FORTIS HOSPITAL LTD. Vs. COMMISSIONER OF CUSTOMS

JUDGEMENT

(1.) The appellant herein, which is the successor of M/s.Wockhardt Hospital and Heart Institute (referred to as the 'Institute' hereinafter) had a hospital at Bangalore. Sometime in the year 1990, the said Institute imported a Cardiac Catherization Laboratory (known as Angiography system) with its spares/accessories valued at Rs.1,14,23,471/-. The said Institute applied for exemption from payment of import duty taking shelter under the Notification No. 64/88-cus dated 01.03.1988. This notification provides for exemption on medical equipment imported against Custom Duty Exemption Certificate issued by the Director General of Health Services. Apart from the said certificate, there are certain other conditions which are mentioned in the notification that need to be satisfied to avail the exemption. These conditions are as under: -

(2.) From a bare reading of the aforesaid stipulations, it is clear that these conditions are to be fulfilled not at the time of the import but in future, by the importer while utilising the imported equipment. Therefore, the conditions are continuing in nature.

(3.) The Institute was not charged any import duty as it had produced requisite certificate dated 11.02.1991 issued by the Director General of Health Services, New Delhi. After sometime, the Revenue authorities/respondent herein came to know that the Institute was committing breach of the aforesaid conditions, as it had not been providing free diagnostic treatment to at least 40 per cent of all its outdoor patients and it was also not giving free treatment to indoor patients having income of less than Rs.500 per month and for this purpose, it had not got 10 per cent hospital beds reserved for such patients. It resulted in issuance of show cause notice to the Institute. Pertinently, this show cause notice dated 12.01.2000 was issued under Section 124 of the Customs Act, 1962 (hereinafter referred to as Act) and after stating that the aforesaid breach was allegedly committed by the appellant, in the show cause notice, it was proposed as under: -