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TMI Blog2005 (10) TMI 112X X X X Extracts X X X X X X X X Extracts X X X X ..... plea by the appellants not to pay the demanded duty when the conditions of free treatment are violated. We also do not think that it is necessary for an exemption notification issued u/s 25 to contain a recovery provision when the power to recover duty can be traced to Section 12, nor any mandate to provide such a recovery provision in an exemption notification is contained in the said Section 25. Thus, we are of the view that the duty in respect the impugned goods imported by the appellants during 1988-94 and used by them in violation of the conditions of the impugned notification is payable irrespective of whether they redeem the same or not independently of Section 125(2) as the duty is recoverable u/s 12 and the impugned notification as well as in terms of the Apex Court decision in Paragraph 12 of Mediwell [ 1996 (12) TMI 51 - SUPREME COURT] . We also find no merit in the argument of the ld. Senior Counsel that the adjudicating Commissioner could have imposed penalty equal to duty, but he has chosen to only impose a nominal penalty. We are of the view that the equal duty provision u/s 112 only provides a measure for the maximum penalty that can be imposed and it is not a prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - (Rs. 34,91,567/- + Rs. 7,89,86,799/-). These notices also proposed recovery of customs duty amounting to Rs. 11,52,06,608/- (Rs. 39,36,742/- + Rs. 11,12,69,866/-) as well as penal action against the appellants. The impugned imports took place during 1988-1994. 3. It was inter alia alleged in the said show cause notices that the appellants had made wilful misstatements in their applications for obtaining customs duty exemption certificates and had suppressed the facts about the non-fulfilment of the conditions of the Notification No. 64/88. It was also alleged that the appellants had failed to fulfil the conditions of the said notification, that they were well aware of the continuous obligation cast on them at the time of import and that, therefore, they should not have opted for the scheme. 4. The impugned order arises from adjudication of these two show cause notices. The Adjudicating Commissioner has come to a finding that the appellants have violated the two post-imposition conditions in the said Notification No. 64/88 relating to (i) giving free treatment to 40% of the outdoor patients and (ii) keeping 10% of the total beds free for patients with family income less than Rs. 5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t-importation violation of the conditions of the exemption Notification would appropriately fall within the Customs jurisdiction and not within the jurisdiction of the certificate issuing authority that is MoH/DGHS (vide Para 38). (ii) Customs can start recovery proceeding, recovery will be for the amount which was exempted, and equipment can be confiscated under Section 111(o) of the Customs Act, 1962 (vide Para 40 and Para 60). (iii) Since liability to pay duty and confiscation of the goods can arise only subsequent to the date of clearance of the goods when there is infringement of the conditions, Section 28 does not apply (vide Para 56). In a case of continuing obligation, the date of clearance of the goods cannot be the date for determining limitation. Date for raising demand should be counted only from the date of show cause notice when infringement is alleged (vide Para 57). The referring Benches in their referral orders dated 1-7-2003 and 8-4-2005 have sought reconsideration of Lady Amphthil (supra) on the following counts :- (a) Paragraph 57 of Lady Amphthil (supra) does not indicate under what provision duty can be demanded. The department cannot proceed to recover duty i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the decision in Mediwell (supra) in Faridabad CT Scan Centre v. DGHS - 1997 (95) E.L.T. 161 (S.C.) holding that benefit of an exemption notification is not to be extended to some one on the ground that such benefit had wrongly been extended to others. As such, Mediwell (supra) is no longer good law and hence cannot be taken as authority for recovery of duty. (5) Section 143 applies to non fulfilment of conditions prior to import, and does not provide authority for recovery of duty when post importation conditions are violated. (6) The adjudicating Commissioner in Paragraph 43 of the impugned order has observed that even though the hospital has in strict terms failed to meet the conditions of the exemption, it is undeniable that it has been doing considerable charitable work and rendering service to the community . As such, the appellants are not in the category of fly-by-night operators. They are contesting the duty liability as there is no specific provision in law or in the notification for recovery of duty in the event of non-fulfilment of post-import conditions. (7) The adjudicating Commissioner could have imposed penalty equal to duty, but he has chosen not to do so. Arguments ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... MMTC Ltd. v. CC - 2001 (133) E.LT. 310 (Del-HC). (8) Lady Amphthil (supra) correctly interprets that Section 28 is not applicable and hence, in the absence of any specific limitation period, the liability arises only when there is infringement of the condition in the notification. Medical Relief Society (supra) [1999 (111) E.L.T. 327 (Kar.)] also supports the view that Section 28 does not come in the way of recovery duty which can be made in terms of the notification. Findings 10. We have carefully considered all the arguments advanced from both sides as well as the case records, written submissions and the cited case laws. We briefly consider the legal provisions first in relation to the main argument by the appellants that duty cannot be demanded in the present case in the absence of any specific provision of law. We find that in Virgo Steel (supra), a Bench of three Judges of the Apex Court had dealt with this question. We quote from Paragraph 8 thereof :- 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 recovery of duty escaped. This is because ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to conditions. In the case of Notification No. 64/88, the exemption granted is conditional. The conditions relating to (i) free treatment of 40% outdoor patients and (ii) reservation of 10% of beds for free treatment of patients with family income less than Rs. 500 p.m. make it manifestly clear what the public interest behind the said exemption is. If these conditions are not fulfilled after importation and the public interest is not served, the exemption becomes unavailable and full duty as leviable under Section 12 becomes payable. 14. We note that the impugned notification has not provided for obtaining any bond or bank guarantee for recovery of duty in the event of failure to fulfil the conditions of free treatment. However, it is the prerogative of the Government to grant exemption, as has been held in Sri Sathya Sai Inst. (supra), and it is for the Government to incorporate appropriate provisions. Merely because some other exemption notifications incorporate provisions regarding bond etc. by way of extra precaution and this one does not (as the Government may have valid reasons not to burden hospitals doing genuine charitable work with bonds and bank guarantees), this cannot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty who have granted such certificate of exemption would ensure that the obligation imposed on the persons availing of the exemption notification are being duly carried out and on being satisfied that the said obligations have not been discharged they can enforce realization of the customs duty from them. The Apex Court has thus clearly held that the said Notification No. 65/88 casts a continuing obligation and that in the event of failure to discharge that obligation, duty is demandable. 16. The learned senior Advocate for the appellants has argued at length that Paragraphs 12 and 13 of Mediwell (supra) are not to be taken as ratio decidendi or obiter dicta as they are in the nature of casual observation. We do not find force in such argument. In the concluding sentence of Paragraph 14 of Mediwell (supra), the Apex Court has clearly stated that availability of such concession by the appellant would be subject to the direction and conditions as stated earlier . As such, the earlier Paragraph 12 is an integral part of the Apex Court's order being directions for availing the duty concession under the impugned notification. Moreover, we note that the Larger Bench of three Judges of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 125(2) states that where any fine in lieu of confiscation of goods is imposed, the owner shall, in addition, be liable to any duty and charges payable on the goods. It merely clarifies that confiscated goods cannot be released on payment of fine alone. It, nowhere, says that if confiscated goods are not redeemed, the duty demand, if otherwise payable, gets extinguished. Jagadish Cancer (supra) also says that there is a mandatory requirement on the adjudicating officer before permitting the redemption of the goods to levy any duty. It also nowhere says that duty shall not be payable if the goods are not redeemed. (iii) We find that the Department has merely placed the goods under seizure by issue of a seizure memo, but the appellants have been allowed to operate the impugned equipments at the places of installation in the premises of the appellants. Even after confiscation, the equipments remain with the appellants. As such, the appellants have had the use of the impugned equipments all along since the time of their importation and their contention that they do not wish to redeem the same has no meaning. In view of the foregoing, we are of the view that the duty in respect the i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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