Customs, Excise and Gold Tribunal - Delhi
Surlux Diagnostics Ltd. vs Collector Of Customs on 7 March, 1994
Equivalent citations: 1994ECR571(TRI.-DELHI), 1994(71)ELT569(TRI-DEL)
ORDER S.L. Peeran, Member (J)
1. The appellant, importer, is aggrieved with the order of the Collector of Customs, Bombay. The Importer had imported "Cat Scanner Equipment" and claimed the benefit of Notification No. 64/88-Cus., dt. 1-3-1988. The Bill of Entry disclosed the value of the said item at Rs. 1,40,22,787.00 CIF. Alongwith the Bill of Entry, the importers had attached the following documents :
(i) Invoice No. HH-001/90 dt. 24-3-1990 of M/s. Hightech Health Equipment Co., Hongkong.
(ii) Insurance Certificate No. 15080322 (1064) dt. 30-3-1990 indicating the reference No. SDL/HH/29/80 relating to the goods imported.
(iii) Certificate of origin dt. 30-3-1990 relating to the goods,
(iv) Copy of Bill of Lading No. NY 547890 dt. 8-5-1990.
(v) Order confirmation No. CH. 001/90 dt. 14-3-1990 by M/s. High Tech Health Equipments Co., Hongkong.
(vi) Packing list of M/s. High Tech Health Equipment Co., Hongkong relating to invoice No. NH-001/90 dt. 24-3-1990 indicating importer's reference number as SDL/HH/29/30.
(vii) NMIC No. I/CC/5/88/397 dt. 25-5-1988 endorsed on application No. NMIC/1-88 dt. 15-4-1988 for CT-SE 600 Syner view Scanner and other items sought to be imported from M/s. Pickers International, USA against the order placed with them through M/s. U.B. Pickers Ltd., and to be consigned to Poona Hospital and Research Centre.
(viii) DEC No. Z-37021/20/88-MG dt. 25-11-1988 by ADG/DGHS, New Delhi on the quotation No. UBP/BOM/761/88/Q dt. Nil of U.B. Pickers, Colaba, Bombay for Synerview C.T. Scanner to be consigned to Poona Hospital and Research Centre.
(ix) Catalogue relating to Synerview series S.C.T. Scanner Model 600 SE of M/s. Picker International.
The Importers had declared under Rule 10 of the Customs (Valuation) Rules, 1988 to the effect that the suppliers were M/s. High Tech Health Equipment Company, Hongkong and that they did not have any agent. They had not imported similar goods earlier and had furnished the contract No. as SDL/HH/29/90 and had verified that the information furnished by them was true, complete and correct in every respect. They had also furnished various other information for the scrutiny of the department. The appellants had claimed that they are a Private Limited Co. having diagnostic centres in Bombay, Poona, Baroda etc. In pursuance of an agreement with the Pune Hospital and Research Centre at Poona which is a Public Charitable Institution, they had imported the said item in July '90 and claimed the benefit. They had furnished all the details including the duty exemption certificate in terms of the said notification from the Director General of Health Services, New Delhi.
2. The Deptt. was not satisfied with these declarations and therefore, on a specific information from Central Intelligence Unit, the goods were examined 100% on 3-9-1990 in the presence of the CIU Officers and the importer's representatives namely Shri S.K. Sarpotdar, General Manager and one technical representative Shri A.P. Singh who represents the importers.
3. The report of the inspection is reproduced herein below :
"Lot inspected goods opened and examined all checked description and entry, the goods are as per the detailed case wise list attached. The goods have been identified by the Importer's Engineer Mr. A.P. Singh and Mr. S.K. Sarpotdar representative of M/s. Surlux Diagnostic Ltd., Bombay. The list prepared by Mr. Sarpotdar. The goods appear to be old and one label was found from case No. 3 showing the date of inspection on 12-7-1982. The label duly attested by me and Shri Sarpotdar and forwarded to C.I.U. Two manuals found in the case No. 4 duly initialled and forwarded to C.I.U. Examination carried out under the supervision of C.I.U. staff.
4. This is the inspection report on the basis of which the entire case is built against the importers and the department has in furtherance of the investigation taken statements from the following persons :
1. Shri S.K. Sarpotdar, General Manager of the Importer's company.
2. Shri Lai Goel, Director of the Importer's company.
3. Dr. C.N. Rao, General Manager of M/s. U.B. Electronics & Instruments Ltd.
4. Shri A.D. Mirchandani, Ex-Regional Sales Manager of M/s. U.B. Picker, Colaba, Bombay.
5. Shri A.P. Singh, Partner of M/s. Impex Consultants and Liaisons Services, New Delhi,
5. It is imputed to Shri S.K. Sarpotdar on the basis of his statement taken by the Investigating Officers, that he had agreed to the suggestion that Shri A.P. Singh, Technical Person, had signed the examination report in concurrence to the fact that the machine imported was old one. It is further alleged that on inspection of DEC endorsement on quotation No. UBP/BOM/761/88 Q of M/s. U.B. Picker, application for NMIC/1-88 dt. 15-4-1988 and letter No. Z-37021/20/86-MG dt. 25-11-1988, submitted alongwith Bill of Entry, Shri Sarpotdar had stated :
"On scrutiny of these three documents, it is seen that the goods shown in the NMIC and DEC differs and also these certificates do not tally with the Bill of Entry with respect to the description". "I am not aware as to why these certificates were attached to the subject Bill of Entry".
It is also imputed to Shri Sarpotdar on the basis of his statement dt. 4-10-1990 the following facts :
"(1) They had diagnostic Centre at Poona under name and style "Pune Diagnostic Centre" which is a unit of M/s. Surlux Diagnostics Ltd., Bombay which is situated inside the premises of Poona Hospital and Research Centre, 29, Sadhashiv Peth, Pune-30.
(ii) Both these were separate legal entity and each was independent of other both physically and financially. The staff of Pune Diagnostic Centre were not employees of Poona Hospital and financial accounting of Poona Diagnostic Centre was not in anyway connected with the finance of Poona Hospital and Research Centre.
(iii) The consignment of C.T. Scanner covered by Bill of Entry No. 7235/20-7-90 was meant for Poona Diagnostic Centre and Poona Hospital and Research Centre was not connected with the import of this machine.
(iv) Pune Diagnostic Centre or Surlux Diagnostics Ltd. was not charitable organisation and not registered with the Charity Commissioner. They did not have hospital facilities and there were no beds for indoor patients.
(v) The condition No. 2 to the table to Notification No. 64/88 was not fulfilled by them and he did not know how Duty Exemption Certificates were obtained.
(vi) The NMIC No. NMIC/1-88 dt. 15-4-1988 and DEC No. 239021/20/88 MG dt. 25-11-1988 was for new C.T. Scanner and the same did not cover old/reconditioned C.T. Scanner.
(vii) The insurance was for invoice value or for slightly more. He did not know why the insured sum was U.S. $ 1,00,000.00 against the declared CIF value of US. $ 8,00,000.00 in respect of the C. T. Scanner covered by Bill of Entry No. 7235/20.7.90."
6. Likewise the department has culled out several facts from the statements of Shri A.P. Singh, Shri A.D. Mirchandani and Shri Lai Goel, Director and has also referred to several correspondence from the seized records and have alleged in paras 18 to 22 as follows :
* * * * * * * On the basis of the above allegations, it is alleged that the exemption to hospital equipments are subject to certification from DGHS is covered by Notification No. 64/88-Cus., dt. 1-3-1988. It is the case of the Deptt. that the certificate issued by the DGHS in terms of the notification is not sufficient compliance and therefore, the importer had obtained the D.E. Certificate as a second category hospital by mis-representation of facts and hence they are not entitled to be covered under the said notification. In view of the matter, it is alleged that the importer had attempted to evade the Customs Duty of Rs. 56,65,206. Therefore, they were called upon to explain by the show cause notice dt. 10-4-1991 as to why the imported goods should not be confiscated under Sections 111(d) and 111(m) of Customs Act, 1962 and also as to why the penal action should not be taken under Section 112 ibid.
7. The importer filed their reply dt. 2-5-1991 denying all the allegations made in the show cause notice. Inter alia, they submitted that the goods imported by them were not old but they were brand new ones, which had been imported as per the certificate issued by DGHS. They denied the allegation that they had admitted the goods to be old one. It is their contention that the examination report had been prepared with a preconceived general information that there was some mis-declaration. It is their contention that the report is vague, in as much it had stated "appear to be old". It is stated by them that there is no evidence at all placed by the department in support of their allegation that the imported goods were old and used one. It is specifically stated by them that the price paid for the imported goods was the price of a new one, in as much they had paid about US $ 8,00,000.00. In this connection, they referred to the other importers, who had paid even less for a new machine and in this context, they referred to the department's evidence itself, which had been collected during the course of the investigation. They have specifically stated that the certificate had been issued only after complete satisfaction by the DGHS, on the ground that the importer was a Diagnostic Centre in the Hospital and that the patients of the hospital would be getting the benefit. They had undertaken that they will fulfil all the necessary conditions of the notifications. They denied that there is no mis-representation of any facts. Therefore, on the basis of the certificate produced from the DGHS and also on the various other grounds and more particularly on the basis of high value of the imported goods which was corresponding to the value of the new goods. They prayed that the proceedings be dropped against them.
8. Ld. Collector granted them a personal hearing and after considering their submissions, he rejected the plea by holding that the impugned goods namely CAT scanner is not eligible for exemption from duty under Notification No. 64/88-Cus., dt. 1-3-1988. In that event of the matter, he also imposed a fine of Rs. 14 lakhs in lieu of confiscation. However, he did not impose any penalty on them under Section 112(a) of the Customs Act, 1962 on the ground that the only contravention which he has held proved is that the imported goods are not new and that this being not a serious offence it does not warrant a penalty under the circumstances of the case.
The ld. Collector has held that import under OGL has necessarily to be new goods. He has held that in this case the goods examined were found to be not new ones but were old and reconditioned. In some packets manuals were of 1983 and one equipment revealed that it was manufactured in 1983. The ld. Collector in his order has also held that the counsel was offered another examination, but the counsel did not accept it as the machine had been lying in the docks for one year and "it would certainly appear to be old only". The ld. Collector has held in para 36 :
"36. In my view whether a particular machine is old or new is a question which has to be decided on the basis of its examination in the Docks and other circumstances. Such questions cannot be decided with reference to the case law. It is not the case of the importers also that there is any indication on the machine that it was manufactured in 1989-90. The other evidence clearly shows that it was an old machine and in fact the signs of usage were visible by mere examination of the machine".
In conclusion the ld. Collector has held that the machine in question was not a new machine and accordingly in view of the prohibition contained in Clause 5(3)(iii) of the Imports (Control) Order, 1955, the import was unauthorised rendering the goods in question liable to confiscation under Section 111(d) of the Customs Act, 1962. In that view of the matter, the Collector has held that the charge of mis-declaration under Section 111(m) need be invoked but still it can be confiscated under Section 111(d) of the Customs Act, 1962. The ld. Collector has accepted the CIF value of the machine at Rs. 1,40,22,787/- and also to be a highly sophisticated machine and coming within the category of life saving equipment and in this regard has also held that "it is not the case of anybody that such machines would be sold in the market for profit. Having regard to these facts and circumstances of the case this is a case where a lenient view in the quantum of fine would be merited. Having regard to this I give the importers an option to pay a fine of Rs. 14 lakhs only in lieu of confiscation...".
The ld. Collector has accepted the description of the machine and held it to be a minor discrepancy and that the machine is a CAT scanner only.
As regards the eligibility of the benefit of the Notification No. 64/88-Cus., dt. 1-3-1988, the ld. Collector has held in paras 42 to 46 as follows :
* * * * * * * In view of the above findings, the ld. Collector has held that the Diagnostic Centre in question would come in the category of a commercial establishment and is certainly not entitled to exemption from duty on high valued sophisticated medical equipment.
9. We have heard Shri M. Rangaswamy, ld. Advocate for the Appellant and Shri B.K. Singh, ld. SDR for the Revenue.
10. The ld. Advocate submitted that there was nothing on record to show that the machinery imported was an old one. The appraiser had written the report under the supervision of CIU and duress and hence such report should be discarded. The ld. Advocate time and again argued that the case had been filed with mala fide intentions and the department had somehow made up their mind to deny the benefit of the notification and hence had trumped up this false charge of the machinery being old one. Referring to the examination report, the Councel pointed out that the report was also not in specific and clear terms but merely expressed a subjective report in the words "the goods appear to be old and one label was found from case No. 3 showing the date of inspection on 12-7-1982". From this it cannot be inferred that the goods were old one at all. It is a personal opinion of a person who is not an engineer or expert and looks are deceptive. The machinery had not been used at all and the importer had paid full market value of a new machine and therefore, merely to say on the basis of looks that it is an old one is fallacious. He further submitted that in this report, there had been no mention of the goods being reconditioned, yet the ld. Collector had introduced this element of machinery being re-conditioned without any basis or evidence. He further submitted that the alleged recovery of old manuals was never shown or copies given to the importer till date. He further submitted that the machinery being a new or old one cannot be inferred on the basis of any manual which might have been kept inside the packing. As regards the date of manufacture, said to have been found on the machine, the ld. Advocate submitted that no inference can be drawn with regard to its age as no explanation has been taken from any person as regards the date of manufacture of this machine. He submitted that this number need not necessarily be date of manufacture and it could mean anything else like a part number. He submitted that the department had not investigated about the machinery from the Insurance Company or from the supplier or from any other source with regard to the age of the machine being old or new one. He submitted that the right course of action for the investigation authorities was to have called for information or clarification from the manufacturers and suppliers. Therefore, a mere physical examination and subjective opinion which is not emphatic or borne by any strong evidence and a vague report cannot be accepted against the importer. He pointed out to several statements of persons and demonstrated that contemporaneous import of similar machine had been valued at a lower price. He submitted that if this machine was an old one then the Department should not have accepted the CIF value of a new machine. In this context, he also relied on the ruling rendered in the following two cases :
1. B.K. Krishna, New Delhi v. Collector of Customs and Central Excise, New Delhi -1983 (13) E.L.T. 1130
2. Vydhehi Rethinan v. Collector of Customs (Madras) -1988 (33) E.L.T. 197 He further submitted that assuming the worst against the imported, even then there is no prohibition that an old machine cannot be imported. He further pointed out that there was no need for further physical examination of the machinery required as there was no evidence on record nor could anything be inferred from the inspection report that the machinery is an old one or reconditioned one as held by the ld. Collector. Therefore, the importers were not accepting the Collector's offer for re-examination is justified. He submitted that there had been misdeclaration in the case and therefore, the question of imposing penalty did not arise. He further pointed out to the evidence on record and showed that the importer had denied having imported old machinery and had also categorically stated to the officers that they had after coming to know from the Customs Deptt, had reported to the suppliers and had also pointed out to the supplier that if the machine turned down to be old one, they would hold them responsible for all consequences.
11. As regards the denial of exemption of the Notification ld. Counsel pointed out that once the certificate has been issued by DGHS then the Customs had to accept the same. The ld. Collector had wrongly interpreted the notification and had exceeded his jurisdiction in rejecting the same. He submitted that the department had called for report from the Min. of Health and Min. of Health had clearly given an opinion that the diagnostic centre attached to a hospital would be entitled to the benefit of the exemption. In this context, he pointed out to the said opinion which had been filed by the ld. JDR in this case before the Tribunal. He submitted that the DGHS had given a 9 point certificate and it had been given after fully understanding and satisfying the details furnished by the importers. Therefore, the Collector was not at all justified in rejecting the said certificate. In this context, he relied on the following rulings :
1. Equipment Sales Corporation v. Collr. of Customs -1989 (39) E.L.T. 431
2. Bombay Chemicals Pvt. Ltd. v. Appellate Collector of Customs -1990 (49) E.L.T. 190 (Bombay) He submitted that the right course of action for the Deptt. would have been to take necessary bond from the importer for due compliance of the terms of the notification instead to infer a different intention then what is incorporated in the notification was without any jurisdiction. He also referred to question raised in the Parliament in this aspect and the answer given by the Govt., which clearly indicated the policy of the Govt. to allow diagnostic centre to import life saving equipment, even if they are merely attached to the hospital. He submitted that in the present case, the importer was a very much attached to the hospital with all the facilities provided by the hospital authorities. Therefore, the importer was placed in a better position than other importers who had no facility at all and who had been given clearance while importing similar machinery. In support of his arguments he relied on the following rulings :
1. Union of India v. Wood Papers Ltd., 1990 (47) E.L.T. 5002.
2. Rohit Pulp & Paper Mills Ltd. v. Collector of Central Excise, 1990 (47) E.L.T. 491 (SC)
3. Tata Oil Mills Co. Ltd. v. Collector of C. Excise, 1989 (43) E.L.T. 183 (SC)
4. Collector of C. Excise v. Park Export (P) Ltd., 1988 (38) E.L.T. 741 SC.
5. Indian Aluminium Co. Ltd. and Anr. v. Union of India and Anr., 1983 (12) E.L.T. 349 (Delhi)
12. In conclusion the ld. Collector submitted that the Collector had proceeded on the basis of doubt and in such cases the benefit of doubt should be granted to the importer. In this case he relied on the ruling rendered by the Tribunal in the case of Indian Chemicals, Ahmedabad v. Collector of Central Excise, Ahmedabad as reported in 1986 (25) E.L.T. 318 (T).
13. Arguing for the Revenue ld. JDR justified the imposition of penalty for mis-declaration of the item as new one when in fact goods imported have been old machinery. He referred to regulation of the Import Control Order and pointed out that old goods cannot be imported. He also submitted that the insurance was for lesser value and therefore, the inference that the goods were old one is fully justified. Ld. SDR clearly admitted that there was no word "reconditioned" in the examination report and therefore, such inference drawn by the ld. Collector was not within the scope of the inspection report. Ld. JDR also fairly admitted that the value of the new machinery has been $ 8,00,000 which was a value for a new machine. However, he submitted that the findings given by the ld. Collector for not accepting the certificate of DGHS is fully justified. He submitted that the importer was not having their own hospital but they were only going to cater the requirements of the patients only without patient which facility alone is not sufficient for fulfilment of the terms of the notification. He submitted that mere Diagnostic Centre by itself is not sufficient for a person to import such expensive machinery, although the ld. Collector had held that the importer was a genuine one and the machinery had not been imported for sale. He also referred to the Lexicon Wetster Dictionary, page 276 with regard to the meaning of the term 'Diagnostic'. From the reading of this word from the dictionary, ld. SDR attempted to show that the type of activity to be undertaken by the importer would not come within ambit of the Notification. He referred to the correspondence of the Collector with the Min. of Health and submitted that although the opinion expressed by the Min. of Health was in favour of the appellant, however, they had stated that the Min. of Finance will decide the issue. Therefore, he submitted that the finding given by the ld. Collector should be accepted.
14. We have carefully considered the submissions made by both the sides and have gone through the records and the findings given by the ld. Collector. There are two issues involved in this case :
(i) whether there is a mis-declaration and if so whether there is sufficient material on record to show that the machinery is an old and reconditioned one thus calling for imposition of penalty under Section 112(a) of the Customs Act, 1962,
(ii) whether a certificate issued by the DGHS in favour of the importer is a sufficient compliance of the terms of the notification in question for granting the benefit.
The only material on record in support of the first charge is the examination report. As can be seen from the said report, the appraiser has merely stated that the machinery "appears to be old one". The ld. Collector has further added for his own that "the machinery is old and reconditioned one". There is no evidence anywhere on record to show that the machinery was a reconditioned one and in that view of the matter, the findings given by the ld. Collector on this issue is certainly a far fetched one, drawn out of surmise and out of context. There is force in the appellant's contention that the report is a mere surmise and no concrete evidence has been produced to show that the machinery is not a new one. The price of the machine is $ 8,00,000 which has been accepted, which in turn works out to Rs. 1,40,22,787. The ld. Collector has given a very categorical finding that it is a highly sophisticated machine and was not meant to be sold in market for profit. When the intention of the importer has been clearly spelt out by the ld. Collector himself, it is surprising to note that the ld. Collector has accepted a mere surmise of the appraiser to hold the machinery to be old one. The investigating authority should have called for explanation from the supplier with regard to the condition of the machine. The machinery has not been examined by any experts and therefore, in this state of evidence, which is present in this case, it cannot be held at all that the condition of the machine is an old one. The Investigating Officers are said to have recovered old manuals. This by itself cannot be a ground to hold the machinery to be old one as there has been no reconciliation done between the manual and the actual machinery imported. The examiner has noted a number on the machinery and inferred that the machinery is of 1982. This is also not a correct conclusion to hold that the machinery is an old one. Nothing more can be read from such a report as regards the condition of the machine. In view of the Collector's own finding that the import is a genuine one, the charge of misdeclaration of facts and hence the order of confiscation and imposition of redemption fine of Rs. 14 lakhs is set aside.
15. As regards the second question is concerned, the DGHS has granted the certificate after a thorough examination of the importer's case. The certificate given by the Dy. Director of Health Services is reproduced below :
"Certified that the Institution M/s. Surlux Diagnostic Ltd. will provide diagnostic treatment facilities to all citizens of India without distinction of Caste, Creed, Race religion and language.
2. Certified that 40% of out door patients will be treated free of cost.
3. Certified that indoor treatment facilities will be provided free to all families whose income is less than Rs. 500/- p.m. and for this purpose not less than 10% of the beds will be reserved.
4. Certified that the charges levied for other indoor patients will be responsible either on the basis of the income of the patients guardians or other.
5. Certified that the Medical Surgical and Diagnostic equipments, apparatus and appliance to be imported by the institution will only be used in the institution and will not be removed here for private use and will not be sold or otherwise disposed off without prior permission of the Govt.
6. Certified that the institution has an appropriate programme for the establishment of the hospital.
7. Certified that there are sufficient funds and resources to establish the hospital.
8. Certified that the hospital will start functioning within a period of two years.
9. The certificate will be valid for two years from the date of issue.
Sd/-
Dy. Director of Health Services, Pune Circle, Pune-1".
16. Ld. Collector has accepted the genuinity of the certificate but he has a very strange doubt and that is he has held that the authorities have not fully applied their mind with regard to the intention of the notification and thus the certificate is not acceptable. Let us examine these aspects of the matter. The Notification 64/88-Cus., dt. 1-3-1988 reads here as under :
* * * * * * * As the Notification reads, the notified goods are exempted from the whole of duty of Customs and whole of additional duty provided the import has been approved by the Govt. of India in the Min. of Health and Family Welfare or by the Directorate General of Health Services to the Govt. of India, as essential for use in any hospital as specified in the table. The DGHS has considered the case of the importer and after having satisfied itself with regard to the conditions of the Notification, has granted the certificate and in terms of the certificate has also certified that 40% of outdoor patients will be treated free of cost and that indoor facility will be provided free to all families whose income is less than Rs. 500/- per month and for this purpose not less than 10% of the beds will be reserved. Somehow, the ld. Collector is not satisfied with this certificate. He has raised several doubts and has imputed his own expressions and understanding, both with regard to the Notification as well as with regard to the certificate. With due respect of the ld. Collector, it will be beyond the scope of the notification as well as the certificate to enter into such a controversy. Moreover, the terms of the Notification stipulate that import could be granted to 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 opinion (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 with a period of two years and (iv) such hospital when starts functioning would be relatable to a hospital specified in paras 1, 2 & 3 of the table of the notification and the said Ministry of Health and Family Welfare certifies to that effect. The Ministry of Health in this case is fully satisfied and they have certified that the importer had got a diagnostic centre within a hospital premises although the said hospital premises would not have been owned by them. As can be seen from the terms of the Notification, a diagnostic centre can build their own hospital within a period of two years from the date of import. A further perusal of Clause 4 shows that importers after the clearance of the equipment should execute a bond to the effect that the hospital equipment would be installed in the hospital and also give an undertaking of its functioning and in case if they fail to do so then they would find themselves to pay the duty leviable on the said hospital equipment. The explanation to the notification defines "Hospital". This Explanation to the term "Hospital" clearly brings within its ambit "any Institution, Centre, Trust, Society, Association, Laboratory, Clinic and Maternity Home which renders medical, surgical or diagnostic treatment". The Explanation to the notification being so very clear, it follows that the reading of the Clause 2 of the Notification cannot be done in such.a way as to hold that a diagnostic treatment centre should be a hospital by itself and that both in-patient or out-patient facility should be available with the Importer. Such a reading as has been done by the ld. Collector, would make the notification otiose and also would place unnecessary burden on the importer, especially when the Importer has imported this life saving machinery for the purpose of rendering service to the needy patients and the Govt. of India has permitted hospitals and diagnostic centres to import life saving equipments to provide charitable work. Therefore, if a strict view is taken then the very purpose of granting the benefit of the notification, to the deserving Importers, would be defeated. In this case, the Collector had made reference to the Ministry of Health & Family Welfare and they have clearly clarified on this issue. The Min. of Health has clarified by placing their views on this doubt raised by the Collector, which should have been sufficient to grant the benefit. The same is reproduced herein below :
* * * * * * * By the above clarification, it is very clear that diagnostic centre may or may not require indoor facility and gives the examples of laprotomy for making a tissue from the abdomen for biopsy, which require hospitalisation i.e. indoor admission for a few days but non-invasive diagnostic procedure like X-Ray, Scanning etc. do not require indoor admission. Dr. G.K. Vishwakarma, Director General of Health Services has also sent his opinion dt. 28-12-1990 to the Collector, which clarifies that for diagnostic treatment no beds are required and it cannot be essential for receiving the benefit of CDEC. It further states that diagnostic treatment is very expensive and it cannot be provided by Govt. This clarification given by Dr. Vishwakarma should have also been sufficient to grant the clearance. Somehow, the ld. Collector appears to have made up his mind to discriminate this importer. The opinion of Dr. Vishwakarma is reproduced herein below:
"Dear Shri Gupta, This is with reference to your d.o. letter No. CIU-Gen-45/90 dt. 9th Nov. '90 regarding issue of Customs Duty Exemption Certificate for Hospital equipments.
2. It may be mentioned in this connection that the Directorate General of Health Services has been following the procedure for issue of Customs Duty Exemption Certificate to various Hospitals/Medical Institution strictly in conformity with the provisions of Notification No. 64/88-Cus., dt. 1-3-1988, issued by the Min. of Finance, Govt. of India. Paragraph 2 of this table annexed to the Notification, followed by the 'Explanation' given at the end of the Notification, clearly state that institutions rendering 'Medical, surgical or diagnostic treatment' are covered under the provisions of the Notification. Further explanation in the Notification has been given in as much as a 'Hospital' includes any Institution, Centre, Trust, Society, Association, Laboratory Clinic and Maternity Home, which renders medical, surgical or diagnostic treatment. It has been felt that the expression 'any' is an omnibus provision, and the term" medical, surgical or diagnostic treatment' means any one of or all three treatments.
3. Considering above, I realise that for "diagnostic purpose" no bed is required. Hence, the bed requirement cannot be essential for receiving the benefit of CDEC. Further, the diagnostic equipment which are very costly worth several crores of rupees cannot be afforded by the Government and such services are being provided by the private sector. These services do not require indoor facilities and are mostly located in private sector. This point may kindly be clarified, otherwise due to reasons stated above, it will not be possible to extend these facilities to such diagnostic clinics and the sufferers will be the patients only.
4. The letter attached as Annexure 'D' to the d.o. letter under reference pertains to calling for additional information with respect to certain 'Cardiology' equipments, hence it is felt that the same considerations may not be applicable in the case at point.
5. In case further clarifications are needed regarding the interpretation and the meaning to be read into the Notification, it is suggested that Min. of Finance (Department of Revenue) may be the appropriate authority.
With best regards and waiting for an early reply as the cases are pending at this end.
Yours Sincerely, sd/-
(Dr. G.K. Vishwakarma)"
The Jt. Director of Health Services has also issued another certificate dt. 6-7-1989. This certificate clearly states that the importer provides diagnostic and curative aid or treatment to all citizens of India without distinction of Caste, Creed, race, religion and language and that they had provided diagnostic preventive or curative care free to 2739 patients out of total 5962 patient attendance in India which comes to more than 40%. The entire certificate is itself reproduced herein below :
"Sub :- Surlux Diagnostic Ltd., Bombay-400021 Custom Duty Exemption Certificate., -
Ref:- Application Ifo. SDL/DIR/340/89, dt. 31-5-1989 Asstt. Director of Health Services (MCH) Bombay has visited the Surlux Diagnostic Ltd., Bombay dt. 1-7-1989 and verified the records and recommended for Customs Duty Exemption Certificate. Hence Directorate of Health Services, Bombay is pleased to issue Five Point Certificate required as per Notification No. 64/88-Cus., dt. 1-3-1988 in favour of Surlux Diagnostic Ltd., Bombay-21.
1. Certified that the Institution provides diagnostic and curative aid or treatment to all citizens of India without distinction of Caste, Creed, race, religion and language.
2. Certified that the Institution provide diagnostic preventive or curative care free to 2739 patients out of total 5962 out patient attendance in the year 1988, which comes more than 40%.
3. Certified that indoor treatment facilities are provided free to all with income of less than Rs. 500/- p.m. whenever made available for this purpose not less than 10% of beds are reserved.
4. Certified that the charges levied for other indoor patients are reasonable either on the basis of the income of patients/guardians or otherwise.
5. Certified that the Medical, Surgical and Diagnostic Equipments apparatus and appliances to be imported, will be used in the Institution itself only and will not be removed therefrom for private use and will not be sold or otherwise disposed off without prior permission of the Government.
THE CERTIFICATE IS VALIED FOR CURRENT FINANCIAL YEAR I.E. 1989-90.
SD/-
Jt. Director of Health Services (PDE) Bombay".
17. In view of our findings in terms of these clarifications given by the Director of Health and enormous evidence placed by the importers and taking into consideration, the salient law laid down by the Hon'ble Supreme Court in the noted cases. The appellant succeeds in the appeal and the same is allowed.