwell was entitled to get the CDEC from the DGHS, '"the very notification granting exemption must be construed to cast continuing obligation on the part of all those who have obtained the certificate from the appropriate authority and on the basis of that have imported equipments without payment of customs duty to give free treatment at least to 40 per cent of the outdoor patien ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r was aggrieved by the denial of the CDEC and cited the cases of certain others similarly placed who had been granted such CDECs. Reliance was placed on the observations made in para 10 of the Mediwell Hospital case that a diagnostic centre run by a private individual purely on commercial basis may not be entitled to exemption under the notification issued by the Central Government. It was noticed in Faridabad CT. Scan Centre that despite the above observations made in the Mediwell Hospital case, Mediwell had been granted on the ground that several other individual diagnostic centres not attached to any hospital had been granted the exemption and that denial of such CDEC to Mediwell would be violative of Article 14 of the Constitution. The three-Judge Bench disagreed with the above view expressed in the Mediwell Hospital case. It explained that the principle of equality under Article 14 did not apply when the order relied upon was unsustainable in law and illegal. It was held that "the decision in Mediwell Hospital does not lay down the correct law on this point." (emphasis supplied) 36. It is clear from the decision in Faridabad CT. Scan Centre that only insofar as the two-J ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stion arose before the Madras High Court in Apollo Hospitals Enterprises Ltd. v. Union of India. In that case, the Petitioner had imported certain life saving medical equipments for installation in its hospital and obtained a CDEC under the Notification No. 64/88. The Petitioner's application was rejected on the ground that the DGHS had relied upon a certain report, a copy of which had not been given to the Petitioner. Secondly, the DGHS had failed to consider whether non-compliance of the requirement of Clause 2 of the Notification No. 64/88 was wilful. It had also not considered whether the compliance was required to be made only till such time the Notification No. 64/88 survived. 41. The learned Single Judge of the Madras High Court in Apollo Hospitals held that the requirement of complying with the condition under Clause 2 of the table to the Notification No. 64/88 would continue till such time the said notification was operational. It was further held that such liability cannot be enforced after the repeal of the notification. It was held in para 43 (E.L.T. @ p. 75): "43. Having derived such exemption whether it is open to the petitioners to contend that after the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to exist. Such obligation could not be enforced even after the repeal of the said notification, i.e., even after 1st March 1994. 44. It is in the above background that this Court proceeds to examine the judgment of the Division Bench of the Bombay High Court in Shah Diagnostic Institute Private Ltd. v. Union of India. The facts in that case were that the Petitioner was granted a CDEC on 17th December 1985 for import of an MRI machine. The MRI machine was allowed clearance in part shipments. The show cause notices were issued on 14th December 1992, 5th June 1993 and 10th November 1993 calling upon the Petitioners therein to show cause as to why the duty amount of Rs. 3,82,47,105/- should not be levied and recovered and the MR1 machine not be confiscated. After considering the reply of the Petitioners, an order was passed on 28th August 1994 withdrawing the CDEC ordering the recovery of the duty amount together with the penalty of Rs. 10,00,000/-. This was challenged before the Bombay High Court. The facts in the connected writ petition were that some spare parts of the MRI machine were sought to be cleared by invoking Notification No. 64/88. 45. The Bombay High Court n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt period. 47. The resultant position on a collective reading of the judgment of the Bombay High Court in Shah Diagnostic and the order of the CESTAT in Bharath Diagnostics Centre is that with the repeal of the Customs Notification No. 64/88 with effect from 1st March 1994, the Petitioner in the instant case would have to satisfy the Respondents that it duly complied with the conditionalities in Para 2 of the Table to the Notification during the time the said Notification was in force. While all the judgments referred hereinbefore talk of the validity of action taken by the Respondents after the repeal of the Notification for the non-compliance during the period the said notification was in force, none of the judgments state that the obligation to comply with the conditions under Notification No. 64/88 continued after the said notification was repealed. Consequences for the Petitioner 48. There are two rival contentions on the scope and enforceability of the obligations under Notification 64/88. The first, as advocated by the Petitioner, is that the obligation of the Petitioner to comply with the Notification No. 64/88 continued up to 1st March 1994, and could be enfor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ied with the conditions of Notification No. 64/88 even as on that date. As far as the Petitioner is concerned, it was entitled to presume that with no objection having been raised to the figures submitted by it up to 1st March 1994, it had complied with the requirements of Notification No. 64/88. The action taken by the DGHS by way of the impugned order in seeking to withdraw the CDEC for non-compliance of the conditionalities attached to the Notification No. 64/88 was, therefore, unsustainable in law. 54. As regards the obligations for the period subsequent to 1st March 1994, as already held by this Court, there is no such obligation arising from the Notification No. 64/88 after the date of its repeal. Even otherwise, the Petitioner is entitled to take benefit of the certificate given to it by the Delhi Government on 3rd January 2001 that it continued to fulfill its obligations under the Notification No. 64/88 even up to 31st October 2000. Nothing has been shown to this court to discard the earlier approval by the DHS of the Delhi government of the returns filed by the Petitioner of its compliance of the Notification No. 64/88 up to 1st March 1994. In any event up to the tim ..... X X X X Extracts X X X X X X X X Extracts X X X X
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