Karnataka High Court
P D Hinduja Sindhi Hospital vs Union Of India on 4 January, 2018
Author: Vineet Kothari
Bench: Vineet Kothari
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IN THE HIGH COURT OF KARNATAKA, BENGALURU
DATED THIS THE 4TH DAY OF JANUARY 2018
BEFORE
THE HON'BLE Dr.JUSTICE VINEET KOTHARI
WRIT PETITION No.19335 OF 2012 (GM-CUS)
Between:
P.D.Hinduja Sindhi Hospital
Sindhi Hospital Road
Sampangiramnagar
Bangalore 560 027
Rep. by its President
Sri Balilal Chhabria. ...Petitioner
(By: Mr.Kiran S. Javali, Advocate
for Mr.Chandrashekara.K, Advocate)
And:
1. Union of India
By Secretary
Ministry of Health & Family Welfare
South Block, New Delhi.
2. Union of India
By Secretary
Ministry of Science and Technology
New Delhi.
3. Bangalore Heart & Research Centre
5/1, Hosur Road, Bangalore
Rep. by its Director.
(deleted vide Court order dt.28.3.2014).
Date of Order -04-01-2018 W.P.No.19335/2012
P.D.Hinduja Sindhi Hospital Vs. Union of India & Ors.
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4. Additional Commissioner of Customs
C.R.Buildings, Queen's Road
Bangalore 560 001.
5. Additional Commissioner of Customs
Air Cargo Complex
BIAL Airport, Devanahalli
Bangalore - 300. ...Respondents
(By:Mr.C.Shashikantha, C.G.C. for R1, R2, R4 & R5)
This Writ Petition is filed under Articles 226 & 227 of
the Constitution of India praying to quash or set aside the
order dated 21.8.2000 vide Annexure-L to this Writ Petition
and etc.
This W.P. coming on for Final Hearing this day, the
Court made the following:-
ORDER
Mr.Kiran S. Javali, Advocate for Mr.Chandrashekara.K, Advocate Mr.C.Shashikantha, C.G.C. for Respodnents-1, 2, 4 & 5.
This Writ Petition has been filed by petitioner- P.D.Hinduja Sindhi Hospital in this Court on 16.6.2012 with the following prayers.
"a) Issue a Writ of Mandamus or a Writ in the nature of Mandamus or a Writ of Certiorari or any other Writ, Order or Directions quashing or setting aside the order No.Z 37021 11 90-MG Date of Order -04-01-2018 W.P.No.19335/2012 P.D.Hinduja Sindhi Hospital Vs. Union of India & Ors. 3/16 dated 21.8.2000 (Annexure-L) to this Writ Petition.
b) Issue a Writ of Prohibition or a Writ in the nature of Prohibition or any other writ, order, or direction, prohibiting the Respondent No.1, 4 and 5 from taking any further action with respect to the Order No.Z 37021 11 90-MG dated 21.8.2000 (Annexure-L) to this Writ Petition.
c) Issue a Writ of Declaration or a Writ in the nature of a declaration or any other Writ, Order or direction, declaring that the cancellation of the CDEC be set aside.
d) Pass any further order as the Hon'ble Court may deem fit in the circumstances of the case."
2. By the impugned order, Annexure-L dated 21.8.2000, the respondent-Deputy Director General (Medical), Directorate General of Health Services revoked the Customs Duty Exemption Certificate (CDEC) dated 16.5.1990 given in favour of the petitioner to avail exemption from customs duty in respect of certain medical equipments imported by it, Date of Order -04-01-2018 W.P.No.19335/2012 P.D.Hinduja Sindhi Hospital Vs. Union of India & Ors. 4/16 for the alleged non-compliance with the conditions of the Notification No.64/88-Cus. dated 01.03.1988. The operative portion of the said impugned order is quoted below for ready reference:-
"4. This Directorate had called for certain information from you vide letter of even no. dated 19.4.2000 in order to ascertain whether your institution fulfills the conditions for obtaining/retaining CDECs for import of hospital equipments under notification no.64/88-cus. dated 1.3.88. Information furnished by you vide your letter dated 10.5.2000 has been examined and it has been found that you are not in a position to furnish the details on the free treatment as the records are not traceable and many of those records were destroyed during flooding of your basement where the records had been stored. It is observed that it is not possible to verify the continuous fulfillment of post import conditions in the absence of verifiable records.
5. You have also stated that Multichannel Monitor, imported under a project, was transferred to Bangalore Heart Hospital and Research Centre, Bangalore after the Date of Order -04-01-2018 W.P.No.19335/2012 P.D.Hinduja Sindhi Hospital Vs. Union of India & Ors.5/16
termination of the project in 1992. At the time of application your institution justified import of Multi Channel Monitor for use in its Cath lab and during post operative care in surgical intensive care unit and did not make a mention that the equipment is for research under a project funded by Govt. of India. It has also been observed that you had filed a declaration at the time of application that the equipment will not be removed without prior permission from Ministry of Health and F.W./Dte. General of Health Services, Government of India and you at no point of time informed this Directorate on shifting of the Multichannel Monitor to Bangalore Heart Hospital and Res. Centre, Bangalore.
6. In view of the facts stated above, it is concluded that M/s.P.D.Hinduja Sindhi Hospital, Bangalore failed to substantiate its fulfillment of post import conditions undertaken at the time of importation and thus not eligible to retain CDECs under the said notification. Therefore, CDEC issued to you vide letter No.Z37021/14/90-MG dated 16.5.90 as stated under para (1) above is hereby withdrawn as cancelled. Pending request for CDECs for (1) Spare parts of film Processing Machine and (ii) Date of Order -04-01-2018 W.P.No.19335/2012 P.D.Hinduja Sindhi Hospital Vs. Union of India & Ors.6/16
Blood Gas Analyser made vide your letter no.COS/EX/88 dated 17.6.88 and 30.6.88 is also hereby rejected on the reasons stated above.
7. This issues with the approval of DGHS and Secy (H), Ministry of Health & Family Welfare, Govt. of India, New Delhi."
3. Mr.Kiran S. Javali, the learned counsel for the petitioner submitted before the Court that the medical equipments in question like, Spares for Blood Gas Analyser, Spares for Combilabor Film Processing Machine, RM 300 Multichannel Monitor, etc. were imported by the petitioner-Hospital in the year 1989 claiming exemption from customs duty under the Notification No.64/88-Cus. dated 01.03.1988 and they were imported and utilized for the specific research project conducted by the petitioner-Hospital and as per the condition of CDEC itself, these equipments were not owned by the petitioner-Hospital, but were only utilized for the research project and cardiac surgeries for the poor people of the concerned area and these equipments Date of Order -04-01-2018 W.P.No.19335/2012 P.D.Hinduja Sindhi Hospital Vs. Union of India & Ors. 7/16 were returned back to the Government of India in the year 1991.
4. The petitioner being a Charitable Institution was working only for the benefit of poor people and a reply in this regard with the aforesaid factual information was duly furnished to the Assistant Commissioner of Customs, Bangalore, in pursuance of notice vide Annexure-C dated 29.1.1999. The substance of the said reply to the Customs Authority given by the petitioner-Institution is quoted below for ready reference:-
"P.D.Hinduja Sindhi Hospital is a Charitable Hospital run by M/s.Sindhi Youth Association and is in existence for more than 26 years. Sindhi Youth Association is registered under the Societies Registration Act and is engaged in various social services like running hospital, free treatment to poor, scholarships and free books to poor students, etc. Date of Order -04-01-2018 W.P.No.19335/2012 P.D.Hinduja Sindhi Hospital Vs. Union of India & Ors. 8/16 This hospital was permitted to conduct a Research Project on "JUVENILE MITRAL STENOSIS IN INDIA' by the Department of Science and Technology, Government of India, vide GOI letter No.HCS/DST/637/78 dated 24th October 1979. Out of equipments meant for the project costing approximately Rs.37 lakhs, certain medical equipment was imported in 1981 by the hospital for Research Project. The entire equipment covered by this Project were owned by the hospital, and were used for Research Project only and were never the property of the Hospital.
Subsequently in 1989, the following equipments were imported under Notification No.64/88 of Customs Department claiming custody duty exemption.
a) Spares for Blood Gas Analyser.
b) Spres for Combilabor Film Processing
Machine.
c) RM 300 Multichannel Monitor.
The above mentioned items/equipments were utilised for the project, and at the termination of the project, the entire equipment was returned to the Government of India.
Date of Order -04-01-2018 W.P.No.19335/2012 P.D.Hinduja Sindhi Hospital Vs. Union of India & Ors. 9/16 We are not in a position to answer the questionnaire forwarded by your office as the documents/records are not traceable at this stage, since many of them were destroyed during the flooding of our basement, where the records had been housed.
The imported equipment were with this hospital only for the duration of the project, and hence were not owned by the hospital at any stage.
One of the members of our Board of Management has personally met Mr.T.Jayaraman, Additional Collector of Customs, Bangalore and explained the matter in detail to him As the imported equipments were held by the Hospital during the duration of Research project permitted by the Department of Science and Technology and not owned by us, we request you to drop the proceedings. Kindly note that at no time were we the owners of the equipment. These were funded by the Government of India to perform Cardiac surgeries and to provide cardiac treatment to the poor people in our area, as Date of Order -04-01-2018 W.P.No.19335/2012 P.D.Hinduja Sindhi Hospital Vs. Union of India & Ors. 10/16 part of the project. On termination of the project, the entire equipment was returned to the owners, namely the Government of India in 1991.
5. The learned counsel for the petitioner urged that the Customs Authority has never refuted these averments by this petitioner-Institution before it in its reply Annexure-C dated 29.1.1999 and has never withdrawn the exemption of customs duty by passing any appropriate order in the matter, however, the Deputy Director General (M) passed the impugned order Annexure-L on 21.8.2000 as quoted above, for the alleged non-compliance of the conditions specified in the Notification No.64/88-Cus. dated 01.03.1988.
6. Mr.Kiran Javali submitted that although it is true that the record which was sought to be produced before the concerned Authority, viz., Deputy Director General (M) could not be so produced, as most of it was washed out in the flood in the said area in the basement storage where the said records were kept, but the facts Date of Order -04-01-2018 W.P.No.19335/2012 P.D.Hinduja Sindhi Hospital Vs. Union of India & Ors. 11/16 of the case clearly reveal that the petitioner- Institution neither enjoyed the said customs duty exemption illegally nor owned and retained these medical equipments imported as exempted from the customs duty and since they were imported for a particular research project for a limited period under the directions of the concerned Authority of the Government itself and funded by Government only and these equipments were returned back to the Government of India and these facts were not disputed even in the impugned order, however, in para 5 of the impugned order, the said Authority observed that shifting of Multichannel Monitor to Banglaore Heart Hospital and Research Centre, another Government Institution was done by the petitioner without any prior approval of the Government of India. He therefore urged that the exemption from customs duty availed by the petitioner at the time of import could not be withdrawn by the respondents in these circumstances. The petitioner Date of Order -04-01-2018 W.P.No.19335/2012 P.D.Hinduja Sindhi Hospital Vs. Union of India & Ors. 12/16 being a Charitable Hospital was providing free services to poor persons.
7. On the other hand, the learned counsel for the respondent-Union of India, Mr.C.Shashikantha, submitted before the Court that no such document or information was furnished by the petitioner-Institution before the concerned Authority, despite an opportunity given to them and on the contrary, they have clearly admitted that the concerned records were destroyed and therefore could not be so produced so as to establish the satisfaction of conditions of the Notification No.64/88-Cus. dated 01.03.1988.
8. I have heard the learned counsels for the parties and perused the records.
9. In the considered opinion of this Court, the present Writ Petition deserves to be allowed and the impugned order deserves to be quashed and set aside.
Date of Order -04-01-2018 W.P.No.19335/2012 P.D.Hinduja Sindhi Hospital Vs. Union of India & Ors. 13/16 The facts of the petitioner-Institution are peculiar and unique. Of course, it did avail customs duty exemption under the Notification No.64/88-Cus. dated 01.03.1988 by importing these medical equipments, subject to certain conditions, viz., serving 40% of poor sections of the Society free of cost, but the two facts stand out, which have not been considered by the respondents are (i) that the petitioner-Institution is a Charitable Hospital and is engaged in providing free medical service to poor sections of the Society and (ii) that the equipments in question were not purchased by it to be owned by itself for an endless period, but they were imported out of the funds provided by the Central Government itself for their research project for a particular period and these equipments were returned back to the Government of India or to another Institution of Government of India, viz., Bangalore Heart Hospital and Research Centre, Bangalore.
Date of Order -04-01-2018 W.P.No.19335/2012 P.D.Hinduja Sindhi Hospital Vs. Union of India & Ors. 14/16
10. These facts have not at all been properly appreciated by the respondent Authority while passing the impugned order on 21.8.2000. The said Authority has neither considered the fact that the petitioner- Institution is a Charitable Hospital nor it has considered the fact that the equipments in question were for a limited purpose and limited period. The Notification No.64/88-Cus. dated 01.03.1988 itself does not stipulate any consequence of loss of exemption in this kind of special circumstances.
11. The mere reproduction of conditions of Notification No.64/88-Cus. dated 01.03.1988 by the said Authority in the impugned order and holding that the petitioner having failed to produce the relevant records, which had been destroyed in the flood in the basement area, where such records were kept, was not enough to deny the exemption of customs duty and impose customs duty on the petitioner by withdrawing Date of Order -04-01-2018 W.P.No.19335/2012 P.D.Hinduja Sindhi Hospital Vs. Union of India & Ors. 15/16 the CDEC in question. Unless the effect of these distinguishing features in the case of petitioner- Institution are considered by the said Authorities, both Medical Health and Department of Customs, the petitioner's claim of exemption cannot be denied. The Authorities cannot mechanically pass orders bereft of factual foundation and correct analysis of relevant facts.
12. Since in the present case only one of the Authorities viz., Deputy Director General (Medical) passed the order revoking the CDEC, but the Customs Authority has not passed any order before whom the actual factual status was placed, this Court is of the opinion that the matter deserves to be sent back to these Authorities to re-decide the claim of the petitioner in the light of the aforesaid.
13. This Writ Petition is accordingly allowed and the impugned order Annexure-L dated 21.8.2000 is quashed and set aside and the petitioner is directed to Date of Order -04-01-2018 W.P.No.19335/2012 P.D.Hinduja Sindhi Hospital Vs. Union of India & Ors. 16/16 appear before both the concerned respondent Authorities once again, viz., before the Assistant Commissioner of Customs, Bangalore and Deputy Director General (Medical) or upon delegation of powers to the Regional Director of the said Department at Bangalore. For appearance of the petitioner, these respondents will issue specific notices to the petitioner within a period of two months from today and upon considering the objections and the evidence, whatever the petitioner can now adduce before the said Authorities and the said respondents are directed to decide the case of the petitioner by separate speaking orders within a period of six months from today, in the light of aforesaid observations.
With these observations and directions, this Writ Petition is disposed of. No order as to costs.
Sd/-
JUDGE VGR