Diagnostic centre exemption under Customs notification extended despite no inpatient beds; penalty under confiscation provisions was unsustainable.

A diagnostic centre importing an impedance audiometer was held to fall within Notification No. 64/80-Cus. The requirement relating to reservation of beds for free inpatient medical, surgical or diagnostic treatment was construed so as not to exclude diagnostic centres merely because they lacked indoor treatment facilities. As the equipment was used for diagnosis and treatment or surgery was only recommended where necessary, the centre satisfied the notification's object. On that construction, the exemption applied and the consequential penalty under Section 112 could not be sustained.

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Issues: Whether a diagnostic centre importing an impedance audiometer was entitled to the benefit of Notification No. 64/80-Cus. notwithstanding ? its not providing inpatient treatment facilities and, consequently, whether the penalty imposed under Section 112 could survive.

Analysis: The imported equipment was used in a diagnostic centre for determining the nature and degree of hearing impairment, with treatment or surgery being only recommended where necessary. The condition in the notification relating to reservation of beds for free inpatient medical, surgical or diagnostic treatment was construed in the light of the earlier Tribunal ruling that the notification should not be interpreted so as to exclude diagnostic centres and similar establishments merely because they did not have facilities for indoor treatment. On that construction, the appellant fell within the benefit of the notification.

Conclusion: The appellant was entitled to the benefit of the notification and the consequential penalty could not be sustained.

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