Cc, New Delhi vs M/S Moradabad Charitable Trust &

[Arising out of Order-in-Appeal No. CC(A)/Cus/I&G/116/D-I/07 dated 22.6.2007 passed by the Commissioner of Customs (I&G), New Delhi]

For Approval & Signature :

Honble Mr. Justice G. Raghuram, President

Honble Mr. R.K. Singh, Member (Technical)

1. Whether Press Reporter may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?

2. Whether it would be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?

3. Whether their Lordships wish to see the fair copy of the order?

4. Whether order is to be circulated to the Department Authorities?

CC, New Delhi Appellant

Vs.

M/s Moradabad Charitable Trust & Respondent

Health Research Centre

Appearance:

Shri B.B. Sharma, D.R. - for the Appellant

Shri Priyadarshi Manish, Advocate - for the Respondent

Coram : Honble Mr. Justice G. Raghuram, President

Honble Mr. R.K. Singh, Member (Technical)

F. Order No. 51191/2015

Per R.K. Singh :

The appeal has been filed by Revenue against Order-in-Appeal No. CC(A)/Cus/I&G/116/D-I/07 dated 22.6.2007 which set aside the order-in-original dated 24.11.2004 in terms of which a duty demand of Rs.16,34,657/- was confirmed against the respondents M/s Moradabad Charitable Trust & Health Research Centre along with redemption fine and penalty.

2. The brief facts of the case are as under:

The respondents had availed of the benefit of Notification No.64/88-Cus. dated 1.3.88 on the medical equipment imported without payment of duty on the basis of customs duty exemption certificate issued by DGHS. This notification required the respondents to fulfil certain post-importation conditions such as,  to use the medical equipment for free treatment on an average to at least 40% of their outdoor patients, free treatment to all indoor patients belonging to families with an income of less than Rs. 500/- P.M. and keeping for this purpose at least 10% of all the hospital beds reserved for such patients. The said exemption certificate was withdrawn by DGHS vide letter dated 30.8.2000 for non-fulfilment of the conditions of grant thereof. As the benefit of exemption from Customs duty under Notification No. 64/88-Cus was granted on the basis of Customs Duty Exemption Certificate issued by DGHS which stood cancelled/withdrawn, the impugned duty liability followed as a consequence in the wake of the Supreme Courts judgement in the case of Mediwell Hospital & Health Care Pvt. Ltd. Vs. Union of India  1997 (89) ELT 425 (SC) in terms of which it was held that there was a continuing obligation on the part of the importer for discharging obligation under Notification No. 64/88-Cus and therefore liability to pay customs duty also continues and failure to comply with the stipulations and conditions prescribed in the said exemption notification would amount to importing the impugned hospital equipment without discharging the duty liability due thereon.

The Commissioner (Appeals) set aside the adjudication order essentially on the ground that the appellants are a charitable hospital run by a charitable trust and substantially run and funded by charitable organisation in the name of M/s Moradabad Charitable & Health Research Center, Moradabad as recognised by the DGHS to the Govt. of India. This fact is clearly admitted in the show cause notice as well as in the impugned order. Commissioner (Appeals) further observed that none of the conditions stipulated under any of the other three paragraphs i.e. paragraphs 2, 3 and 4 of the said notifications table are related to the category of hospitals falling under category (paragraph) 1 of the Table of the said Notification. Essentially the Commissioner (Appeals) held that in the present case the hospitals fell under the scope of paragraph 1.

3. Revenue has contended that CDEC was issued vide DGHS for the category of hospital covered under paragraph 2 of the Table in the said notification and that there is no evidence or substance on the basis of which the Commissioner (Appeals) held that the exemption given to the respondents by DGHS was treating them under the category of hospital covered under paragraph 1 of the Table.

4. The ld. Counsel for the respondents contended that they are charitable institution and therefore fall in the category of hospital covered paragraph 1 of the Table in the Notification No. 64/88-Cus and were therefore not subject to fulfilment of the conditions mentioned in paragraph 2 of the said Table. He however did not show any evidence that the duty exemption certificate by DGHS was issued to them treating them as running a hospital under paragraph 1 of the said Table appended to Notification No. 64/88-Cus.

5. We have considered the contentions of both sides. At the very outset, it is pertinent to mention that it is not in dispute that for hospitals covered under paragraph 2 of the said Table if the duty exemption certificate is withdrawn by the DGHS, then on account of the continuing liability in the wake of Supreme Courts judgement in the case of Mediwell Hospital & Health Care Pvt. Ltd. (supra), the duty liability would arise. We have perused the impugned order-in-appeal. The Commissioner (Appeals) has recorded a finding that the appellants are a charitable hospital run by a charitable trust and substantially run and funded by charitable organisation in the name of Moradabad Charitable Trust Health Research Centre as recognised by the DGHS to the Government of India and that this fact is clearly admitted in the Show Cause Notice as well as in the impugned order. We have perused the related show cause notice and order in original and find that it is nowhere admitted therein that M/s Moradabad Charitable Trust & Health Research Centre has been so certified/approved by the Ministry of Health and Family Welfare. Thus, the said observation of the Commissioner (Appeals) is devoid of any sustainable basis. Quite to the contrary, the letter of DGHS dated 30.8.2000 in terms of which the CDEC issued to the appellants was withdrawn as cancelled specifically noted that the appellants were issued CDEC as a hospital falling under para 2 of the Table attached to notification No. 64/88-Cus and that such hospital were required to fulfil the conditions contained in paras 2 (a), (b) & (c) of the Table in the said notification. Thus, it is evident that DGHS had given the respondents CDEC treating their hospital as falling under paragraph 2 of the said Table and not under the paragraph 1 thereof. In the case of Bharat Diagnostic Centre Vs. CC - 2014 (307) ELT 632 (SC), it was held by Supreme Court as under :

22. In the instant case, the DGHS duly issued an? exemption certificate but subsequently the same was withdrawn by the same authority. If for any reason the appellant was aggrieved by such withdrawal, it should have questioned the same. Since having questioned the said withdrawal and having withdrawn it later on, we are of the opinion that the appellant cannot take exception to the duty demand made by the respondent.

In other words, it is not open to Customs (adjudicating authorities) to question the withdrawal of the CDEC.

6. In para 21 of the Supreme Court judgement in the case of Bharat Diagnostic Centre Vs. CC, the Supreme Court approvingly referring to the judgement in the case of Mediwell Hospital (supra) further held as under :

21. Thereafter, the Custom Authorities issued a demand? notice directing the appellant to pay the customs duty, which may have been for some other reasons including the withdrawal of the exemption certificate by the DGHS. We cannot take exception to the demand so made by them for the simple reason that the appellant would be eligible for exemption from payment of duty only if it had obtained an exemption certificate from the DGHS. If the foundation on which the appellant was entitled to claim exemption, i.e. the exemption certificate, before the Customs Authorities was withdrawn by the competent authority, the natural consequences must follow, that being the non-applicability of the exemption from custom duty. As a consequence of the absence of a valid exemption certificate, the appellant would be liable to pay appropriate custom duty.

7. In the light of the foregoing analysis, we have no hesitation to hold the impugned order in appeal as unsustainable and accordingly set aside the same as a consequence of which the related order in original dated 24.11.2004 springs back to life. The Revenues appeal thus stands allowed.

(Justice G. Raghuram)

President

(R.K. Singh)

Member (Technical)

RM

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