Customs, Excise and Gold Tribunal - Tamil Nadu
Vinodhagan Memorial Hospital vs Commissioner Of Customs on 15 March, 2007
Equivalent citations: 2007(120)ECC285, 2007ECR285(TRI.-CHENNAI)
ORDER P.G. Chacko, Member (J)
1. The appellants had imported a medical equipment valued at Rs. 6,93,184/- and cleared the same without payment of duty under Notification No. 64/88-Cus. dated 1.3.1988 vide Bill of Entry No. 12770 dated 2.4.1992. The clearance was obtained on the strength of a Customs Duty Exemption Certificate [CDEC for short] of the Director-General of Health Services [DGHS for short].
2. The above Notification had stipulated that hospitals certified by DGHS should provide medical, surgical or diagnostic treatment -
(a) Free, on an average, to at least 40% of all their outdoor patients;
(b) Free treatment to all indoor patients belonging to families with an income of less than Rs. 500/- 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 those specified in class (a) and (b) above.
3. Later, on from the results of enquiries, it appeared to the department that the appellant's institution was only a diagnostic centre/polyclinic and not a hospital; that they had not provided free treatment to 40% of the outdoor patients and also had not provided reservation of 10% of beds for treatment of poor inpatients. The appellants were thus found to have violated the conditions of the above Notification. Therefore, a show-cause notice dated 7.9.1992 was issued to them for (a) recovering duty on the goods under the proviso to Section 28(1) of the Customs Act by denying the benefit of the above Notification, (b) confiscating the goods under Section 111(o) of the Act and (c) imposing penalty under Section 112(a) of the Act. These proposals were contested. In adjudication of the dispute, the original authority confirmed demand of duty of Rs. 2,77,284/- against the importer, held the goods liable for confiscation under Section 111(o) of the Act but allowed its redemption against payment of a fine of Rs. 2,77,284/- and imposed a penalty of Rs. 10,000/- on the party under Section 112(a) of the Act. The appeal filed with the Commissioner (Appeals) against the decision of the original authority was rejected. Hence the present appeal.
4. After hearing both sides, we note that a similar case of the same party was disposed of by this Bench as per Final Order No. 123/2007 dated 12.2.2007 in Appeal No. C/150/2001. The facts of the present case are similar to those of the earlier case. The demand of duty on the appellants in the earlier case was sustained for the reasons recorded in paragraphs 4 to 6 of the above final order, which are reproduced below:
4. Heard both sides. Learned Counsel submitted that, though DGHS who had issued CDEC to the appellants in respect of the medical equipment and subsequently withdrew the certificate, such withdrawal was set aside by the Hon'ble High Court of Madras in Writ Petition No. 13924 of 2001. He submitted that following the decision already rendered in Apollo Hospitals Enterprises Ltd. v. Union of India , the Hon'ble Court remanded the matter to DGHS for its reconsideration. Learned Counsel contended that where CDEC issued by DGHS was in force, it was not open to the Customs authorities to demand duty on the medical equipment. Learned Counsel further submitted that when DGHS had already recognised the appellants as a hospital, it was not open to the Customs authorities to hold that they were only a diagnostic centre/polyclinic. The Commissioner's finding that no specific register/record was maintained by the appellants was also challenged by Counsel who submitted that the Commissioner himself had found that they had furnished details of casualty register. According to learned Counsel, the Commissioner's order suffered from infirmities and hence requires to be set aside. It was particularly submitted that the quantum of penalty imposed by him on the appellants was too high.
It was argued that in view of the decision of the High Court in Apollo Hospitals' case, the impugned order was liable to be set aside. Learned SDR at the outset submitted that this Bench had in the case of Jaya Nursing Home (P) Ltd. v. Commissioner of Customs, Chennai 2004 (177) E.L.T. 766 (Tri.-Chennai) distinguished Apollo Hospitals' case and held that the provisions of Section 159 A of the Customs Act had overriding effect on the Hon'ble High Court's ruling. Learned SDR also reiterated the findings of the Commissioner.
5. After giving careful consideration to the submissions, we have to reject learned Counsel's plea that the demand of duty is not sustainable as long as CDEC issued by DGHS is in operation. It appears from the text of the Customs Notification that the provisions of this Notification are applicable to a hospital equipment, the import of which is approved by the DGHS as essential for use in hospital specified in the Table annexed to the Notification. As per S. No. 1 of the said Table, the hospital must be certified by the 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. The conditions for the benefit of exemption were laid down under S. No. 2 of the said Table. It would follow that, by the mere reason of the hospital holding CDEC issued by DGHS, they cannot claim the benefit of exemption from demand of duty on any medical equipment imported by them. It was mandatory for the appellant to satisfy the conditions laid down under S. No. 2 of the Table annexed to the Notification. Learned Commissioner found that the appellants did not even have an outpatient department to provide treatment. In respect of inpatients, it was found that the minimum of 10% beds was not reserved for patients whose income was less than Rs. 500 per month. Even the Director of the hospital had admitted these facts in his statement. It was also noted by learned Commissioner that the appellants had failed to submit documents/registers to prove their claim with regard to outpatients. The casualty register produced by them did not meet the requirement of free treatment to outpatients. In these circumstances, learned Commissioner rightly held that the benefit of exemption under Notification No. 64/88 was not available to the CT Scanner with accessories imported by the appellants.
The demand of duty is therefore sustainable.
6. As held by the Hon'ble Supreme Court in Mediwell Hospitals' case, hospitals claiming the benefit of Customs Notification No. 64/88 had continuing liability to comply with the conditions therein. This liability did not come to an end even when the Notification was rescinded inasamuch as Section 159A of the Customs Act saved departmental proceedings for enforcing the liability under the Notification against the hospital as held by this Bench in the case of Jaya Nursing Home case (supra). In view of the continuing nature of the liability under the Notification, the demand of duty is not hit by the limitation prescribed under Section 28 of the Customs Act.
5. Following the above decision, we uphold the demand of duty raised on the appellants.
6. The lower authorities have held the goods liable for confiscation under Section 111(o) of the Customs Act with option for redemption thereof against payment of a fine. We find that the appellants have not succeeded in challenging the confiscation order, nor have they shown that they did not render the goods liable for confiscation. Consequently, the penalty imposed on them under Section 112(a) of the Act is liable to be sustained. In our view, the quantum of penalty is quite reasonable. The appellants have a grievance regarding the quantum of fine. We find that the lower authorities have imposed a fine equal to duty, which does not seem to be in conformity with the proviso to Section 125(1) of the Customs Act. The value of the goods at the time of importation was Rs. 6,93,184/-. That was nearly 15 years ago. It is anybody's guess as to what would be the present market value (PMV) of the goods which have been in constant use by the appellants. After taking these circumstances into account, we reduce the fine to Rs. 5,000/- (Rupees five thousand only). With this modification, the impugned order is sustained and this appeal is disposed of.
(Dictated and pronounced in open court)