2011 (2) TMI 534 - AT - Customs

Medical institution not required to pre-deposit duty under Customs Act, penalties must be paid

ANDROMEDA FOUNDATION INDIA (P) LTD. Versus CC., (IMPORT), MUMBAI

The Tribunal held that the appellant, a medical institution, was not obligated to pre-deposit duty and interest under Sec. 129E of the Customs Act as the ... Application for stay - waiver of pre-deposit - Confiscation - Notification 64/1988-Cus. - after importing the medical equipments and clearing the same duty-free under the aforesaid Notification, the hospital failed to discharge their obligation under the Notification and thereby rendered the equipments liable to confiscation and also rendered themselves liable to penalty - Decided against the assessee In the instant case, the medical equipments were confiscated by the Commissioner and, by virtue of Sec. 126 of the Act, they vested in the Central Government. Sub-section (2) of Sec. 126 makes the status of the goods clearer by providing that the adjudicating authority shall take and hold possession of the confiscated goods - Since the appellants do not propose to redeem the goods at this stage, they cannot be compelled to pre-deposit any amount of fine - Accordingly, the appellants are directed to pre-deposit the penalty amounts within 4 weeks and report compliance on 21-3-2011 Issues:1. Whether the appellant, a medical institution, should pre-deposit the duty amount under Sec. 129E of the Customs Act.2. Whether there is a requirement of pre-deposit in respect of penalties imposed on the appellants.Analysis:1. The appeal and stay application were filed by a medical institution, represented by the Managing Director. The counsel for the appellants argued that since the medical equipment is under Customs' control, there should be no duty amount pre-deposited, including the redemption fine. On the other hand, the JDR contended that duty liability is independent of the goods' location and urged for pre-deposit of the duty amount based on a previous case. The counsel rebutted, stating that the issue is limited to whether the duty amount should be pre-deposited under Sec. 129E of the Customs Act.2. The Tribunal deliberated on the submissions and found that the appellants failed to establish a prima facie case for waiving pre-deposit or stay in penalties. The hospital, after importing duty-free medical equipment, breached conditions leading to confiscation and penalties. The Tribunal emphasized that mens rea is not necessary for imposing penalties under Sec. 112 of the Customs Act. The key question revolved around whether the appellant should pre-deposit the duty amount under Sec. 129E. The Tribunal analyzed the relevant provision, stating that duty and interest need not be pre-deposited if the goods are under Customs' control. Since the confiscated medical equipment was under Customs' control, pre-deposit of duty and interest was deemed unnecessary. However, pre-deposit of penalties was mandated within a specified timeline.Conclusion:The Tribunal ruled that the appellant was not required to pre-deposit the duty and interest under Sec. 129E of the Customs Act due to the confiscated goods being under Customs' control. However, pre-deposit of penalties was necessary, and the appellants were directed to comply within a specified timeframe.