Cus - Whether condition of the notification 64/88-Cus for period past rescission of notification is not required to be fulfilled - Conflicting views, therefore, matter referred to Larger Bench: CESTAT
By TIOL News Service
MUMBAI, NOV 06, 2015: THE appellant imported medical equipment described in the B/E dated 18/11/1992 as "Hanaulex Shadow Less Ceiling Mounted Light Set" & claimed exemption under Notification No. 64/88-Cus dated 1/3/1998 which granted exemption from the whole of the basic custom duty as well as the additional duty on hospital equipment.
Paragraph 2 of the table to the notification prescribing the conditions to be satisfied read:
"All such hospitals which may be certified by the said Ministry of Health and Family Welfare, in each case, to be run for providing medical, surgical or diagnostic treatment not only without any distinction of caste, creed, race, religion or language but also.
(a) free, on an average, to at least 40% of all their outdoor patients and
(b) free to all indoor patients belonging to families with an income of less than rupees five hundred per month, and keeping for this purpose at least 10% of all the hospitals 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 specified in clauses (a) and (b)"
Incidentally, this notification along with 323 other notifications were rescinded by a single notification 99/94-Cus dated 01.03.1994.
Based on the Rosha Committee report, according to which the appellant have not fulfilled the condition of the notification 64/88-Cus during year 1994-1995, a SCN dated 22/3/2002 was issued proposing to demand custom duty, to confiscate the medical equipments by denying Notification No. 64/88-Cus.
By an order dated July 2004, the Commissioner of Customs (Import) in de novo adjudication [Ref: 2003-TIOL-191-CESTAT-MUM] held that the importer had not satisfied the conditions of the Notfn. No. 64/88-Cus dated 1/3/1998 and, therefore, denied the benefit of the notification & confirmed duty demand of Rs.4.59 lakhs. The adjudicating authority also ordered confiscation of the medical equipments and gave an option to redeem the goods on payment of Redemption Fine of Rs.46,000/- and also imposed penalty of Rs.25,000/- u/s 112 of Customs Act, 1962.
The appeal was heard by the Division Bench on 12th August 2015.
After considering the submissions, made by both sides with support of case laws, the Bench observed that the issue is related to fulfillment of condition during the period 1994-95 which is after the rescission of notification 64/88-Cus, whether it will amount to violation of condition and benefit of notification can be denied in such circumstances or otherwise has to be decided first.
The Bench also observed that on identical issue there are two conflicting judgments of the Tribunal, one in the case of Sunitidevi Singhania Hospital & Medical Research Centre - 2014-TIOL-2062-CESTAT-MUM wherein division bench has held as under:
"5.2 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 hon'ble apex Court in the case of Jagdish Cancer & Research Centre - 2002-TIOL-119-SC-CUS, the question of time-bar will not arise. In the present case, the imported goods were confiscated under Section 111(o) of the Customs Act, 1962 and allowed to be redeemed. The order for payment of duty under Section 125(2) would be an integral part of the proceedings relating to confiscation and consequential orders thereon, on the ground that the importer had violated the conditions of notification subject to which the exemption on goods was granted."
And another is the case of Sir H.N. Hospital & Research Centre - 2011-TIOL-111-CESTAT-MUM where the Tribunal has allowed the appeal holding that condition of the notification 64/88-Cus for the period past rescission of notification (vide Notification No. 99/94-Cus dated 1/3/1994) is not required to be fulfilled.
Concluding that in view of the aforesaid conflicting judgments, the same needs to be resolved only by the Larger Bench, the Division Bench directed the Registry to place the matter before the President for constituting a Larger Bench.
(See 2015-TIOL-2380-CESTAT-MUM)
