Final Order No. C/A/256/2012-Cus.(PB) arising from and Misc. Order No. C/M/2/2012-Cus.(PB), dated 12-1-2012 in Appeal No. C/359/2005. Case: Batra Hospital & Medical Research Centre Vs C.C., New Delhi. CEGAT (Customs, Excise & Gold (Control) Appellate Tribunal) & CESTAT (Customs, Excise and Service Tax Appellate Tribunal)
| Case Number | Final Order No. C/A/256/2012-Cus.(PB) arising from and Misc. Order No. C/M/2/2012-Cus.(PB), dated 12-1-2012 in Appeal No. C/359/2005 |
| Counsel | For Appellant: Shri A.C. Jain, Advocate and For Respondents: Shri Sumit Kumar, SDR. |
| Judges | Shri D.N. Panda, Member (J) and Rakesh Kumar, Member (T) and Third Member on Reference : Shri Mathew John, Member (T) |
| Issue | Customs Act |
| Citation | 2014 (311) ELT 226 (Tri. - Del.) |
| Judgement Date | September 17, 2012 |
| Court | CEGAT (Customs, Excise & Gold (Control) Appellate Tribunal) & CESTAT (Customs, Excise and Service Tax Appellate Tribunal) |
Order:
Rakesh Kumar, Member (T), (Principal Bench At New Delhi)
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The facts giving rise to this appeal are, in brief, as under:
1.1 The appellant, a unit of Ch. Aishi Ram Batra Public Charitable Trust (Regd.), are a super specialty hospital in New Delhi. They, during 1989 to 1993 period, imported 85 consignments of various medical equipments free of duty under Notification No. 64/88-Cus., dated 1-3-1988 issued under Section 25(1) of the Customs Act, 1962. The duty foregone on these goods was Rs. 1,32,37,001/-. Notification No. 64/88-Cus. exempted from the whole of the customs duty leviable under First Schedule to the Customs Tariff Act, 1975 and Additional Customs duty leviable under Section 3 of the Customs Tariff Act, 1975 subject to the conditions specified in it, the hospital equipments imported by certain categories of hospitals, as mentioned in the table annexed to this notification. The Table annexed to the notification mentioned four categories of hospitals which were eligible for exemption. The appellant, on the basis of certificates issued by the Ministry of Health & Family Welfare claimed that they are covered by S. No. 2 of the Table to the notification which reads as under:-
"All such hospitals which may be certified by the said Ministry of Health and Family Welfare, in each case, to be run for providing medical, surgical or diagnostic treatment not only without any distinction of caste, creed, race, religion or language, but also -
(a) free, on an average, to at least 40% of all their outdoor patients; and
(b) free to all indoor patients belonging to families with an income less than rupees five hundred per month and keeping for this purpose at least 10% of all the hospital beds reserved for such patients; and
(c) at reasonable charges, either on the basis of the income of the patients concerned or otherwise, for patients other than those specified in clauses (a) and (b)".
The appellant on the basis of the certificates issued by the Ministry of Health, called customs duty exemption certificate (CDEC) certifying that the appellant fall in the S. No. 2 of the table to the Notification No. 64/88-Cus. made the above-mentioned duty free imports of medical equipments, spares & accessories, as they satisfied the conditions as specified in paras 2 & 3 of the notification. There is no dispute about satisfaction of the conditions in paras 2 & 3 of the notification.
1.2 Hon''ble Supreme Court in case of Mediwell Hospital reported in 1997 (89) ELT 425 (S.C.), while interpreting the provisions of Notification No. 64/88-Cus. in respect of hospitals who had made duty free import of medical equipments by claiming to be in the category of hospitals covered by S. No. 2 of the table to the notification, held that the obligation of a hospital for free treatment of poor patients and treatment of other patients at reasonable rates is a continuing obligation and if they fail to meet this obligation, they would not be eligible for the duty exemption. In this case, the Apex Court also held that in such cases the time limit for recovery of duty under Section 28 of Customs Act, 1962 would not apply.
1.3 In the year 2000, the customs officers checked the appellant''s records to ascertain the percentage of OPD patients treated free and percentage of economically poor indoor patients treated free and it appeared that they had not fulfilled the conditions of the exemption notification in this regard.
1.4 On the basis of the above inquiry, a show cause notice dated 16-9-2000 was issued to the appellant for -
(a) recovery of duty amounting to Rs. 1,32,37,001/- forgone in respect of the duty free imports made under Notification 64/88-Cus. as detailed in Annexure to the show cause notice along with interest;
(b) confiscation of the goods under Section 111(o) of Customs Act, 1962; and
(c) imposition of penalty on the appellant under Sections 112(a) and 114A of Customs Act, 1962.
1.5 The above show cause notice was adjudicated by the Commissioner vide order-in-original No. 01/Adj,/SN/05, dated 31-5-2005 by which -
(a) the duty demand of Rs. 1,32,37,001/- was confirmed;
(b) the goods imported duty free were ordered to be confiscated under Section 111(o) of Customs Act, 1962 with option to be redeemed on payment of redemption fine of Rs. 10 lakhs; and
(c) penalty of Rs. 5,00,000/- was imposed on the appellant under Section 112 (a) ibid.
1.6 Against the above order of the Commissioner, this appeal has been filed.
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Heard both the sides.
2.1 Shri A.C. Jain, Advocate, the learned Counsel for the appellant made the following submissions:-
(1) The appellant had reserved at least 10% beds for indoor patients and for this purpose there was a separate indoor patients ward. Similarly there was arrangement for free treatment of eligible outdoor patients. The facility regarding free indoor treatment to poor patients i.e. patients of families with monthly income of less than Rs. 500/- and for free treatment of eligible OPD patients had been made known to the public by displaying the information about the same on the Notice Boards at the gate and other places. The number of free indoor patients as percentage of total bed occupancy during 1988, 1989, 1990, 1991, 1992 and 1993 was 10% +, 15%, 10%, 10% +, 10% + and 12% + respectively, not 8%, 10.5%, 9%, 9%, 9% and 10% respectively as alleged by the Department.
(2) In any case, since there was a separate indoor patient ward for free treatment of indigent patients, the appellant have complied with the condition of keeping at least 10% beds reserved for indoor treatment of poor patients.
(3) As regards the condition of treating at least 40% OPD patient free, this condition cannot be construed that every year strictly 40% OPD patients have to be treated free sometimes it may depend upon the availability of the patient. During 1988 to 1993, the percentage of OPD patients treated free each year was 40% or more. During 1994, 1995 & 1996, the number of paid OPD patients substantially increased on account of super-specialty facilities, because of which the percentage of free OPD patients decreased in spite of increase in the absolute number of OPD patients treated free. The words "at least 40% on an average" in the exemption notification cannot be construed that strictly 40% of the OPD patients have to be treated free, as sometimes it may depend upon availability of patients. If no patient who is entitled for such free treatment comes to the hospital, the management of the hospital cannot be blamed for non-compliance of the condition. In this regard, reliance is placed on Hon''ble Madras High Court''s judgment in case of Apollo Hospitals Enterprises Ltd. v. U.O.I. reported in 2001 (133) ELT 58 (Mad.) (para-25).
(4) The judgment of the Apex Court in case of Mediwell Hospital & Health Care Pvt. Ltd. v. U.O.I. reported in 1997 (89) ELT 425 (S.C.), on which the show cause notice is based and in case of Commissioner of Customs v. Jagdish Cancer & Research Centre reported in 2001 (132) ELT 257 relied upon by Commissioner in the impugned order, is not applicable to the facts of this case, as the appellant are a hospital, not a diagnostic centre and had made the necessary arrangement for free treatment of eligible outdoor patients and poor indoor patients and had an exclusive ward for free treatment of poor indoor patients and there were Boards at the hospital gate and other places in the hospital informing the public about these arrangements. The DGHS and health authorities of Delhi were also satisfied that the appellant are providing free OPD treatment to whosever eligible patient came to them and free treatment to poor indoor patients as per the conditions of the notification.
(5) In any case, the duty demand is time-barred, as in terms of the Board''s Circular No. 73/2000-Cus., dated 1-9-2000, the limitation for recovery of duty for violation of post-importation obligations which are continuing conditions would start from the last day of violation preceding the initiation of proceedings.
(6) Neither any duty is recoverable from the appellant nor any penalty is imposable on them. Since there is no violation of post-import obligations, there is no question of confiscation of the goods imported duty free by the appellant under Notification No. 64/88-Customs.
2.2 Shri Sumit Kumar, the learned DR reiterating the findings of the Commissioner in the impugned order made the following submissions:-
(1) The appellant have not produced any evidence that they had reserved at least 10% of the beds for free treatment of poor indoor patients. They have not denied that during 1995 and 1996 the percentage of OPD treated patients free was below 40%. When the condition of notification have not been fulfilled, the exemption under Notification No. 64/88-Cus. would not be available and has been correctly denied.
(2) In terms of the Apex Court''s judgment in case Mediwell Hospital and Health Care Pvt. Ltd. v. Union of India (supra) and CC, Mumbai v. Jagdish Cancer & Research Centre (supra), for the hospitals who availed the benefit of duty free imports under Notification No. 64/88-Cus., the obligation of reserving at least 10% beds for free treatment of poor indoor patients and free treatment of at least 40% OPD patients is a continuing obligation, that this obligation must be fulfilled during each year and failure to fulfil the same will result in denial of the exemption benefit. In terms of these judgments, the customs authorities can check and verify the fulfilment of the conditions of exemption in case of violation enforce the realization of customs duty from the hospitals.
(3) Tribunal in case of Noida Medicare Centre Ltd. v. CC, New Delhi reported in 2007 (220) ELT 230 has held that for availing the benefit of Notification No. 64/88-Cus. - both the conditions - reserving at least 10% hospital beds for free treatment of poor indoor patients and free treatment of at least 40% outdoor patients must be followed...
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