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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 ..... ealth Services (DGHS). 2.2 DGHS vide its letter F No Z 37021/63/86-MG dated 08.01.2001 withdrew the CDEC issued by them under Notification No 64/88-Cus dated 01.03.1988, for the reason that institute was not fulfilling the conditions specified in the said Notification. 2.3 Since Respondents had willfully misstated and suppressed the facts, had wrongly availed the facility under Notification No 64/88-Cus and subsequent to imports failed to fulfill the post import conditions as specified, a Show Cause Notice was issued to them asking them to show cause as to why i. the goods imported valued at Rs. 60,30,618/- should not be held liable for confiscation under Section 111(o) of the Customs Act, 1962; ii. the legitimate duty amounting to Rs. 1,40,64,277/- should not be demanded and recovered from the importer u/s 12 and/ or 125(2) of the Customs Act, 1962; iii. the penalty should not be imposed u/s 112(a) of the Customs Act,1962. 2.4 Adjudicating authority has by his order in original held that i. institute did not comply with the post import condition stipulated in the said notification as they did not have any facility to comply with condition (b) and (c) in Para 2 to the table ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ication is not fulfilled department has the power to recover the escaped duty under Section 12 of the Customs Act, 1962 without limitation of time for demanding duty so escaped. v. Mediwell Hospital and health Care Pvt Ltd [1997 (89) ELT 425 (SC) also hold that custom duty can be realized whenever obligations imposed by the exemption notification are not fulfilled. vi. In case of Virgo Steel [2002 (1410 ELT 598 (SC)] Hon'ble Supreme Court held that "..... While the absence of notice may invalidate the procedure adopted by the proper Officer under the Act, it will not take away the jurisdiction of the Officer to initiate action for the purpose of recovery of duty escaped. This is because of the fact that the proper Officer does not derive his power to initiate proceedings for recovery of escaped duty from Section 28 of the Act. Such power is conferred on him by other provisions of the Act which mandate the proper Officer to collect the duty leviable...... A cumulative reading of these provisions found in the Act clearly shows that the jurisdiction of a proper Officer to initiate proceedings for recovery of duty which has escaped collection, is not traceable to Section 28. The powe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate submitted that - i. Adjudicating authority has by his order made out a case against them which never there in the show cause notice, by stating the respondents were not a hospital but a diagnostic centre. {Reckitt and Coleman of India Ltd [1997 (10) SCC 379]} ii. Adjudicating authority has proceeded on irrational and ambiguous basis, therefore order is to be strike down; {B Lakshmichand [1983 (12) ELT 322 (MAD)] iii. Post import conditions cannot be continue when the notification No 64/88_Cus was rescinded by the Notification No 98/94-Cus on 1.03.1994. iv. The ruling of Hon'ble Supreme Court in case of Mediwel Hospitals have considered by larger bench of Supreme Court in case of Faridabad CT Scan Centre [1997 (7) SCC 752] and it was held that Mediwell Hospital case did not lay down the correct law. In case of Sri Sai Sathya Institute High Medical Science [2003(158) ELT 675 (SC), larger bench held against the decision of Mediwell Hospital. Similarly Mediwell Hospital has been discussed in case of RG Stone Urological Research Institute & other {Order dated 24.08.2010 of Delhi High Court in CWP No 2485/2001}, Apollo Hospital Enterprises Limited [2001 (133) ELT 58 (Mad)], Bhara ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Mediwell Hospital case has been reiterated by the Apex Court in case of Jagdish Cancer Research Institute (supra). Thus our interpretation of Section 125(2) is supported by the aforesaid observation of the Apex Court." ii. Shah Diagnostic Institute Pvt Ltd [2008 (222) ELT 12 (Bom)], holding that- "31 Now, we may deal with the last contention of the Petitioners that the Notification No 64/88-Cus dated 1st March 1988 came to an end on 1st March 1994 and, therefore, the conditions imposed in the said notifications came to an end and ceased to be effective. The learned Counsel submitted that Section 6 of the General Clauses Act cannot be made applicable to such notification. 32. This argument of the learned Counsel overlooks and ignored Section 159A of the Customs Act which was introduced by the Finance Act, 2001. Section 159A reads thus: "159A. Effect of amendments, etc., of rules, regulations, notifications or orders. Where any rule, regulation, notification or order made or issued under this Act or any notification or order issued under such rule or Page 0883 regulation, is amended, repealed, superseded or rescinded, then, unless a different intention appears, such amendmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 12 (a) of the Customs Act. 33.2 I find the main equipment for which spares were imported was Lithotome. This equipment and its spares were covered under Notification 65/88-Cus with concessional rate of duty of 40%. Considering the total value of Rs. 60,36,618/- for the imports of the impugned spare parts the duty liability worked out approximately to Rs. 24,12,000/- only. I take this fact into account for the purpose of deciding the quantum of penalty." 4.5 Respondents have challenged the findings of Commissioner referred above by relying on various decisions specifically of Delhi High Court in their own case [Order dated 24.09.2008 in CWP 2485/2001] "Analysis of Mediwell Hospital and the later Supreme Court decisions 31. This brings us to the decisions of the Supreme Court, beginning with the Mediwell Hospital case, on whether the obligation under Notification No. 64/88 continues indefinitely and, in any event, even after the repeal of the said notification. 32. .................. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. In respect of 386 institutions/hospitals CDEC has either been withdrawn or cancelled." 35. ........................ 36. It is clear from the decision in Faridabad CT. Scan Centre that only insofar as the two-Judge Bench in the Mediwell Hospital case held that even a diagnostic centre not attached to any hospital could be granted the CDEC, such decision was held to be no longer good law. By no means can this be construed as an overruling by the larger bench in Faridabad CT. Scan Centre of the entire decision of the smaller bench in the Mediwell Hospital case. 37. ..................... 38. The resultant position is that after the judgment in Sri Sathya Sai Institute High. Medical Sciences v. Union of India, the directions in para 14 of the decision in the Mediwell Hospital case, which imposed a condition of the holder of a CDEC having to issue advertisement in newspapers regarding the provision of free treatment, were held to be no longer good law. 39. Consequently, only the directions contained in para 13 of the Mediwell Hospital case that declared that the obligation under Notification No. 64/88 was a continuing one, which was required to be monitored by the authoritie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll indoor patients belonging to the families with an income of less than Rs. 500/- per month and at least 10 per cent of the hospital beds should be reserved for such patients. Since the first Petitioner did not have the facility of inpatients, it could not have complied with the said conditions and, therefore, was ineligible for the benefit of exemption. It was then held that the attempt by the Petitioners therein to have the machines installed in the premises of the Breach Candy Hospital and Research Centre and not in their own units was dishonest and constituted the practice of a fraud on the revenue authorities. Consequently, it was held that the CDEC was rightly withdrawn. It was further held that the judgment in Apollo Hospitals Enterprises Ltd. did not help the case of the Petitioners at all. The contention that the Notification No. 64/88 was repealed on 1st March 1994 and, therefore, the conditions imposed thereunder ceased to be effective, was rejected by the Bombay High Court by referring to Section 159A of the Customs Act, 1962. It was held that the rescission of the Notification No. 64/88 did not affect the liability acquired, accrued or incurred by the Petitioners with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tinued thereafter in view of Section 159A of the Customs Act, 1962. Thus finding arrived by the Commissioner relying on the decisions of the jurisdictional High Court cannot be faulted with. 4.7 Commissioner after holding the issue on merits in favour of revenue did not demand the duty and observed as follows: "32 Issue V Since the SCN was issued after the time limit specified in section 28 of the Customs Act and since the goods are not available for confiscation is the demand for duty sustainable? In this case a demand under Section 28 will not be maintainable because it is time barred. It is decided by the Supreme Court in the case of Jagdish Cancer & Research Centre that in cases involving confiscation of goods duty will be payable under section 125(2) of the Customs Act and not under Section 28 of the Customs Act, 1962. However in this case there has been no seizure of the goods. It is decided by the Courts that for confiscation of goods either the goods should be physically available or the goods should have been released to the party on the strength of a bond agreeing to pay redemption fine in lieu of confiscation. In this case the goods were never seized and the goods we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have waited for option to be exercised by the Institute under Section 125(1)of the Act as well and in that eventuality, duty would have automatically become payable under Section 125(2) of the Act. But when such an option was not exercised, it could have taken separate and independent action by issuing Show Cause Notice to the effect that the Institute had violated the terms of exemption notification and therefore, was liable to pay duty." 5.10 thus in view of the above decisions when it is concluded that 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. Subsection 3 to Section 28, at the time of issuance of Show Cause Notice reads as follows: "3) For the purposes of sub-section (1), the expression 'relevant date' means, (a) in case where duty is not levied, or interest is not charged, the date on which the proper officer makes an order for the clearance of the goods; (b) in a case where duty is provisionally assessed under Section 18, the date of adjustment of duty after the final assessment t ..... 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