TaxTMI 
TaxTMI 
2012 (7) TMI 6
X X X X Extracts X X X X
X X X X Extracts X X X X
....ntioned in the table annexed to this notification. The Table annexed to the notification mentioned four categories of hospitals which were eligible for exemption. The Appellant, on the basis of certificates issued by the Ministry of Health & Family Welfare claimed that they are covered by S.No.2 of the Table to the notification which reads as under:- "All such hospitals which may be certified by the said Ministry of Health and Family Welfare, in each case, to be run for providing medical, surgical or diagnostic treatment not only without any distinction of caste, creed, race, religion or language, but also - (a) free , on an average, to at least 40% of all their outdoor patients; and (b) free to all indoor patients belonging to families with an income less than rupees five hundred per month and keeping for this purpose at least 10% of all the hospital beds reserved for such patients; and (c) at reasonable charges, either on the basis of the income of the patients concerned or otherwise, for patients other than those specified in clause (a) and (b)" The Appellant on the basis of the certificates issued by the Ministry of Health, called customs duty exemption certifica....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the Commissioner, this appeal has been filed. 2. Heard both the sides. 2.1 Shri A.C. Jain, Advocate, the learned Counsel for the Appellant made the following submissions:- (1) The Appellant had reserved at least 10% beds for indoor patients and for this purpose there was a separate indoor patients ward. Similarly there was arrangement for free treatment of eligible outdoor patients. The facility regarding free indoor treatment to poor patients i.e. patients of families with monthly income of less than Rs.500/- and for free treatment of eligible OPD patients had been made known to the public by displaying the information about the same on the Notice Boards at the gate and other places. The number of free indoor patients as percentage of total bed occupancy during 1988, 1989, 1990, 1991, 1992 and 1973 was 10% +, 15%, 10%, 10% +, 10% + and 12% + respectively, not 8%, 10.5%, 9%, 9%, 9% and 10% respectively as alleged by the Department. (2) In any case, since there was a separate indoor patient ward for free treatment of indigent patients, the Appellant have complied with the condition of keeping at least 10% beds reserved for indoor treatment of poor patients. (3) As re....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ceding the initiation of proceedings. (6) Neither any duty is recoverable from the Appellant nor any penalty is imposable on them. Since there is no violation of post-import obligations, there is no question of confiscation of the goods imported duty free by the Appellant under Notification No.64/88-Customs. 2.2 Shri Sumit Kumar, the learned DR reiterating the findings of the Commissioner in the impugned order made the following submissions:- (1) The Appellant have not produced any evidence that they had reserved at least 10% of the beds for free treatment of poor indoor patients. They have not denied that during 1995 and 1996 the percentage of OPD treated patients free was below 40%. When the condition of notification have not been fulfilled, the exemption under Notification No.64/88-Cus would not be available and has been correctly denied. (2) In terms of the Apex Court's judgement in case Mediwell Hospital and Health Care Pvt. Ltd. Vs. Union of India (supra) and CC, Mumbai Vs. Jagdish Cancer & Research Centre (supra), for the hospitals who availed the benefit of duty free imports under Notification No. 64/88-Cus, the obligation of reserving at least 10% beds for free....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nt of at least 40% of outdoor patients, the CDEC issued to the Appellant was withdrawn by the DGHS vide letter dated 3.11.2000 and, therefore, the Appellant are no longer entitled for the exemption under Notification No.64/88-Cus and the duty foregone in respect of the duty free imports is recoverable from them. 2.3 In rejoinder, Shri A.C. Jain pleaded that the judgment of the Apex Court in case of Jagdish Cancer Research Centre (supra) can not be blindly applied to this case, as in this case the Appellant had taken all the steps they could to fulfil the conditions of the exemption notifications and if during 1995 and 1996 the percentage of free OPD patients was less than 40%, the reason for the same was that less OPD patients had opted for free treatment and less patients entitled for free treatment had visited the hospital, that it is not the condition of the notification that the hospitals should go to the door steps of the patients and persuade them to come to the hospital for free OPD/indoor treatment, and that the condition of free treatment of at least 10% poor indoor patients and at least 40% outdoor patients is subject to the established legal maximal. Lex non - cogit a....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... also - (a) free, on an average, to at least 40% of all their outdoor patients; and (b) free to all indoor patients belonging to families with an income of less than Rs.500/- per month and keeping for this purpose at least 10% of all hospital beds reserved for such patients; and (c) at reasonable charges, either on the basis of the income of the patients concerned or otherwise to patients, other than those specified in (a) and (b)." For duty free clearance of each consignment of medical equipment, a certificate called customs duty exemption certification (CDEC) was being issued by DGHS certifying that the Appellant are a hospital of the type as mentioned above. The allegation of the Revenue is that the Appellant are not a hospital covered by S.No.2 of the Table, as during 1995 & 1996 the outdoor patients treated free were such less than 40% and the percentage of poor indoor patients treated free has always been less than 10%. The Appellant while not disputing that the percentage of OPD patients treated free during 1995 & 1996 was 35% and 36% respectively i.e. less than 40%, have pleaded that - (a) during other years i.e. all the years from 1988 to 1999 except for 199....
X X X X Extracts X X X X
X X X X Extracts X X X X
....erving at least 10% of the total beds in the hospital for free treatment of patients from families with monthly income of less than Rs.500/- not treating at least 10% of the total indoor patients free. 5. However, the 2nd condition for being a hospital eligible for exemption in terms of S.No.2 of the Table to the Notification is "treating free, on an average, at least 40% of all their outdoor patients". In this regard, there is no dispute that throughout during 1988 to 1999 period, only during 1995 & 1996, this percentage was below 40% i.e. 35% and 36% and during other years, those were 40% or more. The Appellants' contention is that - (a) just because of less than 40% OPD patients were treated free during 1995 & 1996, the exemption can not be denied, as this depends upon the availability of eligible patients and, in this regard, reliance is placed on judgement of Hon'ble Madras High Court in case of Apollo Hospital Enterprises Vs. U.O.I. reported in 2001 (133) ELT 58 (Mad); and (b) the notification does not require the hospitals to bring the OPD patients for free treatment by hook or by crook when more patients opt for paid OPD treatment and the law does not require performa....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ent of poor indoor patients. It provides for free indoor treatment for all the poor patients (i.e. patients belonging to family with a monthly income of less than Rs. 500/-) and for this purpose, reserving atleast 10% of the total hospital beds. Thus for clause (b), what is important is reserving 10% of the hospital beds for indoor treatment for poor patients as defined in it and any poor patient who comes to the hospital has to be treated free, but no minimum percentage of poor indoor patients to be treated free is prescribes in clause (b). For clause (b), if after reserving at least 10% of the total beds for free treatment of poor indoor patients, the number of poor indoor patients treated free is still less 10% of total number of indoor patients treated, it cannot be said that the condition of clause (b) has not been fulfiled unless it is shown that the patients who are poor, as per the definition of "poor patients" in this clause, who came to the hospital for indoor treatment were turned back without treatment. It is for this reason that in this case, as discussed in para-4 above, keeping in view the fact that the appellant's plea that they have a separate ward in the hospital ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....supra) a diagnostic centre, while directing DGHS to issue CDEC to the hospital in terms of Sl. No. 2 of the table to the notification No. 64/88-Cus has held that - (a) granting duty exemption to a hospital under Notification No. 64/88-Cus against DGHS certificate certifying that the hospital is covered by Sl. No. 2 of the table to the notification must be construed to cast a continuing obligation for the hospital to give free treatment to at least 40% OPD patients as Well as free treatment to all indoor patients of families with income of less than Rs.500/- per month and reserve at least 10% of total beds for this purpose; (b) the hospitals who have availed of the exemption under notification No.64/88-Cus must notify in the newspapers giving full particulars of the patients treated free; (c) the authority which granted such duty exemption must ensure that the obligation regarding free treatment of at least 40% OPD patients and all poor indoor patients by reserving at least 10% beds is discharged and if the obligations are not discharged, the custom duty foregone shall be recovered from the hospital. The above judgment in Mediwell's case has been upheld by a larger bench of....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d 1996 have become ineligible for the exemption. We are find that the Commissioner in para 3 of the impugned order has mentioned that the CDEC issued to the Appellant was withdrawn by the DGHS vide letter dated 3.11.2000. The Appellant have not produced any evidence to the contrary. 6.3.3 We agree that the Appellant had made efforts and made necessary arrangement for fulfillment the conditions of S.No.2 of the Table to the Notification. We do take note of the fact that for free treatment of indigent indoor patients, there was a separate ward in the Appellant's hospital and it is not the Department's allegation that the number of beds in the ward for free treatment of poor indoor patients was less than 10% of the total beds in the Hospital. But as discussed above, for meeting the conditions of clause (b) regarding free treatment of at least 40% OPD patients, having intention to fulfil this condition and making arrangements for the same is not enough, this condition must be fulfilled by actually treating at least 40% OPD patients free. If the Appellant claims to be a "hospital being run or substantially aided by a charitable organization approved by the Ministry of Health & Family....
X X X X Extracts X X X X
X X X X Extracts X X X X
....on on the issues dealing with pleadings of appellant made in reply to SCN and urged before ld. Adjudicating Authority which were not addressed by him. So also there was no specific allegation in SCN providing no foundation to Adjudication on the above issue and there was violation of natural justice as well as the Notification whether calling for consideration of ground realities pragmatically to make that workable. 10. The SCN dated 16.09.2000 (available at page 30 of appeal folder) at page 3 thereof made allegation that the appellant did not disclose the details and address of the patients treated free in OPD and IPD in last 10 years, % of the beds reserved for economically poor; and the % of the IPD patients claimed to be free has always been less than 10%. Only with these 3 (three) allegations, SCN was issued alleging further that the importer has not fulfilled the conditions specified in the Notification No. 64/88 - Cus dated 01.03.08. But such SCN did not disclose which are the conditions not fulfilled. Such SCN was assailed by ld. Counsel for appellant submitting that the SCN is baseless since exemption notification does not require what are the details to be disclosed fo....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nctioning of a quasi-judicial authority has to inspire confidence in the minds of those subjected to its jurisdiction, such authority must act with utmost fairness. Its fairness is obviously to be manifested by the language in which charges are couched and conveyed to the person proceeded against. In the instant case it is clear that the Notice issuing Authority has demonstrated a totally close mind at the stage of show cause notice itself. Such a close mind is inconsistent with the scheme of rule of law. 15. Therefore, while issuing a show-cause notice, the authorities must take care to manifestly keep an open mind as they are to act fairly in adjudging the guilt or otherwise of the person proceeded against and especially when he has the power to take a punitive step against the person after giving him a show cause notice. The principle that justice must not only be done but it must eminently appear to be done as well is equally applicable to quasi judicial proceeding if such a proceeding has to inspire confidence in the mind of those who are subject to it. 16. Apex Court in the case of Kaur Singh V. CCE - 1997 (94) ELT 289 (SC) has held that the party to whom a show cause n....
X X X X Extracts X X X X
X X X X Extracts X X X X
....3 is quite separate from the hospitals covered by Para 1 and 2 of the Table. Therefore without clear fact finding on the category of hospital to which the appellant belongs, any decision made in adjudication on the basis of aforesaid 3 allegations in the SCN shall be prejudging the matter. 19. The SCN does not state as to which category the appellant's hospitals belongs and whether certified by MHFW in that regard while allowing duty free import. The allegation aforesaid in the SCN cannot be considered to have brought out allegations in clear terms to grant fair opportunity to the appellant to defend. Allegations were without any basis. When the appellant has stated material fact of its charitable nature, that needed testing with the category of hospital certified by the DGHS for importing the spares of bio medical equipments during 1988 to 1993 following para 21 of Judgment of Hon'ble High Court of Delhi in the case of Sir Ganga Ram Trust Society vs. Union of India-2011 (268) ELT 465 (Del.). Without ascertaining the status of the appellant hospital, the Authority reached to abrupt conclusion on the allegation of not furnishing of details made in the SCN which was not the requir....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... in controversy. But no exercise appears to have been done in adjudication in this direction. 22. Unless facts are well settled, it is unsafe to apply the law to such unsettled facts. Ld. Adjudicating Authority without settling the facts discussed the judgments for no gain. Apex Court in the case Ambica Quarry Works V. State of Gujarat & Others - (1987) 1 SCC 213 has observed that the ratio of any decision must be understood in the back ground of the facts of that case. It has been said a long time ago that a case is only an authority for what it actually decides and not what logically follows for it. It is well settled that a little difference in facts or additional facts may make a lot of difference in the precedential value of a decision - Bhavanagar Unversity V. Palittana Sugar Mills Pvt. Ltd - (2003) 2 SCC 111 (Para - 59). It has also been held in the case of Bharat Petroleum Corporation Ltd. & Another V. N. E. Vairamani & another - AIR 2004 SC 4778 that Courts should not place reliance on decisions without discussing as to how the factual situation fits in with the fact situation of the decision on which reliance is placed. Observations of Courts are neither to be read as ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ell as practical aspect of it and the exemption notification must be construed to be a workable one, following the ratio laid down by the Apex Court judgment in the case of UOI V. M/s Ranbaxy Laboratories Ld. & Ors - AIR 2008 SC 2286 and the principles laid down by Hon'ble High Court of Madras in the case of Appollo Hospitals - 2001 (133) ELT 58 (Mad). This aspect has not been dealt by Adjudicating Authority in the impugned order. 25. Appellant's submission was that for convenience of free OPD patients and for convenience of inspection by Authorities from time to time as well as for practical convenience of accountability, the appellant has maintained separate OPD for free service so as to save them from payment to the consultants who charge for providing their service at paying OPD and when such a free facility was provided to all who approached at free OPD, mere shortfall of an insignificant percentage taking free OPD patients and patients seeking for paying OPD service shall not disentitle the appellant to the exemption deserved consideration and finding thereon by Adjudicating Authority was warranted when there was pleading before him in that regard. But that did not receive....