Continuing compliance under customs exemption notification determines whether duty-free benefit survives after post-import condition breach.

Notification No. 64/88-Cus. granted duty-free import of medical equipment only while the stipulated free-treatment conditions continued to be satisfied. Where the hospital failed to provide the required free outpatient and indoor treatment, and the exempting certificate was withdrawn on that basis, the exemption could not survive. The importer remained under a continuing obligation to comply with the notification's conditions, and breach at any stage justified duty liability. On that reasoning, confiscation, duty demand and penalty were upheld because the post-import conditions for exemption were not fulfilled.

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Issues: Whether the appellant was entitled to retain the benefit of Notification No. 64/88-Cus. despite the finding that the post-import conditions for free treatment were not fulfilled, and whether the confiscation, duty demand and penalty were liable to be interfered with.

Analysis: The imported medical equipment was allowed duty-free subject to the conditions of the notification. The DGHS, on the basis of the central enquiry team's findings, withdrew the exemption certificate after concluding that the hospital was not providing the stipulated free outpatient and indoor treatment, that free cases were negligible or unverifiable, and that no adequate evidence was produced to rebut those findings. Once the exemption conditions were found to have been breached, the benefit of the notification could not survive. The decision relied on the principle that an importer claiming exemption under the notification remains under a continuing obligation to satisfy its conditions, and breach at any stage attracts duty liability and confiscation.

Conclusion: The appellant was not entitled to the exemption benefit, and the confiscation, duty demand and penalty were upheld.

Ratio Decidendi: A person claiming exemption under Notification No. 64/88-Cus. must continuously satisfy its conditions, and failure to do so at any stage renders the goods liable to duty and confiscation.

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