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In the year 1992-93, the appellant-Society imported certain medical equipments for the use in its charitable hospital. According to the appellant, under Notification No. 64/88-Cus dated March 1, 1988, exemptions were granted to hospital equipments imported by specified category of hospitals (charitable) subject to certification by Directorate General of Health Services (DGHS). The table in the notification classified hospitals in four categories. According to the appellant, it falls under Para No.3 of the table of notification.

The appellant, however, along with several other hospitals, had applied for the benefit of exemption notification not under para 3 but para 2 of the table. The benefit of exemption was granted. Since the Society was also entitled to exemption under para 3 of the table, an application was made to DGHS highlighting the fact that the appellant is a non-profit organization and had been permitted to import medical equipments by DGHS by certification. It has been registered as an institution to receive donations in foreign exchange and since the area of operations of the main hospital at Ghanapur and the Rural Health Hospital are in rural areas, it would be entitled to invoke para 3 of the table of notification of exemption. The Deputy Director General (Medical), DGHS, by an order dated January 25, 2000 rejected the application of the appellant observing therein that initially the request was made by the appellant for exemption under para 2 of the notification and accordingly, the institution was granted such exemption. It was, therefore, not open to apply for exemption under para 3 of the table of the exemption notification and the application was liable to be rejected.

Being aggrieved by the above order passed by the Deputy Director General (Medical), the appellant-Society filed the above petitions in the High Court of Andhra Pradesh. The High Court also dismissed the petitions observing that it was not in dispute that the appellant (petitioner) claimed exemption in respect of import of hospital equipments and was allowed on the basis of its prayer under category para 2 of the table. The High Court noted that the learned counsel for the appellant-petitioner relied upon certain decisions in support of the contention that a categorization could be changed but it held that the exemption was granted in category 2 of the table, certain information was sought which was not supplied by the Society and the exemption was withdrawn. Regarding category 3, however, the High Court observed that when the appellant did not fulfill conditions relatable to category 2 institution, its claim for conversion of categorization under category 3 was untenable. Accordingly, all petitions were dismissed.

In the counter-affidavit, it has been asserted that in the light of the observations in Mediwell Hospital, the Director General of Health Services and Department of Health decided to review cases of all (396) beneficent institutions who had availed of benefits under notification 64/88, and the appellant was one of them. Since it was found that the appellant was not fulfilling the conditions set out in para 2 of the Table, the benefit was withdrawn. In our opinion, the decision in Mediwell Hospital would not take away the right of the appellant to claim benefit under para 3 of the Table of exemption notification. If the appellant is not entitled to exemption under para 2, it cannot make grievance against denial of exemption. But if it is otherwise entitled to such benefit under para 3, it cannot be denied either. The contention of the authorities, therefore, has no force and must be rejected.