Customs, Excise and Gold Tribunal - Delhi
St. Stephens Hospital vs Commissioner Of Customs on 2 August, 2000
Equivalent citations: 2000(121)ELT91(TRI-DEL)
ORDER Jyoti Balasundaram, Member (J)
1. The appellants herein imported (i) one Remote controlled X-Ray TV System with 90/45" and (ii) whole Body CT Scanner Model SCT 3000 Tx with accessories and spares from Japan vide Bill of entry dated 27-8-1990 and 27-11-1990 respectively against Customs Duty Exemption Certificates dated 28-2-1990 and 16-11-1990. The importers availed the benefit of exemption under Notification No. 64/88-Cus., dated 1-3-1988 and cleared the goods duty free. At the time of import, they furnished an undertaking in writing to the Assistant Commissioner of Customs at the time of clearance to the effect that they shall furnish certificates evidencing installation of the imported hospital equipment and functioning of the hospital within a period of two years. Since such certificates from the prescribed authority namely DGHS or Ministry of Health and Family Welfare were not produced within the stipulated period, the Department issued show cause notice proposing recovery of duty of Rs. 36,91,763/- for non-fulfilment of post import conditions of Notification No. 64/88 and proposing recovery of interest and imposition of penalty as the goods had become liable to confiscation.
2. The Adjudicating Authority upheld the charges in the notice and confirmed duty demand together with interest and also imposed a penalty of Rs. 1 lakh on the appellants. Hence this appeal.
3. We have heard Shri M. Chandrashekhran, learned Sr. Advocate and Shri M.P. Singh, learned DR. Notification No. 64/88 is reproduced below:
"Exemption to hospital equipments imported by specified category of hospitals (charitable) subject to certification from DGHS, etc. - In exercise of the powers conferred by Sub-section (1) of Section 25 of the Customs Act, 1962 ( 52 of 1962), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts all equipment, apparatus and appliances, including spare parts and accessories thereof, but excluding consumable items (hereinafter referred to as the 'hospital equipment'), the import of which is approved either generally or in each case by the Government of India in the Ministry of Health and family Welfare, or by the Directorate General of Health Services to the Government of India, as essential for use in any hospital specified in the Table below, from -
(i) the whole of the duty of customs leviable thereon under the First Schedule to the Customs Tariff Act, 1975 (51 of 1975); and
(ii) the whole of the additional duty leviable thereon under Section 3 of the said Customs Tariff Act.
2. In approving the import of any hospital equipment under paragraph 1, regard shall be had to the following factors namely :-
(i) that the hospital equipment in respect of which the exemption is claimed under this notification is not manufactured in India; and
(ii) that the hospital equipment in respect of which the exemption is claimed is necessary for running or maintenance of the hospital.
3. Provided that in the case of import of spare parts, no approval as specified in paragraph 1 will be required subject to the condition that -
(i) the spare parts are imported by the hospital;
(ii) the hospital will, at the time of importation, produce a certificate from the Ministry of Health and Family Welfare or the Directorate General of Health Services that the said hospital falls in one of the categories of hospitals specified in the said Table;
(iii) the Head of the hospital certifies that the spare parts in question are required for the maintenance of an imported equipment in use with the hospital and such parts will not be used for any other purpose.
TABLE
1. All such hospitals as may be certified by the said Ministry of Health and Family Welfare to be run or substantially aided by such charitable organisation as may be approved, from time to time, by the said Ministry of Health and Family Welfare.
2. 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 or 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 percent of all the hospital 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 those specified in clauses (a) and (b).
3. Any such hospital in respect of which the said Ministry of Health and Family Welfare, may, having regard to the type of medical, surgical or diagnostic treatment available there, or the geographical situation thereof, or the class of patients for whom the medical, surgical or diagnostic treatment is being provided, certify either generally or in each case, that the hospital even though it makes a charge for the said treatment, is nevertheless run on non-profit basis and is deserving of exemption from the payment of duty on the said hospital equipment under this notification.
Provided that the hospital equipment in respect of which the exemption is claimed, is imported by such hospital by way of free gift from donor abroad or has been purchased out of donations received abroad in foreign exchange.
Provided further that where the said hospital equipment has been purchased out of donations received abroad in foreign exchange, the hospital has been permitted to maintain an account abroad by the Reserve Bank of India for the purposes of receiving funds donated overseas.
4. Any such hospital which is in the process of being established and in respect of which the said Ministry of Health and Family Welfare is of opin-
(i) that there is an appropriate programme for establishment of the hospital;
(ii) that there are sufficient funds and other resources required for such establishment of the hospital;
(iii) that such hospital would be in a position to start functioning within a period of two years, and
(iv) that such hospital, when starts functioning would be relatable to a hospital specified in paragraph 1,2 or 3 of this Table.
and the said Ministry of Health and Family Welfare certifies to that effect:
Provided that -
(a) in the case of a hospital relatable to paragraph 3 of this Table, the importer produces evidence to the Assistant Collector of Customs at the time of clearance of the said hospital equipment that the same is being imported in accordance with the conditions specified in proviso to that paragraph;
(b) the importer shall give an undertaking in writing to the Assistant Collector at the time of clearance of the said hospital equipment that the importer shall furnish certificates from the said Ministry of Health and Family Welfare or from the Directorate General of Health Services, Government of India, within such period as the Assistant Collector of Customs may specify in this behalf or within such extended period as the Assistant Collector of Customs, on sufficient cause being shown, may allow in each case, to the effect,
(i) that such hospital equipment has been installed in the hospital; and
(ii) that such hospital has started functioning.
(c) the importer shall furnish, at the appropriate time, the certificates referred to in (b);
(d) the importer executes a bond in such form and for such sum as may be specified by the Assistant Collector of Customs binding himself to pay, on demand, an amount equal to the duty leviable on the said hospital equal to the duty leviable on the said hospital equipment,
(i) if such hospital starts functioning within the period specified therefor, as is not proved to the satisfaction of the Assistant Collector of Customs to have been installed in such hospital, or
(ii) if such hospital does not start functioning within the period specified therefor.
Explanation - For the purposes of this notification, the expression 'Hospital' includes any Institution, Centre, Trust, Society, Association, Laboratory, Clinic and Maternity Home, which renders medical, surgical or diagnostic treatment.
[Notification No. 64/88-Cus. dated 1-3-1988]"
4. The appellant has been in existence for over 100 years. The claim of the importer that the DGHS issued certificate No. Z-37028/22/88-MG dated 26-2-1990 showing that the appellants hospital falls in category 2 (para 2) of the Table annexed to Notification No. 64/88 stands unrebutted by the Revenue. The contention of the appellants is that the condition of production of certificate from the Ministry of Health & Family Welfare or DGHS to the effect that the imported hospital equipment has been installed in the hospital and that such hospital has started functioning' applies only to hospitals covered by paragraph 4 of the Table to the Notification and that since the appellant is a hospital covered by Sl. No. 2 of the Table and not by Sl. No. 4, such condition is not applicable to it. We see force in this submission. First of all, we note that the post import conditions such as furnishing of certificate regarding installation of equipment and functioning of hospital is contained in the proviso to the table annexed to the notification and is not incorporated in the main body of the notification. This lend support to the view that the proviso incorporating this condition only governs Sl. No. 4 of the Table to the Notification. Secondly the certificate from DGHS and Ministry of Health and Family Welfare referred to in Clause (b) of the relevant proviso has to be to the cumulative effect that the imported hospital equipment has been installed in the hospital and that such hospital has started functioning and the question of an existing hospital obtaining a certificate regarding commencement of its functioning, does not arise. Thirdly, the bond referred to Clause (d) of the relevant proviso speaks of commencement of functioning of hospital and therefore, cannot be held to be applicable to an existing hospital but only to a hospital in the process of being established (covered by Sl. No. 4 of the table to the notification). For the above reasons, we hold that the requirement in Clause (b) of the relevant proviso for production of certificate from the prescribed authorities is not applicable to the appellant which is a hospital covered by Sl. No. 2 of the table to the notification. The fact that the appellant executed a bond in terms of Clause (d) will not alter the above position and the Revenue cannot enforce the bond which we hold is not required to be executed by the appellant hospital. The contention of the learned DR that the post importation conditions in the notification apply even to the appellant hospital, is not tenable. The apprehension on the part of the Revenue regarding non-installation of the imported equipment cleared duty free or misuse by diversion of the same from the hospital is belied by the fact that the appellants have produced certificate from M/s Toshniwal Bros. that the imported equipments were installed and are functioning in the appellant hospital together with the fact that there is no allegation or finding that the equipments were diverted for use outside the hospital.
5. The case law cited by the learned DR in support of his contention that the post importation conditions are to be treated as continuing obligation on the importers, is distinguishable from the facts of the present case. In the case of Mediwell Hospital and Health Care Pvt. Ltd. v. Union of India reported in [1997 (89) E.L.T. 425], the Hon'ble Supreme Court has held that Notification No. 64/88-Cus., dated 1-3-1988 (the very same notification which is under consideration in the present appeal) must be construed to cast continuing obligation on the part of all those who have obtained the certificate from the appropriate authority and on that basis, to have imported equipments without payment of Customs duty, to give free treatment to atleast 40% of the outdoor patients as well as would give free treatment to all indoor patients belonging to families with a monthly income of less than Rs. 500/- PM (hospitals covered by Sl. No. 2 of the table to the notification). The Court has held that the Competent Authority should continue to be vigilant and check whether the undertakings given by the appellants namely to give free treatment to atleast 40% of the indoor patients as well as treatment to indoor patients from families with a monthly income of below Rs. 500/- PM are being duly complied with, after getting the benefit of exemption and importing equipment without payment of duty. In the present case, there is no such dispute and further there is no further dispute that the equipment imported by the appellant has been installed in the hospital and is functioning therein.
6. The decision of the Hon'ble Karnataka High Court in the case of Medical Relief Society of South Kanara v. Union of India reported in [1999 (111) E.L.T. 327 (Kar.)] follows the ratio of the Supreme Court judgement (supra) in respect of continuing obligation under Notification No. 64/88. The same is the position in the judgement of the Punjab & Haryana High Court in the case of CT Scan Research Centre Pvt. Ltd. v. Director General of Health Services reported in [2000 (69) ECC 570 (P & H)].
7. In the light of the above discussion, we hold that the appellants are eligible to the benefit of exemption in terms of Notification No. 64/88-Cus. for the two medical equipments imported by them, set aside the impugned order and allow the appeal.