Customs duty exemption cancellation set aside where charitable use and limited research import were not properly assessed.

Withdrawal of the Customs Duty Exemption Certificate was found unsustainable where the authorities relied mainly on missing old records and an alleged change in location of one monitor, without properly considering the hospital's charitable character, the limited research purpose of the import, and the claim that the equipment was later returned to a government body. The court held that mere repetition of the notification conditions and lack of traceable records were not enough to justify cancellation on the facts presented. The cancellation was quashed and the matter remanded for fresh consideration after notice and separate speaking orders.

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Issues: Whether the order revoking the Customs Duty Exemption Certificate and cancelling the exemption under Notification No. 64/88-Cus. dated 01.03.1988 was sustainable without considering the institution's charitable character, the limited purpose and period of import, and the return of the equipment after the project.

Analysis: The petitioner hospital had imported the medical equipment for a government-funded research project and asserted that the equipment was used for that limited purpose and thereafter returned to the Government or another government institution. The impugned order proceeded mainly on the inability to produce old records and on an alleged shifting of one monitor, but did not properly address the material distinction that the institution was charitable and that the equipment was not acquired for enduring ownership or commercial use. In these circumstances, mere reproduction of the notification conditions and the absence of traceable records were held insufficient to justify withdrawal of the exemption. The matter required a fresh decision by the competent authorities on a proper appraisal of the relevant facts and evidence.

Conclusion: The cancellation of the Customs Duty Exemption Certificate was quashed and the matter was remanded for reconsideration by the competent authorities after issuing notice and passing separate speaking orders.

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