Custom, Excise & Service Tax Tribunal
M/S. Dayanand Medical College & ... vs C.C. (Import & General), New Delhi on 12 August, 2014
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
WEST BLOCK NO.II, R.K. PURAM, NEW DELHI-110066.
COURT - II
Appeal No. C/366/2007-CU[DB]
[Arising Order-in-Original No.11/MDS/07, dated 08.03.2007, passed by C.C., (Import & General), New Delhi]
M/s. Dayanand Medical College & Hospital
:
Appellants
Vs.
C.C. (Import & General), New Delhi
:
Respondents
Present for the Appellants :
Shri Rupendra Singh, Advocate Present for the Respondents :
Shri Rakesh Puri, DR Coram: Honble Mr.D.N.Panda, Judicial Member Honble Mr.Manmohan Singh, Technical Member Reserved on : 28.05.2014 Pronounced on : 12.08.2014 FINAL ORDER NO. 53170/2014, DATED: 12.08.2014 PER: D.N.PANDA This appeal is challenging the order of the adjudication dated 08.10.2004, levying custom duty of Rs.35,21,456/- denying the benefit of Notification No.64/88-CUS, dated 01.03.1988, confiscating medical equipments granting opportunity to redeem the same on deposit of Rs.50,000/- and imposing penalty of Rs.10,000/- under Section 112(a) of the Customs Act, 1962 (hereinafter referred to as The Act).
1.2. Show Cause Notice dated 16.09.2000 was issued to the appellant proposing above consequences on the allegation that the appellant failed to fulfil the conditions of the Notification although medical equipments were imported availing the benefit of Notification No.64/88-CUS, dated 01.03.1988 on the basis of certificate of DGHS. The DGHS reported that on the basis of information dated 21.04.2000, the patients were treated on payment. So also the general outdoor and general indoor patients were treated on same charges. Accordingly, no free services being provided, the appellant was liable to pay the duty foregone by the customs.
1.3. The Show Cause Notice specifically made the allegation in para 4 thereof that as per the communication of the Medical Superintendent to Asst. Commissioner, Customs, Ludhiana on 07.10.1998, outdoor patients were charged nominal fee and they were not treated free as required by the Notification. Other than this there was no other specific cause stated therein.
2.1. The allegation in the Show Cause Notice was challenged by the appellant filing reply to the show cause notice stating that the amount of Rs.10/- charged from the patient cannot be treated as fee charged from OPD patients for their treatment. This was not fee charged for treatment of poor as has been held by Tribunal in the matter of M.S. Ramaiah Medical Teaching Hospital Vs. CC, Bangalore [2005 (184) ELT) 82] and benefit of Notification No.64/88 is not deniable on extraneous considerations.
2.2. It was further submitted by the appellant that in the reply to SCN it was made clear that during the period between 05/1991 to 03/2004, free/ concessional treatment Provided to 4,68,159 patients was of value of Rs.11,33,18,407/-. Balance sheets of appellant showed the free/ concessional treatments provided to poor patients. But the order of adjudication has travelled beyond the scope of Show Cause Notice holding that the appellant has not treated patients with income of less than Rs.500/-. There was no such allegation in the Show Cause Notice. Therefore denial of benefit under notification No.64/88 on this ground was totally beyond the scope of Show Cause Notice and is a gross violation of principle of natural justice. Accordingly adjudication proceeding is bad in law.
2.3. Appellant relied on following judgments in support of its contentions:
(a) Commissioner Vs. Goodluck Industries [2000 (120) ELT A066 (SC)]
(b) Bajaj Auto Ltd. Vs. Union of India [2003 (151) ELT 23 (Bom.)]
(c) Alang Marine Ltd. Vs. CCE, Rajkot [2006 (204) ELT 297 )
(d) Naresh Lokumal Serai Vs. CC, Raigad [2006 (203) ELT 580] 2.4. It was further submitted by the appellant that it had kept more than 10% of total number of beds reserved for patients having income less than Rs.500/- p.m. in each department and provided free treatment to 40% out door patients. In order to keep public and staff of the hospital informed about the beds being kept reserved for defined category, circulars were issued on regular basis. In circulars, the appellant had mentioned the number of beds kept reserved in different departments of the hospital. Therefore, there was no violation of any condition of the notification.
2.5. It was also submssion on behalf of the appellant that Show Cause Notice confined the allegation to the effect that outdoor patients having been charged nominal fees were not treated free as required by the notification. But such allegation was rebutted as aforesaid for which there is no further cause to deny benefit of the Notification. Adjudicating authority exceeded his jurisdiction travelling beyond the Show Cause Notice. Accordingly such proceeding is liable to be quashed and adjudication order is required to be set aside.
2.6. It was further submitted by the appellant that entire factual evidence on record having explained the issue, adjudication is unsustainable. Which was the condition of the Notification violated by appellant was not brought in the Show Cause Notice to grant opportunity of defence to the appellant. Therefore there is no case of Revenue.
2.7. It was further submitted on behalf of the appellant that while remanding the matter, in para-3 of the order, the Tribunal made following observations:
3. It is seen that the show cause notice was issued on the basis that appellant was charging nominal fee towards registration. The other grounds about percentage of reservation etc. were added in the adjudication proceedings only on the basis of cancellation of some certificates. The Commissioner has also not considered the material produced by the appellant and appellants records independently before reaching the conclusion. It would appear that the findings reached are without regard to the decisions of this Tribunal in the case of M.S. Ramaiah Medical Teaching Hospital as well as Bombay Hospital Trust.
2.8. Ld. Advocate for appellant further submitted that learned adjudicating commissioner failed to appreciate that Tribunal had not made any blanket remand. There was a specific remand to decide whether free service was provided free or not. Therefore, deciding the proceedings on ground different from that was stated in the SCN is travelling beyond the directions of the Tribunal. If an appellant is not put to notice as to the nature of contravention and basis thereof, that violates principles of natural justice as has been held in the case of Amrit Foods Vs. CCE, UP 2005 (190) ELT 433 (SC). Similarly, the matter of levy of duty and penalty as well as interest is not a matter of casual exercise intended by law. Invoking of jurisdiction depends on the foundation of Show Cause Notice as has been held in the case of CCE, Nagpur Vs. Ballarpur Industries Ltd. [2007 (215) ELT 489 (SC)]. To this effect, the judgement of the apex court is also in the case of CC, Mumbai Vs. Toyo Engineering India Ltd. [2006 (201) ELT 513 (SC)].
2.9. Supporting order of adjudication, ld. JCDR submitted that:
(1) Last para of the Show Cause Notice at page 2 thereof alleged that the appellant had failed to comply with the condition of Notification No. 64/88-cus dated 01.03.1988 basing on which it was granted Customs Duty Exemption certificate (CDEC) to import medical equipments duty free. Further, Medical Supdt. Of DGHS informed to A.C. Customs, Ludhiana on 07.10.98 that outdoor patients were charged nominal fees in violation of the condition of the above Notification and they were not treated free by the appellant. This made the appellant liable to duty.
(2) While charging of fees from patients was specific instance of violation of the conditions of the notification, other conditions of the notification were also violated by the appellant.
(3) When show cause notice brought to the notice of the appellant that all conditions of the notification were to be complied with by appellant, the appellant failing to comply with the same, was to suffer adjudication which is not beyond SCN.
(4) Obligation to fulfill conditions of the Notification remains un-extinguished even after 10 years of import. Accordingly the duty forgone by the Government due to free import allowed to the appellant was liable to be recovered by the adjudication order since appellant failed to fulfill conditions thereof.
(5) The demand raised by adjudication order was not barred by limitation of 5 year prescribed by Section 28 of the Customs Act, 1962 following the ratio laid down by the Honble Supreme Court in the Mediwell Hospitals Case. When appellant failed to discharge continuous obligations, it was put to notice about violation of all conditions of the notification with one expressly stated example in the SCN. Therefore adjudication can not be said to be beyond SCN.
3. Heard both sides and perused the records.
4. This is second round of litigation before Tribunal. Page 3 of the Show cause notice dated 16.09.2000 available at page 57 of the appeal folder discloses specific allegation against the appellant. According to such allegation, appellant charged nominal fee for which free service to poor patients was not provided.
5. In the first round of litigation, Tribunal in terms of Final Order No. 281/2006-Cus dated 10.8.06 (ref: page 124 of the appeal folder) held that the only issue before the authority was as to whether charging of nominal fee of Rs.10/- disentitles the appellant to benefit of Notification No. 64/88-Cus. Learned adjudicating Commissioner in para 7 of the re-adjudication order categorically held that in view of the decision of Tribunal in the case M/s. Ramaiah Medical Teaching Hospital vs. CCE Bangalore [2005 (184) ELT 82] charge from OPD patients shall not make appellant ineligible to the benefit of notification.
6. The Tribunal in para 3 of its order clearly observed that the show cause notice was issued on the basis that appellant was charging nominal fee towards registration and learned authority below should have reached to the conclusion in the light of Tribunals order in the case of M/s. Ramaiah Medical Teaching Hospital as well as Bombay Hospital Trust.
7. In view of the above observation of the Tribunal, the issue of percentage of reservation etc. did not warrant scrutiny in the denovo adjudication proceeding. Except above allegation on charging of nominal fees, no specific violation of the condition of the Notification No. 64/1988 appeared in the Show cause notice. But learned Authority below came to the conclusion that there was contravention of the conditions of the notification.
8. Law is well settled that adjudication should base only on the allegation made in the show cause notice but not beyond that and denovo adjudication should not travel beyond the scope of the remand. The show cause notice being the foundation of adjudication that is required to expose the allegation in clear terms to enable an assessee to lead defence. Failure to do so, makes the adjudication fatal. Liability being intended to be determined, Show cause notice is the first course of natural justice. That should clearly bring out the allegation. Such proposition of law is laid down in the case of CCE Nagpur vs. Ballarpur Industries Ltd. [2007 (215) ELT 489 (SC)] and the CCE Mumbai vs. Toyo Engg. India Ltd. [2006 (201) ELT 513 (SC)]. The proposition of law in Brindawan Beverages Pvt. Ltd. Vs. Commissioner reported in 2007 (213) ELT 287 (SC) and Metal Forging vs. Union of India reported in 2002 (146) ELT 241 (SC) is also to the said effect.
9. For the reasons stated above re-adjudication does not sustain having travelled beyond SCN on the issues alien to the said notice and the denovo adjudication order having travelled beyond the scope of remand fails to sustain.
10. In the result, the order of re-adjudication is set aside and appeal is allowed.
(Pronounced in the open court on 12.08.2014)
(MANMOHAN SINGH) (D.N.PANDA)
TECHNICAL MEMBER JUDICIAL MEMBER
SSK
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Appeal No.C/366/2007