Conditional customs exemption breach allows confiscation and duty recovery despite rescission when free-treatment obligations remain continuing.

Conditional exemption under Notification No. 64/88-Cus. required the importer to comply continuously with the obligation to provide free treatment to the prescribed categories of patients. The record did not show compliance with the requirement to treat at least 40% of outdoor patients and eligible indoor patients free of charge. Breach of these continuing conditions rendered the imported medical equipment liable to confiscation under the Customs Act, with consequential duty demand and penalty sustained. Enforcement was held permissible even after rescission of the notification and despite a long lapse of time, because the obligation remained continuing during the relevant period.

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Issues: Whether customs duty could be demanded and the imported medical equipment confiscated for failure to comply with the conditions of Notification No. 64/88-Cus., including the obligation to provide free treatment to the prescribed category of patients, even though the demand was raised after a long lapse of time and after rescission of the notification.

Analysis: The exemption under Notification No. 64/88-Cus. was conditional, and the importer was required to satisfy the prescribed obligations throughout the relevant period. The record did not establish compliance with the conditions requiring free treatment to at least 40% of outdoor patients and to eligible indoor patients. The obligation was treated as a continuing one, and action was held permissible even after rescission of the notification. On breach of the exemption conditions, the goods became liable to confiscation under the Customs Act, and consequential penalty and duty demand were sustainable.

Conclusion: The issue was decided against the assessee and in favour of Revenue; the duty demand, confiscation, and penalty were held to be sustainable.

Ratio Decidendi: Breach of a conditional exemption notification renders the imported goods liable to confiscation and duty recovery, and enforcement is not barred merely because the action is taken after rescission of the notification or after a lapse of time where the obligation is continuing.

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