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TMI Blog2012 (9) TMI 915X X X X Extracts X X X X X X X X Extracts X X X X ..... celled is not furnished to the appellant. - The issue as to the point of time up to which the continuing obligation shall continue is not examined with reference to the nature of goods imported and the decisions of various Courts on the issue - In the event of the exemption under Notification 64/88-Cus. being denied to them there is a need to examine whether the appellants were eligible for exemption under Notification 65/86 or any other alternate exemption as would have been available and where the eligibility can be determined with reasonable certainty at this point of time. Case should not be remitted back for making enquiries with the police station or for cross-examination of any official from DGHS at this late point of time because it is not the view of any individual officer that matters in such issues but of the organization as reflected in records. The case should be decided on evidence as disclosed by records. - treating 40% of the outdoor patients was a condition not possible to be complied with because adequate number of poor patients did not turn up. The argument is repugnant to common sense. Further the notification did not say that 40% of the patients should be po ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ive hundred per month and keeping for this purpose at least 10% 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, for patients other than those specified in clauses (a) and (b) . The appellant on the basis of the certificates issued by the Ministry of Health, called customs duty exemption certificate (CDEC) certifying that the appellant fall in the S. No. 2 of the table to the Notification No. 64/88-Cus. made the above-mentioned duty free imports of medical equipments, spares accessories, as they satisfied the conditions as specified in paras 2 3 of the notification. There is no dispute about satisfaction of the conditions in paras 2 3 of the notification. 1.2 Hon ble Supreme Court in case of Mediwell Hospital reported in 1997 (89) E.L.T. 425 (S.C.), while interpreting the provisions of Notification No. 64/88-Cus. in respect of hospitals who had made duty free import of medical equipments by claiming to be in the category of hospitals covered by S. No. 2 of the table to the notification, held that the obligation of a hospital for free treatment of poor pati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of free indoor patients as percentage of total bed occupancy during 1988, 1989, 1990, 1991, 1992 and 1993 was 10% +, 15%, 10%, 10% +, 10% + and 12% + respectively, not 8%, 10.5%, 9%, 9%, 9% and 10% respectively as alleged by the Department. (2) In any case, since there was a separate indoor patient ward for free treatment of indigent patients, the appellant have complied with the condition of keeping at least 10% beds reserved for indoor treatment of poor patients. (3) As regards the condition of treating at least 40% OPD patient free, this condition cannot be construed that every year strictly 40% OPD patients have to be treated free sometimes it may depend upon the availability of the patient. During 1988 to 1993, the percentage of OPD patients treated free each year was 40% or more. During 1994, 1995 1996, the number of paid OPD patients substantially increased on account of super-specialty facilities, because of which the percentage of free OPD patients decreased in spite of increase in the absolute number of OPD patients treated free. The words at least 40% on an average in the exemption notification cannot be construed that strictly 40% of the OPD patients h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was below 40%. When the condition of notification have not been fulfilled, the exemption under Notification No. 64/88-Cus. would not be available and has been correctly denied. (2) In terms of the Apex Court s judgment in case Mediwell Hospital and Health Care Pvt. Ltd. v. Union of India (supra) and CC, Mumbai v. Jagdish Cancer Research Centre (supra), for the hospitals who availed the benefit of duty free imports under Notification No. 64/88-Cus., the obligation of reserving at least 10% beds for free treatment of poor indoor patients and free treatment of at least 40% OPD patients is a continuing obligation, that this obligation must be fulfilled during each year and failure to fulfil the same will result in denial of the exemption benefit. In terms of these judgments, the customs authorities can check and verify the fulfilment of the conditions of exemption in case of violation enforce the realization of customs duty from the hospitals. (3) Tribunal in case of Noida Medicare Centre Ltd. v. CC, New Delhi reported in 2007 (220) E.L.T. 230 has held that for availing the benefit of Notification No. 64/88-Cus. - both the conditions - reserving at least 10% hospital b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tients was less than 40%, the reason for the same was that less OPD patients had opted for free treatment and less patients entitled for free treatment had visited the hospital, that it is not the condition of the notification that the hospitals should go to the doorsteps of the patients and persuade them to come to the hospital for free OPD/indoor treatment, and that the condition of free treatment of at least 10% poor indoor patients and at least 40% outdoor patients is subject to the established legal maxim Lex non - cogit ad impossibilia and Nemo tenetur ad impossibilia, that the appellant had made all the arrangements for free treatment of poor indoor patients and eligible outdoor patients and information in this regard had been displayed on the notice boards at the hospital gates and other places, that except for 1995 and 1996, during all the years from 1988 to 1999, the free OPD patients were in excess of 40% and shortfall in percentage of free OPD patients during 1995 and 1996 is not on account of any lack of arrangement in this regard on the part of the appellant, that show cause notice dated 16-9-2000 is not based on withdrawal/cancellation of CDEC, which is denied; that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant are a hospital of the type as mentioned above. The allegation of the Revenue is that the appellant are not a hospital covered by S. No. 2 of the Table, as during 1995 1996 the outdoor patients treated free were much less than 40% and the percentage of poor indoor patients treated free has always been less than 10%. The appellant while not disputing that the percentage of OPD patients treated free during 1995 1996 was 35% and 36% respectively i.e. less than 40%, have pleaded that - (a) during other years i.e. all the years from 1988 to 1999 except for 1995 1996, the percentage of OPD patients treated free was more than 40%; (b) they had made arrangement in the hospital for free treatment of outdoor patients and poor indoor patients and for the latter, there is a separate ward; (c) information about the facilities for free indoor treatment of poor patients i.e. those with monthly income of ₹ 500/- or less and free treatment of other eligible outdoor patients had been displayed prominently at the hospital gate and OPD buildings; (d) percentage of poor indoor patients treated free during each year from 1988 to 1999, when calculated on the basi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere 40% or more. The appellants contention is that - (a) just because of less than 40% OPD patients were treated free during 1995 1996, the exemption cannot be denied, as this depends upon the availability of eligible patients and, in this regard, reliance is placed on judgment of Hon ble Madras High Court in case of Apollo Hospital Enterprises v. U.O.I. reported in 2001 (133) E.L.T. 58 (Mad); and (b) the notification does not require the hospitals to bring the OPD patients for free treatment by hook or by crook when more patients opt for paid OPD treatment and the law does not require performance of an obligation which is impossible. 5.1 Before considering the above contentions of the appellant, it would be worthwhile looking at S. No. 2 of the Table to the Notification No. 64/88-Cus. and how it has been interpreted by the Apex Court, various High Courts and the Tribunal. 6. A look at S. No. 2 of the Table to the Notification No. 64/88-Cus. would show that, a hospital for being covered by this S. No. 2 must satisfy the following conditions and a certificate in this regard (CDEC) must be issued by the DGHS in each case of duty free import. (a) The hosp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (b). For clause (b), if after reserving at least 10% of the total beds for free treatment of poor indoor patients, the number of poor indoor patients treated free is still less 10% of total number of indoor patients treated, it cannot be said that the condition of clause (b) has not been fulfiled unless it is shown that the patients who are poor, as per the definition of poor patients in this clause, who came to the hospital for indoor treatment were turned back without treatment. It is for this reason that in this case, as discussed in para-4 above, keeping in view the fact that the appellant s plea that they have a separate ward in the hospital for free treatment of poor indoor patients has not been refuted by the Department and it is also not the allegation of the department that the number of beds in the ward earmarked by the appellant for poor indoor patients, is less than 10% of the total beds, we have held that the condition of clause (b) of Sl. No. 2 of the table has been satisfied. 6.2 But the condition of clause (a) of Sl. No. 2 specifies a percentage - at least 40% of total OPD patients for free treatment - these patients can be poor i.e. of family with monthly inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lies with income of less than ₹ 500/- per month and reserve at least 10% of total beds for this purpose; (b) the hospitals who have availed of the exemption under Notification No. 64/88-Cus. must notify in the newspapers giving full particulars of the patients treated free; (c) the authority which granted such duty exemption must ensure that the obligation regarding free treatment of at least 40% OPD patients and all poor indoor patients by reserving at least 10% beds is discharged and if the obligations are not discharged, the customs duty foregone shall be recovered from the hospital. The above judgment in Mediwell s case has been upheld by a Larger Bench of the Apex Court in case of Sri Sathya Sai Inst. High Medi Sciences v. U.O.I. reported in 2003 (158) E.L.T. 675 (S.C.) except for striking down the direction that the hospitals availing of this exemption must notify the details of the patients treated free in the newspapers. 6.3.1 The Apex Court in its subsequent judgment in the case of CC (Imports), Mumbai v. Jagdish Cancer Research Centre, reported in 2001 (132) E.L.T. 257 (S.C.) (para-13) and CC, New Delhi v. C.T. Scan Research Centre (P) Ltd. report ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... indigent indoor patients, there was a separate ward in the appellant s hospital and it is not the Department s allegation that the number of beds in the ward for free treatment of poor indoor patients was less than 10% of the total beds in the Hospital. But as discussed above, for meeting the conditions of clause (b) regarding free treatment of at least 40% OPD patients, having intention to fulfil this condition and making arrangements for the same is not enough, this condition must be fulfilled by actually treating at least 40% OPD patients free. If the appellant claims to be a hospital being run or substantially aided by a charitable organization approved by the Ministry of Health Family Welfare , they should have produced a certificate in this regard from the Ministry of Health Family Welfare, as per S. No. 1 of the Table. But no such certificate has been produced. When the appellant claims to be covered by S. No. 2 of the Table on the basis of a certificate issued by DGHS, they must fulfil all the conditions of the same. It is well settled that exemption notifications have to be construed strictly and non-fulfilment of the condition, whether intentional or unintentional w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... older) at page 3 thereof made allegation that the appellant did not disclose the details and address of the patients treated free in OPD and IPD in last 10 years, % of the beds reserved for economically poor; and the % of the IPD patients claimed to be free has always been less than 10%. Only with these 3 (three) allegations, SCN was issued alleging further that the importer has not fulfilled the conditions specified in the Notification No. 64/88-Cus., dated 1-3-2008. But such SCN did not disclose which are the conditions not fulfilled. Such SCN was assailed by ld. Counsel for appellant submitting that the SCN is baseless since exemption notification does not require what are the details to be disclosed for which Adjudication was made beyond SCN and that is unsustainable. 11. Contention of the ld. Counsel that adjudication is beyond SCN cannot be brushed aside for the reason that SCN is foundation and gives rise to civil and evil consequences. It has been held in the case of CCE v. Gas Authority of India Ltd. - 2008 (232) E.L.T. 7 (S.C.) that SCN is foundation of the demand and an assessee proceeds with that to lead its defence. If SCN does not make specific allegation in clear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tice itself. Such a close mind is inconsistent with the scheme of rule of law. 15. Therefore, while issuing a show cause notice, the authorities must take care to manifestly keep an open mind as they are to act fairly in adjudging the guilt or otherwise of the person proceeded against and especially when he has the power to take a punitive step against the person after giving him a show cause notice. The principle that justice must not only be done but it must eminently appear to be done as well is equally applicable to quasi judicial proceeding if such a proceeding has to inspire confidence in the mind of those who are subject to it. 16. Apex Court in the case of Kaur Singh v. CCE - 1997 (94) E.L.T. 289 (S.C.) has held that the party to whom a show cause notice is issued must be made aware of the allegation against it. This is a requirement of natural justice. Unless the assessee is put to such notice, he has no opportunity to meet the case against him. This is all the more so when a larger period of limitation can be invoked on a variety of grounds. Which ground is alleged against the assessee must be made known to him, and there is no scope for assuming that the ground i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat regard while allowing duty free import. The allegation aforesaid in the SCN cannot be considered to have brought out allegations in clear terms to grant fair opportunity to the appellant to defend. Allegations were without any basis. When the appellant has stated material fact of its charitable nature, that needed testing with the category of hospital certified by the DGHS for importing the spares of bio-medical equipments during 1988 to 1993 following para 21 of judgment of Hon ble High Court of Delhi in the case of Sir Ganga Ram Trust Society v. Union of India - 2011 (268) E.L.T. 465 (Del.). Without ascertaining the status of the appellant hospital, the Authority reached to abrupt conclusion on the allegation of not furnishing of details made in the SCN which was not the requirement of any disclosure by hospitals in terms of the Notification unless otherwise called for by Authorities under law. 20. The particulars furnished by the appellant which would be relevant for exemption under Para 2 of the Table appended to the Notification No. 64/88 will not act as an estoppel to prevent the appellant from claiming benefit of Para 1 of the said Table if that is otherwise permissib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the ratio of any decision must be understood in the background of the facts of that case. It has been said a long time ago that a case is only an authority for what it actually decides and not what logically follows for it. It is well settled that a little difference in facts or additional facts may make a lot of difference in the precedential value of a decision - Bhavanagar University v. Palittana Sugar Mills Pvt. Ltd. - (2003) 2 SCC 111 (Para-59). It has also been held in the case of Bharat Petrolium Corporation Ltd. Another v. N. E. Vairamani another - AIR 2004 SC 4778 that Courts should not place reliance on decisions without discussing as to how the factual situation fits in with the fact situation of the decision on which reliance is placed. Observations of Courts are neither to be read as Euclid s theorems nor as provisions of a statute and that too taken out of the context. These observations must be read in the context in which they appear to have been stated. Judgments of Courts are not be construed as statute, it may become necessary for judges to embark into lengthy discussions but the discussion is meant to explain and not to define. Judges interpret statutes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not been dealt by Adjudicating Authority in the impugned order. 25. Appellant s submission was that for convenience of free OPD patients and for convenience of inspection by Authorities from time to time as well as for practical convenience of accountability, the appellant has maintained separate OPD for free service so as to save them from payment to the consultants who charge for providing their service at paying OPD and when such a free facility was provided to all who approached at free OPD, mere shortfall of an insignificant percentage taking free OPD patients and patients seeking for paying OPD service shall not disentitle the appellant to the exemption deserved consideration and finding thereon by Adjudicating Authority was warranted when there was pleading before him in that regard. But that did not receive his consideration for no fact finding in the adjudication to that effect by any field inspection or seeking any information from DGHS although the appellant pleads that Adjudicating Authority recorded in its minute of hearing as to proposal for causing inquiry with DGHS. 26. Aforesaid reasons and observations call for remand of the matter to the learned Adjudicati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the country against many hospitals which imported goods claiming exemption under the said notification but did not comply with the conditions in the notification after import of the goods. There have been many decisions of different High Courts and the Apex Court on this subject. 31. From the annexure to the SCN it is seen that during the years 1990 to 1993, the appellant hospital had imported 85 consignments claiming exemption under Notification 64/88-Cus. Out of the 85 consignments, as specified in annexure to the SCN dated 16-9-2000, there is demand for differential duty only in the case of 64 consignments as per worksheet annexed to the SCN. Out of 81 consignments 80 consignments are prima facie of spares and accessories and one consignment is stated to be of Vital Sign Monitor-VS M5 about which the position whether it is a complete machine is not clear. 32. The exemption was available to four types of hospitals as listed in the Table annexed to the notification. As per paragraph 1 of the said notification, for claiming such exemption for import of medical equipment it was necessary to produce a certificate commonly known as Customs Duty Exemption Certificate ( CDEC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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). 3. Hospitals run on no profit no loss basis and specially certified by Ministry of Health and Family Welfare considering the class of people served or the geographical situation of the hospital and if such hospital was purchasing such goods from foreign exchange donation received abroad. 4. Hospital that is being set up subject to certain conditions specified in that regard. 34. What I noticed from scrutiny of the records of this case is that no copy of any certificate is part of the proceedings before lower authorities. No certificate is produced before the Tribunal by either side. There is a mention in the impugned order about letter dated 3-11-2010 from DGHS about withdrawal of CDEC issued to the hospital. But the letter is not supplied to the appellant or produced before the Tribunal. 35. Further there is no seizure of any spares or equipment imported under the Notifi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mporter has not fulfilled the conditions specified in the Notification No. 64/88-Cus., dated 1-3-1988 and thus was not entitled to avail the exemption under the said notification. On account of non-fulfilment of the conditions of the notification the importer was liable to pay duty of ₹ 1,32,37,001.03 (plus further quantification being done) but for the exemption as well as interest thereon @ 20% per annum w.e.f. the date of clearance under Section 28A of the Customs Act, 1962. The imported goods are liable to confiscation under Section 111(o) of the Act ibid as it appears that the benefit of notification had been availed by misstatement and suppression of the facts, hence rendering the importer liable to penalty under Sections 112 and 114A of the Customs Act, 1962. Now therefore, it appears that the importer in the present case violated the conditions of the said exemption notification as per the reply received from M/s. Batra Hospital and Medical Research Centre, New Delhi on 28-7-2000, it is clear that they have not disclosed the details and addresses of the patients treated free in OPD and IPD in last 10 years, 0% (sic means only percentage ) of the beds reserved fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t condition nowhere indicates that within what period, the prescribed percentage is to be achieved. It is submitted that it should be during the life of the equipment imported. Thus, shortfall of particular year may be made good in the following year. We are not impressed by this argument. It would, not at all, be necessary to prescribe any period to achieve the given percentage of patients treated free. It should generally be all through the period. It being at least 40% there is hardly any occasion to say that in case there is more than 40% in a given period, that make good the deficiency in the previous or the following year. Therefore following the judgment pronounced by the Apex Court, I hold that as the notice have not fulfilled the conditions stipulated in the Notification No. 64/88, they are liable for action as proposed in the notice. 41. Technical Member of the Bench which heard the matter upholds the order-in-original for the following reasons. (i) It is an accepted fact that the percentage of outdoor patients treated free during the years 1995 and 1996 were 35% and 36% respectively and thus below the level prescribed in the Notification 64/88-Cus. (Conditio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... para 22 of the said order. (iii) On the basis of figures furnished by the appellant hospital the adjudicating authority has held that 40% OPD patients were not treated free of cost without discussing the submissions of the appellant hospital. (iv) The adjudication was done without giving a proper hearing and the hearing was an empty formality. (v) There is a statement that the adjudicating authority has considered in para 10 of his order that the condition in the notification was that free treatment to all patients belonging to the salary group less than ₹ 500 pm . (To my mind it is only a simple error of using the word salary instead of income and no wrong understanding of the condition is reflected in the findings). (vi) The question of compliance with law should be judged in a pragmatic view as well as practical aspect as decided by the Apex Court in Ranbaxy Laboratories Ltd. and Others - AIR 2008 S.C. 2286 and in the case of Apollo Hospitals - 2001 (133) E.L.T. 58 (Mad.). (vii) When free treatment was given to all patients who approached the OPD mere shortfall of an insignificant percentage should not disentitle them for exemption under Noti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the condition is on the appellant. At the time of claiming the exemption they did not consider the condition to be impossible to comply with because adequate number of poor patients were not turning up for free treatment. It is only after import of the goods that the appellant is pleading this to be an impossible condition. 44.2 In proceedings before the lower authority there was no claim that the CDEC was issued to them under category 1. So it is obvious that CDEC was issued under category 2. 44.3 The Notification prescribes the minimum percentage of OPD patients that should have been treated free of charges at 40%. The expectation was more. The appellant hospital did not meet the requirement in letter or spirit for two years by their own admission. This is not an issue where some margin of allowance can be granted to the appellant hospital. This issue is already decided by courts. 44.4 In a country like India the argument that adequate number of poor patients did not turn up for free medical treatment cannot be accepted as a bona fide submission. It could have happened only because the appellant were not responding to the need of the poor in a sincere manner. The poor m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e adjudication but it is relied upon. The letter is not produced before the Tribunal. The appellant says that they have not received the said letter from DGHS. 46. The show cause notice is issued assuming that certificate is issued to the hospital under category 2 as is seen from the third paragraph of the SCN because it talks about conditions stipulated against category 2. The cancellation letter from DGHS is stated to be for the reason that the hospital did not satisfy the conditions as applicable to hospitals of category 2. In reply there is no categorical assertion that the certificate was issued to the hospital as a hospital falling under category 1, though there is a mention in para 5 of the reply that there is no mention in the SCN that the hospital is not satisfying conditions in para 1, 3, or 4 of the Table. Actually the position is that if the certificate was issued under category 2 and if such certificate was accepted and acted upon there was no reason to examine conditions which were relevant to category 1, 3 and 4. There is no submission anywhere in the appeal memorandum filed in 2005 before the Tribunal that the hospital was falling under category 1 and not under c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were cancelled for this reason. But this letter from the appellant to DGHS and the letter from DGHS received by the customs department are not on record. 50. The Hon ble Apex Court in the case of Mediwell Hospital and Health Care Pvt. Ltd. and Jagdish Cancer Research Centre and different High Courts in many other decisions had decided that the obligation under the conditions imposed under the Table to the notification is to be satisfied not only before the import of the goods but also after the import of the goods. The Apex Court has described the obligation as a continuing obligation . But how long the obligation would continue is not clear from the terms of the notification and from the decisions of the Apex Court. The appellant argues that the obligation comes to an end once the notification was rescinded on 1-3-1994. The ld. AR for Revenue opposes this. According to him the rescinding of a notification can mean only that no further import under concessional rate in the notification would be permitted. It cannot be interpreted to mean that the conditions subject to which the exemption was availed in the past would end. According to him it would continue during the life ti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case, in fact the DGHS was the respondent. 54. I am also not in agreement with the suggestion that the issue is to be examined to see whether the notification was substantially complied with rather than complied with as per the terms of the notification. In this matter I am guided by the decision of the Apex Court in the case of CCE v. Hari Chand Shri Gopal - 2010 (260) E.L.T. 3 (S.C.). This issue is to be decided with reference to facts of each case and issue at dispute. If the demand was confirmed for the reason that the names and addresses of the patients who were treated free of cost during 1988 to 1994 were not available in the year 2000 then I would have agreed with the proposition. If the objection is that as per the records of the hospital the percentage of poor people treated free of cost was less than the prescribed percentage, I do not agree with the proposition that substantial compliance is enough. Further this issue is already decided by the Tribunal in the case of Noida Medicare Centre Ltd. v. CC - 2007 (220) E.L.T. 230 as affirmed by Apex Court as reported at 2008 (224) E.L.T. A66 (S.C.) and in many other decisions on issues relating to similar shortfalls in othe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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