Cus - Notfn 64/88 - factual position that Customs Duty Exemption Certificate issued by DGHS authorities stood withdrawn was not brought to knowledge of Bench which referred issue - Matter remitted: CESTAT Larger Bench
By TIOL News Service
MUMBAI, OCT 04, 2016: A Public Interest Litigation No. 409/96 was filed in the Delhi High Court seeking quashing of illegal Custom Duty Exemption Certificates (CDEC) issued by DGHS under Notification Number 64/88 dated 1.3.88 in respect of medical equipments, alleged to have caused huge loss to the Public exchequer. The High Court directed an inquiry to be conducted by Sh. K. Chandramouli, the then Joint Secretary, Min. of Health & Family Welfare. Sh. Chandramouli submitted the report on 29.8.96 wherein 23 institutions were scrutinized as test cases.
On consideration of the above report, Delhi High Court vide its order dated 18.10.96 constituted another committee headed by Mr. Padma Rosha retired Director General (Security) J & K, comprising Officers from various concerned Ministry/Department of Government of India.
The Committee was inter alia set-up to :
- Enquire whether Customs Duty Exemption Certificates have been issued by the Ministry of Health & Family Welfare, Directorate General of Health Services, for individual importers/institutions in accordance with the terms and conditions laid down in the Notification No. 64/88-Cus., dated 1.3.1988 and any other prescribed parameters or policy guidelines;
- Enquire whether any such certificates have been issued by the Ministry of Health & Family Welfare/Directorate General of Health Services to individual importers or institutions who were otherwise not entitled to receive them
- Enquire whether the institutions concerned have fulfilled the conditions subject to which the exemption from duty was granted
The Committee completed scrutiny of 401 cases out of which it was found that 123 institutions (including diagnostic centers) were not entitled for exemption and 217 institutions failed to fulfill post importation conditions.
Based on the Rosha Committee report, according to which the appellant have not fulfilled the condition of the notification 64/88-Cus during year 1994-1995, a SCN dated 22/3/2002 was issued proposing to demand custom duty, to confiscate the medical equipments by denying Notification No. 64/88-Cus.
Incidentally, this notification along with 323 other notifications were rescinded by a single notification 99/94-Cus dated 01.03.1994.
By an order dated July 2004, the Commissioner of Customs (Import) in de novo adjudication [ref. - 2003-TIOL-191-CESTAT-MUM held that the importer had not satisfied the conditions of the Notfn. No. 64/88-Cus dated 1/3/1998 and, therefore, denied the benefit of the notification & confirmed duty demand of Rs.4.59 lakhs. The adjudicating authority also ordered confiscation of the medical equipments and gave an option to redeem the goods on payment of Redemption Fine of Rs.46,000/- and also imposed penalty of Rs.25,000/- u/s 112 of Customs Act, 1962.
The appeal was heard by the Division Bench on 12th August 2015.
The Bench observed that the issue is related to fulfillment of condition during the period 1994-95 which is after the rescission of notification 64/88-Cus, whether it will amount to violation of condition and benefit of notification can be denied in such circumstances or otherwise has to be decided first.
The Bench also observed that on identical issue there are two conflicting judgments of the Tribunal, one in the case of Sunitidevi Singhania Hospital & Medical Research Centre - 2014-TIOL-2062-CESTAT-MUM wherein the division bench has held that Notification imposes a continuing obligation and the other decision in the case of Sir H.N. Hospital & Research Centre - 2011-TIOL-111-CESTAT-MUM where the Tribunal has allowed the appeal holding that condition of the notification 64/88-Cus for the period past rescission of notification (vide Notification No. 99/94-Cus dated 1/3/1994) is not required to be fulfilled.
The Division Bench, therefore, opined that the matter needs to be resolved by the Larger Bench. We reported this as - 2015-TIOL-2380-CESTAT-MUM.
The Larger Bench, after considering the submissions, in a terse order observed -
"4. … On a specific question from the Bench as to the facts of the case, it was informed to us that Customs Duty Exemption Certificate (CDEC) issued by the DGHS authorities in appellant's case stood withdrawn by the authorities. This factual position was not brought to the knowledge of the Bench which referred the issue to Larger Bench due to which this reference was made. On this factual matrix the entire case can be decided by the Division Bench without going into the question of as to effect of rescission of Notification No. 64/88. In view of the foregoing, we decline to answer the reference made to us and remit the matter back to the Division Bench to decide the issue on the facts and circumstances of the case."
(See 2016-TIOL-2603-CESTAT-MUM-LB )
