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TMI Blog2019 (2) TMI 612X X X X Extracts X X X X X X X X Extracts X X X X ..... cannot be sustained - the post import conditions stipulated in a exemption notification are not satisfied the duty becomes payable in terms of the Section 12 of the Customs Act, 1962 and it is for the respondents to come forward and pay the duty. The order of Commissioner not considering demand of the duty legitimately payable under Section 12 of Customs Act, 1962 cannot be sustained - the matter needs to be remitted back to the Commissioner for determination of the issue in respect of the various contraventions alleged in the show cause notice and for recording a specific finding in respect of the duty legitimately payable under Section 12 - appeal allowed by way of remand. - APPEAL No. C/190/2011, C/CO/44/2011 - A/85263/2019 - Dated:- 8-2-2019 - S.K. Mohanty, Member (Judicial) And Mr. Sanjiv Srivastava, Member (Technical) Ms. P. Vinita Sekhar, Additional Commissioner (AR), for appellant Shri Jeevan Prakash, Advocate, for respondent ORDER Per: Sanjiv Srivastava This appeal has been filed by the revenue against the Order in Original No CC/MJ/27/2010 Adj ACC dated 30.12.2010 passed by the Commissioner of Customs (Import) Air Cargo Complex, Sahar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Jagdish Cancer and Research Centre, Hon ble Apex Court has held that in cases involving confiscation duty will be payable under Section 125(2). Since the goods are not available for confiscation nor they have been released to the respondents on the strength of a bond agreeing to pay redemption fine in lieu of confiscation thus the provisions of Section 125 cannot be invoked in the present case; vi. the obligations towards duty cannot continue beyond the life time of the equipments imported availing the exemption; vii. penalty of ₹ 24,00,000/- (Rupees Twenty four Lakhs only) is imposed under Section 112(a). 2.5 The order of Commissioner has been challenged by the revenue on various ground as stated below:- i. Since the duty demand does not relate to short levy or non levy at the time of assessment on importation but has subsequently arisen on account of failure to fulfill the post importation conditions stipulated under the Notification, section 28 has no application in the present case. ii. The power to recover escaped duty collect is arising out of section 12 of the Act. Since no specific time limit has been provided under the said section 12, the notice of de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ondents have filed cross objections in the matter challenging the penalty imposed by the Commissioner in his order. 3.1 We have heard Ms P Vinita Sekhar, Additional Commissioner (Authorized representative) for the Appellant (Revenue) and Shri Jeevan Prakash Advocate for the Respondents. 3.2 Arguing for the revenue learned Authorized Representative submitted that adjudicating authority was not correct in confirming the duty demanded after having held that post import conditions stipulated by the Notification No 64/880-Cus were not fulfilled. She submitted the sole reason for not confirming the said demand was that Commissioner found that demand will be barred by limitation under Section 28 and Section 125 of the Customs Act, 1962 is not applicable in this case as the goods were not available for confiscation, nor where they released against a bond or bank guarantee agreeing to pay the redemption fine or the duty. She relied upon the decision of larger bench of Tribunal in case of Bombay Hospital Trust [2005 (188) ELT 374 (T-LB)] to argue that power to recover duty is vested in terms of Section 12 of the Customs Act, 1962 and in case of failure to comply with the post importati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i. Since no duty can be demanded penalty cannot e imposed. ix. They had complied with the post import obligations and also filed the proof of same for about 13 years. 4.1 We have considered the submissions made in the appeal, cross objections and during the course of argument. 4.2 Para 14 of the Show cause Notice reads as follows: 14 Therefore M/s Bombay Urological Institute Research Centre are called upon to show cause to the Commissioner of Customs (Import) Air Cargo Complex, Sahar International Airport, Sahar, Andheri (E), Mumbai as to why (a) The said goods as described in Annexure A to this Show Cause Notice and valued at ₹ 60,30,618/- should not be held liable for confiscation under Section 111(o) of the Customs Act, 1962. (b) The legitimate customs duties amounting to ₹ 1,40,64,277/- should not be demanded and recovered from M/s Bombay Urological Institute Research Centre under the provisions of Section 12 and/or 125 (2) of Customs Act, 1962. (c) Penalty should not be imposed under Section 112(a) of the Customs Act, 1962 for the above described wilful act of defrauding customs duty to the tune of ₹ 1,40,64,277/- (duty cal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pealed, superseded or rescinded; or (d) affect any penalty, forfeiture or punishment incurred in respect of any offence committed under or in violation of any rule, regulation, notification or order so amended, repealed, superseded or rescinded; or (e) affect any investigation, legal proceeding or remedy in respect of any such right, privilege, obligation, liability, penalty, forfeiture or punishment as aforesaid, and any such investigation, legal proceeding or remedy may be instituted, continued or enforced and any such penalty, forfeiture or punishment may be imposed as if the rule, regulation, notification or order, as the case may be, had not been amended, repealed, superseded or rescinded. 33. That Section 159A is deemed to have been inserted on and from 1st February, 1963 cannot be questioned. It, therefore, has to be held that Section 159A was operating on 1st April,1994 when the Notification No 64/88-Cus was rescinded. In other words, rescission of the Notification No 64/88, does not effect the liability acquired, accrued or incurred by the petitioners with regard to fulfillment of clause 2(b) of the said notification. 34. We find no merit in both. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court required the competent authority to continue to be vigilant and check whether the undertakings given by the applicants are being duly complied with after getting the benefit of the exemption notification and importing the equipment without payment of customs duty. It was consequently held that if upon enquiry the authority was satisfied that the said obligation was not being carried out then it would be fully open to the authority to ask the persons who have availed of the benefit of exemption to pay the duty payable in respect of the equipments which have been imported without payment of customs duty. All the above observations were made in para 13 of the judgment (SCC@ p.766). In para 14, a direction was given that all the persons, including Mediwell, who had the benefit of the CDECs should notify in the local newspaper every month the total number of patients they have treated and whether 40% of them are the indigent persons below stipulated income of ` 500/- per month full particulars and address thereof which would ensure that the condition to treat 40% of the patients free of cost would continuously be fulfilled. In the event of default, it was directed that coer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 75): 43. Having derived such exemption whether it is open to the petitioners to contend that after the rescinding of Notification No. 64/88, it is not open to the authorities to enforce the liability. The answer is simple, in view of the judgments of the Supreme Court referred to above. The petitioners those who benefited the tax exemption are bound to discharge the liability during the period when the said Notification 64/88 was in force. Hence it is always open to the authorities to enforce such obligation only during that period when the Notification No. 64/88 was in force and not for the subsequent period. So it is for the authorities to establish that the petitioners had violated the conditions imposed under Notification No. 64/88 subsequent to their availing the benefit of the exemption of Duty and before the end of February, 1994, since Notification 99/94, rescinding the Notification 64/88 came into force on 1-3-94. 42. .. 43. The resultant position from the above discussion would be that as far as the Customs Notification No. 64/88 is concerned, the requirement under Para 2 of the Table to provide free treatment to at least 40% of all their outdoor pat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... conditions under which the benefit of the said notification had been obtained during the period the said notification was in force. Referring to paras 42 and 43 of the Madras High Court ruling in Apollo Hospitals, the CESTAT also held that a careful reading of the said paras would reveal that the authorities can enforce the obligations only during the period when the Notification No. 64/88 was in force and not for the subsequent 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Section 12. The order of Commissioner not considering the demand under Section 12 cannot be sustained in view of the decision of larger Bench (Five Member) of CESTAT in case of Bombay Hospital Trust [2005 (188) ELT 374 (T-LB)] wherein larger bench held- 22. Accordingly, we answer the reference as follows :- (i) When a post-importation condition in an exemption notification is not fulfilled, the Department has the power to recover the escaped duty in terms of Section 12 of the Customs Act, 1962. Paragraph 12 of the Apex Court decision in Mediwell (supra) also provides an authority for such recovery. (ii) Such demand notices will not be subject to any limitation of time. 4.9 In case of Fortis Hospital Apex Court held- It is not that the Department is without any remedy. We have gone through the provisions of notification No. 64/88 dated 01.03.1988. As pointed out above, importer would be exempted from payment of import duty on hospital equipment only when the conditions contained in the said notification are satisfied. Some of the conditions, as pointed out above, are to be fulfilled in future. If that is not done and the importer is found to have viola ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provisional assessment iii. it is not case of recovery of amount erroneously refunded. Thus in terms of (d) the relevant date can be the date of payment of duty or interest. The basic purpose of clause (d), is only to take care of situation where duty becomes payable, subsequent to clearance of the goods from the port, and only seeks to align the provisions of Section 28, so as to provide a machinery provision for recovery of duty legitimately payable under Section 12. 5.11 In our view order of Commissioner not considering demand of the duty legitimately payable under Section 12 of Customs Act, 1962 cannot be sustained. 5.12 Since we are not in position to sustain the order of Commissioner, the matter needs to be remitted back to the Commissioner for determination of the issue in respect of the various contraventions alleged in the show cause notice and for recording a specific finding in respect of the duty legitimately payable under Section 12. Since the matter is being remitted back to Commissioner, he should also determine the issue of penalty under Section 112(a) afresh taking into account the consideration of the submissions made by the respondents herein. 6.1 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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