By TIOL News Service

MUMBAI, OCT 22, 2014: THE appellant imported between March and August 1991 medical equipment claiming the benefit of Notification 64/88-Cus dated 01/03/1998 on the strength of a Customs Duty Exemption Certificate issued by the Director General of Health Services.

The conditions mentioned in the certificate were - (i) the appellant undertakes to give free treatment, on an average, to at least 40% of the outdoor patients; (ii) to give free treatment to all indoor patients belonging to families with an income less than Rs.500/- per month, and to keep for this purpose, at least 10% of all the hospital beds reserved for such patients and to give free treatment at charges either on the basis of income of the patients concerned or otherwise to patients other than those specified above.

It is the case of the Revenue that pursuant to investigations and recording of statement it was revealed that the appellant had failed to fulfil the post import conditions and, therefore, after issuance of SCN dated 04/04/2001 the Customs duty demand was confirmed and the medical equipment were held liable for confiscation and penalty was imposed.

Before the CESTAT the appellant submitted inter alia that patients who attended in outdoor medical camps should also be included under the category of OPD patients; that as regards the condition of keeping 10% of the beds reserved for inpatients whose income is below Rs.500/- per month, it is submitted that all such patients have been admitted and given the beds and treated free and there is no complaint or resentment by any patient in this regard. It is also submitted that occupancy of the beds in the hospital never exceeded more than 75% of the beds available and, therefore, beds were always available for treatment to inpatients within the limit of 10% as stipulated in the Notification; that the appellant was doing philanthropic work and the appellant-hospital was situated in a remote village and is run by Charitable Trust with the sole objective of serving the poor and the needy villagers; that the demand is a belated one.

The AR supported the order of the adjudicating authority and cited quite a few case laws in this regard.

The Bench after considering the submissions observed -

++ It is an admitted fact that as per the records produced by the appellant before the investigating authority, the total number of OPD patients given free treatment amounted to 2.2%, 5.57% and 2.64% for the years 1997, 1998 and 1999 respectively. Similarly the number of inpatients given free treatment &having income below Rs.500/- were 1.2%, 0.36% and 0.81% for the above mentioned years. This position has been admitted by the Hospital Administrator in his confessional statement recorded on 13/12/1999. Therefore, it is clear that the appellant has not fulfilled the post-importation conditions of giving free treatment to 40% of the OPD patients and 10% of the IPD patients.

++ As regards the reliance placed on a letter dated 16/02/2000 wherein the appellant has claimed to have furnished details of the OPD patients treated freely, we have perused an unsigned copy of the said letter. However, there is no mention in the said letter as to from where this data have been obtained and what is the basis for these data and therefore, this claim of the appellant is only a mere averment without any basis or supporting evidence. It is a settled position in law that it is for the person who is claiming the benefit of exemption Notification to lead evidence to show that he is entitled for the exemption. We find that the appellant has completely failed in this regard and the evidence available on record is contrary to the claim of the appellant.

++ As regards the contention that the demand is made belated, this contention is also not sustainable as Notification 64/88 imposes a continuing obligation on the importer with regard to provisions of free medical treatment, as held by the apex Court in the case of Jagdish Cancer & Research Centre - 2002-TIOL-119-SC-CUS.

++ As regards the contention of the appellant that the patients treated in medical camps should be considered as OPD patients, this contention has been rejected by the Tribunal in the Central India Institute of Medical Science case - 2008-TIOL-2639-CESTAT-MUM and, therefore, we do not find any merit in the contention raised by the appellant in this regard.

++ While confirming the duty demand the adjudicating authority has very fairly considered applicability of Notification 65/88-Cus and extended the benefit of the same. We also note that the redemption fine and penalties imposed on the appellant are very reasonable.

Holding that there is no merit in the appeal, the same was rejected.

(See 2014-TIOL-2062-CESTAT-MUM)