2009 (5) TMI 92 - AT - Customs

Hospital Denied Duty Exemption for Medical Equipment Import - Appeal Dismissed, Partial Relief Granted

The Tribunal upheld the denial of duty exemption for medical equipment imported by a hospital under Notification No. 64/88-Cus due to non-compliance with ... Notification No. 64/88-Cus dt. 1-3-88 – exemption to Hospital equipments - grant by the notification is also subjected to monitoring by the Health Service Department of the Govt - Revenue brings to our notice that when the Directorate General of Health Services has found violation of the notification conditions in terms of letter dated 19-3-01 that was enough for Revenue to proceed against the appellant who failed to comply post import conditions as per notification – when DGHS is not satisfied with compliance of notification, benefit of notification can not be granted - we are guided by the Apex Court decision in Jaslok Hospital & Research Centre so we dismiss the appeal of the appellant in toto, except waiver of penalty in view of compliance to Notification till issuance of letter by DGHS – appeal partly allowed Issues:1. Import duty exemption under Notification No. 64/88-Cus for medical equipment imported by a hospital.2. Denial of duty exemption based on non-compliance with post-import conditions.3. Legal implications of the Directorate General of Health Services' letter dated 19-3-01.4. Appellant's failure to challenge the letter and its impact on the case.5. Grant of partial relief in the form of waiver of penalty.Analysis:1. The appellant, a hospital, imported medical equipment duty-free under Notification No. 64/88-Cus. The appellant fulfilled the conditions specified in the notification, including obtaining the necessary certificates and providing medical relief to outdoor and indoor patients.2. The Directorate General of Health Services issued a letter on 19-3-01, leading to the Customs authority issuing a show-cause notice for recovery of duty due to alleged non-compliance with post-import conditions. The appellant argued that the denial of duty exemption based on this letter was unjust, as they had met the notification requirements.3. The Revenue contended that the denial of benefit and duty recovery were justified due to the violation of notification conditions highlighted in the DGHS letter. Citing a Supreme Court judgment, the Revenue emphasized the consequences of non-compliance and the need for timely redressal by the appellant.4. The Tribunal noted the installation and verification of medical equipment, along with the issuance of a certificate in 1998. However, post-import compliance was deemed essential for availing duty exemption. The appellant's failure to challenge the DGHS letter in a timely manner and the subsequent lack of vigilance over several years led to the dismissal of the appeal.5. Despite dismissing the appeal, the Tribunal granted a partial relief by waiving a penalty of Rs. 10,000, considering the appellant's past compliance until the issuance of the DGHS letter. This waiver acknowledged the undisputed service provided by the appellant before the letter's impact.In conclusion, the Tribunal upheld the denial of duty exemption due to non-compliance with post-import conditions and the appellant's failure to challenge the DGHS letter promptly. While dismissing the appeal, a partial relief in the form of penalty waiver was granted based on the appellant's previous compliance.