MAULANA HOSPITAL Vs. CC

JUDGEMENT

(1.) THE appellant -hospital had imported a "Whole Body CT Scanner" in 1991 duty -free under Notification No. 64/88 -Cus. dated 1.3.88. The said Notification had stipulated certain post -importation conditions viz. (a) free treatment to at least 40% of outdoor patients (b) free treatment to all indoor patients belonging to families with income of less than Rs. 500/ - per month, and (c) 10% of hospital beds to be reserved for such poor indoor patients. After a few years, the department found that conditions (a) and (b) had been violated by the hospital and, on that basis, issued a SCN seeking to deny the benefit of the above Notification to the hospital and to recover duty on the medical equipment, as also to confiscate the goods, besides imposing penalty on the hospital. These proposals in the SCN were upheld by the adjudicating authority, whose order was taken in appeal to this Tribunal and the Tribunal remanded the case to the adjudicating authority for fresh decision. What is under challenge presently before the Tribunal is the order passed by ld. Commissioner in the remanded proceedings. It is noted that, in the first round of litigation, the Tribunal allowed waiver of predeposit and stay of recovery. At present, we are considering the appellants' application for waiver of predeposit and stay of recovery in respect of the duty amount (Rs. 23,41,202) and penalty amount (Rs. 5,00,000).

(2.) LD . counsel for the appellants has claimed prima facie case against the demand of duty and the penalty on numerous grounds. It is submitted that the equipment (valued at over Rs. 50 lakhs) confiscated by the Commissioner is in the department's custody and the same will not be redeemed till final disposal of the appeal by the tribunal Ld. counsel has cited a few judicial authorities in support of his submission that duty cannot be levied on the medical equipment at any stage prior to its redemption. Ld. SDR points out that the equipment was allowed duty -free clearance on production of Customs Duty Exemption Certificate (CDEC) issued by the Director -General of Health Services (DGHS) and that the said certificate has since been cancelled by DGHS. It is pointed out that, against cancellation of CDEC, the party had moved the Hon'ble High Court of Kerala and had obtained a remand order and further that, pursuant to the remand order of High Court, DGHS passed a fresh order of cancellation of CDEC. Ld. SDR has pointed out that this order of cancellation of CDEC was also challenged before the High Court by the hospital and that the Hon'ble High Court has upheld the order of DGHS. The reference is to the judgment of learned Single Judge of the High Court, dated 3.1.2006, in W.P. No. 34104 of 2004 (Maulana Hospital v. UOI and Ors.). At this juncture, it is submitted by ld. counsel that the appellant proposes to file appeal against the judgment of the High Court, which will be done soon after reopening of the High Court after summer vacation. Ld. SDR has also relied on decisions of this Bench, rendered in similar cases. She has also referred to stay orders passed by this Bench, whereby the hospitals concerned were directed to predeposit part of the duty demanded from them. Both sides have referred to the Tribunal's. Larger Bench decision in Bombay Hospital Trust v. CC .

(3.) AFTER giving careful consideration to the submissions, we have not discerned prima facie case for the appellants. Even according to the data presented by the hospital, they could not provide free treatment, on the average, to 40% of their outdoor patients during the intervening period between the date of import and the date of the SCN. Similarly, as regards free treatment to poor indoor patients, the figures presented by the appellants are found to be short of what was required under the Notification. Apparently, the department's case that the hospital has committed breach of post -importation conditions of Notification No. 64/88 -Cus. is good enough to be acceptable. The Hon'ble High Court's judgment in W.P.No. 34104/2004 upholding the DGHS' order of cancellation of CDEC is also a strong weapon in the Revenue's hands inasmuch as, where the duty exemption certificate, on the strength of which duty -free clearance of the equipment was allowed, has been cancelled by the competent authority, the liability to pay duty on the goods apparently fall on the importer. In a case cited by ld. counsel vide Grant Medical Foundation v. CC Mumbai 2004 (178) ELT 950 (Tri. -Mumbai), it was held by a coordinate bench of this Tribunal that, if option to redeem goods (similar to the one under consideration) was not exercised, duty in addition to redemption fine could not be demanded. Ld. SDR has relied on Bombay Hospital Trust (supra) in answer to the reliance placed by ld. counsel on Grant Medical Foundation (supra). She has, particularly, referred to para -19 of the judgment of the Larger Bench, wherein we have come across the following observation made by the Bench with reference to Section 125(2) of the Customs Act: