Hospital equipment exemption depended on compliance with notification conditions, not actual free indoor patient utilisation, for an existing hospital.

A customs exemption for hospital equipment under Notification No. 64/88-Cus. applied where the hospital met the prescribed conditions. A certified photocopy of the non-manufacture certificate was accepted because the original had been misplaced and was already on departmental record. The installation certificate requirement was confined to hospitals still under establishment and did not apply to an existing hospital. Compliance with the free-treatment condition was found from evidence showing treatment of at least 40% of outdoor patients free of charge and reservation of 10% of beds for eligible indoor patients; the fact that fewer than 10% of indoor patients actually availed free treatment did not defeat eligibility, because the notification required bed reservation, not actual utilisation.

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Issues: Whether the benefit of Notification No. 64/88-Cus. was available to the hospital despite objections regarding the non-manufacture certificate, the installation certificate, and compliance with the free-treatment conditions for outdoor and indoor patients.

Analysis: The Notification granted customs-duty exemption to specified hospital equipment subject to prescribed conditions. The certificate regarding non-manufacture in India was treated as satisfied because the original was misplaced and a certified photocopy had been accepted by the department. The requirement of an installation certificate was held applicable only to hospitals in the process of being established and not to existing hospitals. On the free-treatment conditions, the relevant requirement was to provide free treatment, on average, to at least 40% of outdoor patients and to reserve at least 10% of beds for indoor patients from families with income below the prescribed limit. The material on record showed compliance with the outdoor-patient requirement and reservation of 10% beds. The fact that less than 10% of indoor patients actually availed free treatment did not defeat eligibility, because the notification required reservation of beds, not a minimum percentage of free indoor patients actually treated.

Conclusion: The objections were not sustainable and the hospital satisfied the notification conditions.

Final Conclusion: The customs demand and confiscatory consequences could not stand, and the exemption benefit remained available.

Ratio Decidendi: Where a customs exemption notification requires reservation of a specified percentage of hospital beds and free treatment to eligible indoor patients, the eligibility is determined by compliance with the stated conditions, not by the actual percentage of such patients treated, and an installation certificate is not required for an already existing hospital.

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