Charitable hospital exemption under customs law may survive later verification gaps when contemporaneous records show substantial compliance.

Contemporaneous official records and historical material may establish a hospital's charitable character for customs duty exemption under Notification No. 64/1988-Cus., even if the exemption application was earlier processed under another category. The Delhi High Court article notes that certificates, correspondence and committee material showing free OPD services and free beds supported treatment of the hospital as charitable, and no estoppel arose from the earlier classification. It further explains that substantial compliance with paragraph 2 of the Table could be accepted where later inspection made exact verification difficult, provided the material showed the exemption scheme's object was met. On that basis, withdrawal of the customs duty exemption certificates was held unsustainable.

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Issues: (i) Whether the hospital was entitled to be treated as a charitable hospital for the purpose of customs duty exemption under Notification No. 64/1988-Cus. dated 01.03.1988; (ii) whether the hospital satisfied the requirements of paragraph 2 of the Table appended to the notification.

Issue (i): Whether the hospital was entitled to be treated as a charitable hospital for the purpose of customs duty exemption under Notification No. 64/1988-Cus. dated 01.03.1988.

Analysis: The relevant notification recognised charitable hospitals as a distinct category, and the record included contemporaneous certificates from the Delhi Administration describing the hospital as charitable and maintaining free OPD and free beds. The Court also relied on earlier tax appellate and committee material indicating that the hospital functioned on a philanthropic basis and provided free medical services to needy patients. The fact that the exemption application had earlier been processed under another category did not create an estoppel against asserting the correct charitable character.

Conclusion: The hospital was entitled to be treated as a charitable hospital for the purpose of the notification.

Issue (ii): Whether the hospital satisfied the requirements of paragraph 2 of the Table appended to the notification.

Analysis: The compliance inquiry was undertaken long after the notification had ceased to operate, making strict verification of historical records difficult. The contemporaneous material on record, including official correspondence and the trustees' affidavit, showed substantial free OPD treatment and sufficient free indoor beds during the relevant period. The Court held that the respondent had not properly considered the material demonstrating that the hospital's model met the object and spirit of the exemption scheme.

Conclusion: The hospital satisfied the requirements of paragraph 2 of the Table appended to the notification.

Final Conclusion: The withdrawal of the customs duty exemption certificates could not be sustained, and the writ petition succeeded.

Ratio Decidendi: Where contemporaneous official records and credible historical material establish that a hospital functioned as a charitable institution and substantially complied with the free-treatment conditions of the exemption scheme, the exemption cannot be withdrawn merely because later inspection and record-keeping difficulties prevent exact post facto verification.

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