Misdeclaration and customs exemption: inspection alone could not prove reconditioned goods, and a DGHS certificate satisfied the notification.

A mere inspection impression that imported equipment appeared old was held insufficient to prove misdeclaration or reconditioning; without expert evidence or supporting enquiry, confiscation and redemption fine could not be sustained. On exemption, the DGHS certificate was treated as sufficient compliance with Notification No. 64/88-Cus. because the notification's language and explanation extended to diagnostic institutions, and a restrictive insistence on a separate inpatient hospital was found inconsistent with its object. The import was therefore treated as lawful on the facts proved, and denial of exemption was set aside.

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Issues: (i) whether the importer had misdeclared the condition of the imported CT scanner and whether the material on record justified treating it as old and reconditioned so as to sustain confiscation and redemption fine; (ii) whether a certificate issued by the Directorate General of Health Services was sufficient compliance with Notification No. 64/88-Cus. for grant of exemption.

Issue (i): whether the importer had misdeclared the condition of the imported CT scanner and whether the material on record justified treating it as old and reconditioned so as to sustain confiscation and redemption fine

Analysis: The only direct material was an examination report stating that the goods appeared to be old. That report did not establish reconditioning, and no expert evidence or supporting enquiry from the supplier was produced to prove that the machine was not new. The inferential use of manuals and an alleged date mark on the machine was held insufficient to prove that the equipment was old. The finding that the machine was old and reconditioned was therefore treated as based on surmise rather than evidence.

Conclusion: The allegation of misdeclaration was not proved, and the confiscation and redemption fine could not be sustained.

Issue (ii): whether a certificate issued by the Directorate General of Health Services was sufficient compliance with Notification No. 64/88-Cus. for grant of exemption

Analysis: The notification contemplated approval by the health authorities for hospital equipment, and its explanation was wide enough to include institutions rendering medical, surgical or diagnostic treatment. The DGHS had issued certificates after considering the importer's case and had certified the relevant conditions, including free treatment requirements. The construction adopted by the lower authority, which insisted on a separate hospital with inpatient facilities for a diagnostic centre, was held to be too restrictive and inconsistent with the language and object of the notification. The clarifications from the health authorities supported the view that diagnostic facilities could qualify without a separate inpatient setup.

Conclusion: The DGHS certificate was held to be sufficient compliance, and the importer was entitled to the exemption.

Final Conclusion: The import was held to be lawful on the facts proved, the denial of exemption was set aside, and the appeal succeeded.

Ratio Decidendi: A mere inspection impression that imported equipment appears old is insufficient to sustain confiscation or denial of exemption without substantive evidence, and a DGHS certificate issued under the governing exemption notification must be accepted where the notification's wording and explanation cover diagnostic institutions.

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