Court rules withdrawal of Customs Duty Exemption Certificate unjustified. /88

The court found that the Directorate General of Health Services' withdrawal of the Customs Duty Exemption Certificate (CDEC) from the petitioner was legally unsustainable. The petitioner had fulfilled obligations under Notification No. 64/88 until its repeal on 1st March 1994, and the withdrawal was deemed unjustified. The court held that the obligations under the notification ceased upon its repeal and procedural fairness was not observed. The court set aside the withdrawal order, allowing the writ petition and awarding costs of Rs. 5,000 to be paid by the respondents to the petitioner within four weeks.

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Issues Involved:
1. Legality of the withdrawal of the Customs Duty Exemption Certificate (CDEC) by the Directorate General of Health Services (DGHS).
2. Compliance with the conditions of Notification No. 64/88.
3. Impact of the repeal of Notification No. 64/88 on the obligations of the petitioner.
4. Procedural fairness and natural justice in the withdrawal of the CDEC.

Detailed Analysis:

1. Legality of the Withdrawal of the CDEC:
The primary issue was the legality of the DGHS's order dated 20th November 2000, which withdrew the CDEC issued to the petitioner. The order was challenged on the grounds that the petitioner had complied with the conditions of the CDEC and that the withdrawal was unjustified.

2. Compliance with the Conditions of Notification No. 64/88:
The petitioner had provided detailed information regarding the treatment of patients, including free and concessional treatments, as required under Notification No. 64/88. The DGHS had initially accepted the returns for the years 1992, 1993, and 1994, and the Delhi Government's report of 3rd January 2001 indicated compliance with the conditions even up to that date. The petitioner argued that it had fulfilled the obligations under the notification, and the DGHS had no grounds for withdrawal.

3. Impact of the Repeal of Notification No. 64/88:
Notification No. 64/88 was repealed on 1st March 1994. The court had to determine whether the obligations under the notification continued beyond its repeal. The court concluded that the obligation to comply with the conditions of Notification No. 64/88 continued only until the notification was in force and could not be enforced after its repeal. Therefore, the DGHS could only seek compliance up to 1st March 1994.

4. Procedural Fairness and Natural Justice:
The court found that the DGHS had not followed the principles of natural justice. The petitioner was not given a copy of the report prepared by the State Government, which was relied upon in the impugned order. Additionally, there was no show cause notice issued before the withdrawal of the CDEC, which violated procedural fairness.

Conclusion:
The court held that the impugned order dated 20th November 2000 by the DGHS withdrawing the CDEC was unsustainable in law. The petitioner had complied with the conditions of Notification No. 64/88 up to its repeal on 1st March 1994, and there was no obligation to comply beyond that date. The court set aside the DGHS's order and allowed the writ petition with costs of Rs. 5,000 to be paid by the respondents to the petitioner within four weeks.

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