TaxTMI 
TaxTMI 
2008 (6) TMI 118
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....er/Commissioner (Appeals). Since the issue involved in all the appeals is the same, i.e. regarding violation of post-import conditions imposed under Notification No. 64/88, leading to confiscation and demand of duty both under Section 28 of the Customs Act, 1962 and Sec. 125(2), they are being decided through a common order. 2. Briefly the facts of the case are that Notification No. 64/88, dated 1-3-88 provides exemption to hospital equipments imported by specified category of hospitals subject to certification from Director General of Health Services (DGHS) etc. It will be useful to reproduce some of the salient features of the notification which are subject matter of dispute before us. The notification reads as under : "In exercise of powers conferred by sub-section (1) of section 25 of Customs Act, 1962 (Act 52 of 1962), the Central Government being satisfied that it is necessary in the public interest to do so, hereby exempts all equipment, apparatus, appliances, including spare parts, and accessories, thereof but excluding consumable items (hereinafter referred to as the hospital equipment), the import of which is approved either generally or in each case by the Government o....
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.... Collector at the time of clearance of the said hospital equipment that the importer shall furnish certificate from the said Ministry of Health and Family Welfare or from Director General of Health Services, Government of India, within such period as the Assistant Collector of Customs may specify in this behalf or within such extended period as the Assistant Collector of Customs, on sufficient cause being shown, may allow in each case to the effect - (i) that such hospital equipment has been installed in the hospital; and (ii) that such hospital started functioning (c) The importer shall furnish, at the appropriate time, the certificates referred to in (b). (d)..............." 3. In respect of all the appeals before us, the common allegation is that the hospitals which were certified by DGHS as being hospitals falling under category 2 of table annexed to the notification and thus were required to provide free treatment on an average to at least 40% of all their outdoor patients and free treatment to all indoor patients having income less than Rs. 500/- and to keep for this purpose at least 10% of all the hospital beds reserved for such patients, have violated these conditions ....
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....ision of free treatment to 40% of the outdoor patients and to 10% of indoor patients having income less than Rs. 500/- per month etc. is a continued obligation us held by the Supreme Court in the Mediwell Hospital and Health Care Private Limited case 1997 (89) E.L.T. 425 (S.C.) = 1996 Indlaw SC 2044 or not and whether the demand or any other cause of action would lye after the recession of the Notification No. 64/88 on 1-3-94 or the obligation was required to be fulfilled only up to the date of rescission of notification No. 64/88 and not thereafter? (iii) Whether the demands of duty were sustainable even though the original show cause notice either did not seek to recover any duty whatsoever or the original show cause notice did not identify or invoke any specific provision to sustain the proposed demand or though the original show cause notice specifically demanded duty under Sec. 28, the demands were confirmed under Section 125, Sec. 18(2) read with Sec. 143(3) or any other provision or no provision at all? (iv) Whether the cancellation of Customs Duty Exemption Certificates (CDECs) can apply retrospectively so as to hold that the goods ab initio were imported without an....
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....t they are covered by an exemption notification relates directly and proximately to the rate of duty applicable thereto for the purpose of assessment. In support of his plea that the decision which is rendered without noticing the provisions of the statute is to be considered as per incuriam and accordingly the decision non est having no precedent value, he referred to the decision of Apex Court in the case of State v. Rattan Lal Arora - (2004) (4) SCC 590 wherein it was held that where in a case the decision has been rendered without reference to statutory bars, the same cannot have any precedent value and shall have to be treated as having been rendered per incuriam. It was further stated that in the case of Young v. Bristol Aeroplane (1944) 2 All. E.R. 293 it was observed that such a decision is to be avoided and ignored "if it is rendered in ignoratium of a statute or other binding authority". He also referred to the references made by the Supreme Court in the case of State of Bihar v. Kalika Singh - 2003 - (SC 2)- GJX-0260-SC where the Apex court in this case cited Ahalsbury's Laws of England 4th Edition. Judgment and orders ......relating to and wherein it was observed as und....
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....t was submitted that in all the appeals before us, the appellants are not interested in exercising their option to redeem the goods and therefore as per this decision duty cannot be demanded from them. The Bombay High Court incorrectly ignored this decision by observing that it was a prima facie observation because the judgment disposed off the petition on merits. 5.2 Shri Rohan Shah, one of the advocates for the appellants submitted that even if the decision of the Bombay High Court in the case of Wockhardt Hospital and Bombay Hospital are not considered as per incuriam, the law on the subject has been laid down by the Supreme Court in the case of Mohan Meakin - 2000 (115) E.L.T. 3 (S.C.) wherein para 5 it has been observed that "Sec. 125 of the Customs Act empowers the authorities of adjudication to release the goods to the person from whose possession the same has been seized, on collection of redemption fine in lieu of confiscation. But such redemption of goods is subject to the owner being called upon to pay any duty and charge that is payable in respect of such goods. The proviso to Sec. 125(1) also makes it obligatory on the adjudging authority to evaluate the fine which sh....
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.... Lords. As regards the first proposition that the decision have been given in ignorance of the previous decision, he referred to the book on Jurisprudence by R.W.M. Dias which while dealing with the hierarchy of courts has referred to the decision of Young v. Bristol Aeroplane (1944) KB 718 wherein it has been held that "if a decision was given per incuriam i.e. in ignorance of statute or other binding authority, the court of appeal is not bound by it; nor may it be bound where the previous court has followed an incomplete report of a still earlier case. The incuria rule does not apply where the previous court, which is alleged to have overlooked to an earlier case, had in fact alluded to it; nor does it apply where the earlier of the conflicting cases exerted only persuasive authority." It was submitted that the Bombay High Court decision in the case of Wockhardt Hospital has noted the decision given by the same court in the case of Harkishan Das Hospital cited supra and in para 50 of its decision stated that it was a prima facie observation made in the context of an issue relating to pre-deposit and accordingly has overruled the issue. In view of this the decision cannot be consi....
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....l discipline require that the orders of the higher appellate authorities should be followed unreservedly by the subordinate authorities. If this healthy rule is not followed, the result will only be undue harassment to the assessees and chaos in administration of tax laws. He also referred to the seven member Bench decision of House of Lords in Cassell and Co. Ltd. v. Broome and another (1972) A.C. 1027, wherein, it was held that it is necessary for each lower tier including the court of appeal to accept loyally the decisions of the higher tiers. Where decisions manifestly conflict, the decision in Young v. Bristol Aeroplane offers guidance to each tier to matters effecting its own decisions. It does not entitle it to question the considered decisions in the upper tiers with the same freedom. Even this House, where it has taken freedom to review its own decisions will do so cautiously. It was further submitted that this decision of House of Lords in the case of Cassell and Co. Ltd. v. Broome and another was also referred to by the Supreme Court in the case of Dunlop India - 1985 (19) E.L.T. 22 (S.C.) wherein in paras 9 and 10 it inter alia observes that it is necessary for each low....
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....ctorate General of Health Services or by the Commissioner of Customs? (ii) Whether action initiated by the Commissioner of Customs towards payment of such duties, levy of penalty and payment of fines in lieu of confiscation of offending goods under the Customs Act was beyond his jurisdiction in terms of Notification No. 64/88? (iii) Whether the demands raised by the Commissioner of Customs were barred by time in terms of the proviso to Section? It was submitted that none of the questions framed by the Tribunal in the two decisions related to determination of rate of duty but only with liability to pay duty once the goods are confiscated for violations of conditions of Notification No. 64/88. Nor has the Bombay High Court framed any such question. The question of applicable duty is only incidental and the Supreme Court decision in the case of Naveen Chemical helps the Revenue's case rather than the appellant's case. In para 13 of the Naveen Chemical case cited supra which also involve confiscation of goods for non-fulfilment of licence conditions, the Supreme Court observed that "the order of the Additional Collector and the appeal before the CEGAT in the present case did not hav....
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....ng others with a matter relating to determination of rate of duty. Rate of duty and determination of rate of duty are two different things. Thus if as a consequence of confiscation the importer is required to pay duty for which the rate of duty is required to be determined, then this will be remote contingency and the CEGAT order cannot be said to have any direct or proximate relation to determination of rate of duty as has been observed by the Hon'ble Supreme Court in the case of Naveen Chemicals cited supra. 5.10 As regards Apex Court decision in the cases of Mohan Meakin and Hargovind Das cited supra, we agree that in none of the cases there was a question before the Apex Court as to what will happen in those cases where the importer refuses to exercise his option to redeem the goods in lieu of confiscation after having cleared the goods from docks and utilizing it to its full extent. While the decision in the Mohan Meakin case only says that once the goods are redeemed the duty has to be assessed before they are released, the decision in the Hargovind Das case only states that the adjudicating authority should consider whether to exercise the discretion to allow release of goo....
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....ustainable in law and is illegal. Shri Hidayatullah ld. Advocate accordingly submitted that Mediwell decision has been overruled by the above decisions and therefore nothing survives in this case and accordingly it cannot be said that the obligation imposed under Notification No. 64/88 are a continued obligation. 6.2 Ld. Jt. CDR Shri B.K. Singh submitted that the decision of the Supreme Court in the Mediwell case has not been overruled and only parts of it have been overruled. Thus while the decision in Faridabad CT Scan Centre overrules only grant of CDECs to diagnostic centre not having hospital on the grounds of equity and non-discrimination under Art. 14 of the Constitution, the Sri Sathya Sai decision only overrules a direction given by Supreme Court regarding advertisements in the newspapers etc. He referred to the observation of Bombay High Court in paras 26 and 49 in the Wockhardt Hospital case wherein it was specifically observed "although some issues decided in Mediwell case have been overruled by the Apex Court in the case of Faridabad CT Scan Centre (supra) and Satyasai Institute (supra) the above observations regarding the liability to pay duty under Sec. 125(2) have ....
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....or any punitive action. It was submitted that the effect of the rescission of exemption Notification No. 64/88 was dealt with by the Madras High Court in the case of Apollo Hospital - 2001 (133) E.L.T. 58 (Mad.) and the observations thereon are to be found in para 32 onwards. The Hon'ble High Court has relying upon the decision of the Supreme Court in the case of State of Rajasthan v. Mangilal Pindwal - 1996 (5) SCC 60 held that the result of repeal of a statute is that the statute repealed ceased to exist with effect from the date of such repeal. But at the same time the repeal does not effect the previous operation of law which has been repealed during the period it was operative prior to the date of such repeal. In view of this Notification No. 64/88 cannot be said to be in existence from 1-3-94 i.e. the date on which it was repealed. The Hon'ble court also referred to clause 6 of General Clauses Act and held that the Supreme Court decision in Pindwal case read with General Clauses Act imply that the authorities can enforce the obligations only during the period when the Notification No. 64/88 was in force and not for the subsequent period. It was further submitted that the Madr....
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.... was correct and the decision cannot be ignored just because it did not deal with provisions of Sec. 159A of Customs Act, 1962. 6.7 Shri B.K. Singh ld. DR, on behalf of the Revenue, submitted that the decision of the Madras High Court in Apollo Hospital case cannot be considered as a correct decision as while considering the effect of rescission of notification recourse cannot be made to the provisions of General Clauses Act as General Clauses Act applies only to a Central Act or regulation as has been held by the Supreme Court in para 36 in the case of Kolhapur Cane Sugar - 2000 (119) E.L.T. 257 (S.C.) = 2000 (2) SCC 536. Notification is neither a statute nor a regulation. Accordingly the Supreme Court decision in the case of Pindwal cited supra is also not relevant as it deals with repeal of a statute. When the Customs Act itself has a provision under Sec. 159A which was introduced on 15-5-2001 i.e. before the decision in Apollo case was delivered, then recourse could not have been made to General Clauses Act. Further, in General Clauses Act, the word 'rescinded' is not there and only repeal is there. In view of this the law has been correctly laid down by the Bombay High Court ....
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....appointed Rosha Committee in the case of People's Union for Civil Liberty in W.P. No. 409/1996 which was required to look into the violations even after rescission of notification and the CDECs were cancelled for post-rescission violations. In the case of National Heart Centre - 2005 (191) E.L.T. 249 also it was held that action can be taken for non-fulfilment of post-import conditions even after the rescission of notification. The effect of rescission of notification has been dealt with by the Karnataka High Court in the Chaparral Health Services - 2001 (130) E.L.T. 34 (Kar.) wherein it was held that the only consequence flowing from the repeal of notification is that future imports even when made by hospitals, who may otherwise have been eligible under the repealed notification will not be entitled to such exemption. The recovery proceedings do not become incompetent only because of the repeal of the notification. 6.9 In view of above it was submitted that the liabilities incurred under Notification 64/88 will continue even after the rescission of notification. 6.10 We have considered the submissions. We find that there are two views, one taken by the Madras High Court in Apoll....
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....r though the original show cause notice specifically demanded duty under Section 28, the demands were confirmed under Section 125, Section 18(2) read with Section 143(3) or any other provision or no provision at all? 7.1 It was contended on behalf of the appellants that in majority of the cases demands were issued under Sec. 28 but were confirmed either under Section 125(2) or without citing any section under which the duty was confirmed and even though the finding portion of the order state that though the demands were raised under Sec. 28, Sec. 28 is not applicable and therefore the limitation provided under Sec. 28 will not apply but in spite of that the demand has been confirmed under a different section or by overlooking the provisions of limitation. In some cases demands were confirmed by referring to the Supreme Court decision in the case of Jagdish Cancer and others without giving them an opportunity to present their case as to whether these decisions are applicable in their case or not. Reference in this regard was invited to the Supreme Court decision in the case Metal Forgings - 2002 (146) E.L.T. 241 (S.C.) wherein it was held that no duty can be demanded without ....
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....ere the option is not exercised, the goods remain vested in the government and in that event Section 125(2) is not attracted is also without any merit. As stated earlier, in respect of the goods confiscated under Section 111(o) with an option to pay fine in lieu of confiscation the duty becomes payable on passing an order under Section 125(1). In such a case, whether the option is exercised or not is wholly irrelevant. Admittedly, the only issue canvassed before the Tribunal was regarding duty liability under Section 125(2) and, therefore, the question of remanding the matter for deciding the other issues raised in the appeal before the Tribunal does not arise." 7.2 Attention was also invited to the Tribunal decision in the case of Lady Amphthil Nurses Institution cited supra in which it has been held that the liability under Notification No. 64/88 is a continuous liability and for demand of duty Sec. 28 did not apply and there is no time limit for issue of demand (paras 56 and 57). This was a Larger Bench decision. Reference was also invited to the Supreme Court decision in the case of Jagdish Cancer where also the demand was issued under Sec. 28 by the Assistant Commission....
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....mmissioiner v. Raghuvar India - 2000 (118) E.L.T. 311 (S.C.). The decision of Larger Bench was approved by High Court as reported in 2006 (201) E.L.T. 555. Similarly in the case of A.R Gupta v. Commissioner - 2005 (191) E.L.T. 1139 it was held a show cause notice can be issued in terms of a notification under which the goods were cleared subject to some conditions. If the notice is not issued under Sec. 28, the limitation prescribed therein will not apply (para 8). In the case of Bharat Charitable Cancer - 2007 (216) E.L.T. 567 in para 5 it was held that where there is a violation of post-import condition of a notification, there is no time limit for demand of duty. In Dalmiya India v. Commissioner - 1995 (79) E.L.T. 120 in para 13 it was held that non-mention of section in the show cause notice is not fatal. 7.4 We have considered the submissions. We find that the decision of the Supreme Court in the Jagdish Cancer case, Bombay High Court decision in the Wockhardt Hospital and Bombay Hospital cases and Larger Bench decision in the Lady Amphthil Nurses Institution case covers all the situations framed under this issue and following the same we hold that once an order of confiscati....
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....n of the Madras High Court in the case of Apollo Hospital wherein it was held that CDECs cannot be withdrawn after rescission of the notification or for violations subsequent to the rescission of the notification. 8.2 The ld. Jt. CDR Shri B.K. Singh submitted that a certificate issued by DGHS cannot be treated at par with a licence issued by DGFT. The facts in the East India case and others are different as in those cases the conditions for the import were to be satisfied at the time of import and not post-import. On the other hand, the certificates were issued subject to fulfilment of the conditions after clearance of the goods as has been clearly brought out in the Larger Bench decision of the Tribunal in the case of Lady Amphthil Nurses Institution. Besides in the East India and other case the goods were sought to be confiscated under Sec. 111(d) for import without licence, even though the licence was valid on date of import but was subsequently cancelled and the Hon'ble Supreme Court held that since on the date of import the licence was existing, the import has to be considered as valid on that date. However, if the conditions under which import is allowed is violated, subsequ....
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....ed to be cancelled and duty required to be demanded in case certificates were incorrectly issued. All this clearly establish that once the certificates are cancelled duty is required to be demanded from the date of clearance. 8.4 We have considered the submission. We find that procurement of a certificate from DGHS is a requirement of the notification and the certificate certifies that the hospitals continue to carryout their obligations and it was under the directions of the Delhi High Court and others that the certificates were cancelled with a direction to deny duty exemption. We find that the appellants do admit that prior to the rescission of notification, if the conditions of the notification are violated, then duty can be demanded as unanimously held by the Madras High Court, Bombay High Court and Supreme Court in Jagdish Cancer etc. and since possession of a certificate from DGHS is one of the conditions of notification which stands violated, after it is withdrawn, the analogy has to be equally applied to the cancellation of certificates done after the rescission of notification as different views cannot be taken in respect of certificates cancelled during the pendency of ....
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....tal is admittedly charging registration fee and cost of drugs and materials and it is only consultation which is given free to the patients. In para 37 it further noted that and admission fee of Rs. 25/- was being charged from general ward patients and the rate list published by the institution shows that a registration fee of Rs. 10/- per patient was also being charged from outdoor patients. In view of this it was held that the treatment provided by them cannot be considered as a free treatment. It was accordingly submitted that in view of the High Court decision charging of registration fee will amount to violation of conditions of exemption notification and will result in denial of exemption. 9.3 We have considered the submissions. In view of the specific decision of Karnataka High Court in the case of Medical Relief Society of South Kanara, cited supra, we hold that recovery of registration charges will amount to violation of conditions of exemption notification and will result in denial of exemption. Issue No. (vi) Whether treatment provided in free camps can be taken into account while calculating the limit of 40%? 10.1 On behalf of the appellant it was submitted that the....
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....Hospital, we find that the Tribunal has not interpreted the decision in the Maulana Hospital case but has only remanded the matter to the Commissioner for fresh decision on the ground that the directions contained in the Tribunal's earlier remand order based on the Madras High Court decision in Apollo Hospital case were not carried out as the remand order having not been challenged has attained finality. In view of this, this decision is of no consequence. 10.4 Having decided the common issues, we now take-up the individual appeals for final decision. 1. Appeal No. C/1381/02 - Central India Institute of Medical Sciences v. CC, Mumbai : 11.1 The hearing in the matter was held on 4th, 11th, 19th, 25th, 26th, 27th March 2008, 21st to 24th April 2008 and 28th to 30th April 2008. None appeared for the appellants on any of the dates in spite of notice. We therefore perused the records and heard the ld. DR. 11.2 We find from the records that the appellants have admitted that they have not utilized two out of six CDECs issued to them and that they failed to fulfil the conditions of notification to give free treatment on an average to at least 40% of all their outdoor patients. A statem....
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....nts even for period subsequent to Notification No. 64/88 and the burden of showing that they have failed to treat the requisite number of patients was on the department as has been held in the case of Jaslok Hospital - 2004 (163) E.L.T. 449 and Inlaks Hospital - 2005 (185) E.L.T. 385. Reliance was also placed on Apollo Hospital case which states that post-rescission violation cannot be considered. They also disputed the interest imposed under Sec. 128AA as the section did not come into force until 1995 as held in the case of Bharati Telecom - 2001 (130) E.L.T. 133 (T) = 2000 (40) RLT 266. Once the assessments were provisional the question of imposing any fine and penalty does not arise. It was also submitted that in case exemption under Notification No. 64/88 is not considered applicable some of the equipments are covered by Notification No. 65/88 which should be extended to them. 12.2 The ld. DR submitted that once the confiscation has been ordered duty automatically becomes payable as per para 51 of Wockhardt Hospital decision. Besides in this case CDECs were withdrawn which fact is not disputed and therefore the exemption became inadmissible ab initio. They have admitted ....
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....not allege that the order has not examined the merits properly and therefore their plea of remand is rejected. 6. Appeal No. C/1193/01 - Sant Tukaram Hospital & Medical Research Centre v. CC (I), Mumbai 14.1 On behalf of the appellant it was submitted that the benefit of Notification No. 64/88 has been denied on the ground that they have not produced the installation certificate from DGHS as stipulated under proviso (b) to clause 4 of the notification and further the CDECs have not been issued to them till now. It was submitted that the installation certificate was issued by private agency IGE India and it is not necessary that the installation certificate should be from DGHS. The ld. Advocate submitted that the Commissioner has not disputed the existence of CDEC certificate but on being asked to make a positive statement that CDECs were issued to them and if so to produce the same, they said they were unsure of the fact and could not produce the CDEC. Once CDECs were not issued at all, the denial of exemption cannot be disputed. The other point made by them is that though the show cause notice seeks to demand duty under Sec. 28 it has been confirmed under Sec. 18(2) read with Se....
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.... admitted that they were charging for medicines but this was also under the impression that free treatment does not mean that medicines are not to be charged for. 16.2 The ld. DR submitted that since they were charging for registration and medicines, the decision of Karnataka High Court in Medical Relief case and Kerala High Court in Maulana Hospital are against them and therefore exemption has rightly been denied. They were also not properly maintaining records during 1988-93 which was mandatory as per Larger Bench Tribunal decision in Lady Amphthil Nurses Institution case cited supra and therefore violations of conditions of notification are established. As regards non-demand of duty in show cause notice, the Wockhardt Hospital decision fully covers the case. 16.3 We have considered the submissions. We find that the facts of the case are fully covered by the Kerala High Court decision in Maulana Hospital case and Karnataka High Court in Medical Relief Society case and Bombay High Court decision in Wockhardt Hospital case. We also note that the CDECs were withdrawn on 26-3-01 and therefore as per our earlier findings the exemptions has to be denied ab initio. In view of this we ....
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....hen the duty can be demanded. The ld. DR does not oppose the prayer. 18.2 Since it is an admitted fact that the assessments were provisional and without finalizing the same, confiscation has been ordered. The matter is therefore remanded back to the Commissioner with a direction that he should first finalize the assessment and thereafter only to demand duty. The confiscation is set aside. 11. Appeal No. C/67/08 - B.M. Shah Hospital and Research Centre v. CC (I), Mumbai : 19.1 It was submitted by the ld. Advocate that in this case they have never received the show cause notice and the order-in-original was passed without hearing them. They came to know of the order only when the tax recovery cell demanded duty from them. They have not received the copy of the order-in-original and it is only when the recovery proceedings were started that they have asked for a copy of order passed by the Additional Commissioner. This plea was also taken before the Commissioner (Appeals), but Commissioner (Appeals) has rejected their plea on the ground that department has produced postal receipt under which show cause notice was dispatched. He however submits that mere dispatch does not mean that ....
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....o the decision of the tribunal in the case of Khabros Steel India - 2006 (194) E.L.T. 117 in which it has been stated that upon confiscation goods belong to the Government and liability to fine and duty arise only if a person who has been given the option to redeem the goods exercises it. Hence question of interest does not arise in the case of confiscated goods. No liability arises on the goods unless the goods are redeemed has also been held by the Supreme Court in the case of UOI v. Lexus Exports - 1994 (71) E.L.T. 348 (S.C.) and Oswal Spinning and Weaving Mills - 1988 (35) E.L.T. 244 (S.C.). 20.2 Alternatively it was submitted that the equipment imported by them is ultrasound scanner which is covered by Notification No. 65/88 which should be extended to them in case they are held ineligible for benefit of Notification No. 64/88. 20.3 The ld. DR however submits that the Supreme Court decision in the case of Lexus Export relates to the goods which were meant for export and therefore the question of payment of duty in that case does not arise. As regards the case of Oswal Spinning the goods were confiscated prior to their clearance from the docks and in such cases even the Bomba....
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....nts imported by the appellant and to extend the benefit thereof if found admissible. 14. Appeal No. C/153/03 - Pravara Medical Trust v. CC, Mumbai : 22.1 Shri Bharat Raichandani, on behalf of the appellant, submitted that in this case, while the show cause notice referred to the cancellation of the CDECs vide DGHS letter dated 30-1-2000 for non-fulfilment of conditions of Notification No. 64/88, the order-in-original refers to cancellation their CDECs vide DGHS letter dated 1-5-2002 and therefore it goes beyond the show cause notice. Similarly while the show cause notice seeks to demand duty under Sec. 28 of the Customs Act, 1962 the Commissioner's finding admits that Sec. 28 is not applicable but duty can be demanded in terms of the notification itself for breach of conditions of notification and has finally demanded duty without citing any section. He referred to the decision of the Supreme Court in the case of Commissioner v. Ballarpur Industries - 2007 (215) E.L.T. 489 wherein it was observed that it is well settled that the show cause notice is the foundation in the matter of levy and recovery of duty, penalty and interest. If there is no invocation of Rule. 7 of the Valuati....
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.... issuing a show cause notice and therefore such withdrawal cannot be considered as valid. DGHS is not competent authority to look into post-import violation of notification conditions. 23.2 In the alternative it was submitted that if the benefit of Notification No. 64/88 is not extended to them the exemption under Notification No. 65/88 and benefit of auxiliary/special excise duty under Notification No. 106/89 should be considered. 23.3 We have considered the submissions. Since it is an admitted fact that CDECs were withdrawn which has not been challenged by the appellant before the appropriate authorities, demand of duty and confiscation of goods and imposition of fine and penalty cannot be disputed in view of the Supreme Court decision in Jaslok Hospital, Jagdish Cancer, Bombay High Court decision in Wockhardt case in earlier part of our order. 23.4 As regards the eligibility of Notification No. 65/88 and exemption from auxiliary/special excise duty under Notification No. 106/89, the matter is remanded back to the Commissioner to examine the claim and to pass suitable orders as per law. 16. Appeal No. C/1011/06 - Vijay Diagnostic Center Cancer Hospital v. CC (I), Mumbai : 24....
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....as admitted that the CDECs were cancelled but they have challenged the same. 26.2 We find that the CDECs have been cancelled and have not been restored and in view of our findings on the common issues the orders of the Commissioner are upheld. 22. C/631/02 - National Heart Center & Hypertension Clinic v. CC (ACC), Mumbai : 27.1 It was submitted that though the CDECs were withdrawn in 2002, they have challenged the withdrawal before the Nagpur Bench of the High Court and the same has been stayed vide interim order in the WP No. 1280/2004. It is their contention that they have complied with the conditions of the Notification No. 64/88 as outdoor camps should be considered for the purpose of computing 40% limit and 10% of the beds for indoor patients even though not reserved, it was for the Revenue to bring out that any such patient who was denied admission or treatment for non-availability of beds. In alternative it is submitted that the benefit of Notification No. 65/88 should be extended to echo cardio graph under S. No. 108 of that notification and that of auxiliary duty under Notification No. 140/90. It was also submitted that the department has also disputed the value w....
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....sioner to examine the eligibility to the notification and to pass suitable orders thereon as per law. 23. Appeal No. C/676/02 - Poona Health Services P. Limited v. CC, Mumbai : 28.1 Shri Sanklecha, ld. Advocate for appellants submitted that in addition to common issues, no notice for confiscation of equipments under Sec. 124 of the Act has been issued as the show cause notice only says as to why the equipments should not be held liable for confiscation. Therefore, once there is no proposal to confiscate the goods, the goods cannot be confiscated by applying Section 125(2) of the Customs Act and accordingly no duty can be demanded. It was admitted that CDECs were cancelled and though the show cause notice was issued under Section 28 the demand was confirmed without citing any legal provision. He referred to the tribunal decision in the case of Praveen Kumar - 2003 (152) E.L.T. 65 wherein it was held that once confiscation is not proposed in show cause notice a penalty cannot be imposed. 28.2 In alternative he submitted that some of the items imported are exempted under S. No. 3, 65 and 119 of Notification No. 65/88 and auxiliary duty is also exempted which benefit should be exten....
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....893/-. We, therefore, reduce the redemption fine from Rs. 50,000/- to Rs. 25,000/- only. But for this the order-in-original is upheld. 25. C/21/03 - The Marathwada Medical and Research Institute v. CC Excise, Mumbai : 30.1 It was admitted that the CDECs were withdrawn before issue of show cause notice and this fact is mentioned in the show cause notice itself. The withdrawal of CDECs was challenged in February 2001 and a decision on the same is pending. In this case also the show cause notice demanded duty under Sec. 28 with interest under Sec. 28(b) in view of cancellation of CDEC. The show cause notice referrers to statement of Dr. Deshpande, Chief Admn. Officer wherein he stated that the 40% free treatment was given in the year 1995-98 and that percentage was less than 40 i.e. 36.14% in 1999. No information was given regarding earmarking of 10% beds for patients having monthly income less than Rs. 500/-. They could not furnish data regarding 1992-95 on the plea that the same were destroyed as they were supposed to keep data for a period of 5 years only as required by the Government of Maharashtra. Besides various pleas on the common issues attention was invited to the findings....
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.... equipment as per Larger Bench decision in the case of Lady Amphthil Nurses Institution, Supreme Court decision in Jaslok Hospital regarding withdrawal of CDEC, Bombay High Court decision in the case of Wockhardt regarding non-demand of duty in show cause notice or citing incorrect rule etc. and non-possession of CDEC as on today. 30.6 As regards the duty on depreciated value, once the Tribunal in the case of Belle Vue Clinic has noted its earlier decisions in the case of Diascan, then this decision cannot be said to be per incuriam as per our findings on the common issues. 30.7 As regards reference by the Supreme Court in the case of Bharat Diagnostic to the Larger Bench, the issue therein appears to be concerning with diagnostic centres run on commercial basis without having a hospital of their own which is not the issue in the appellant's case and accordingly has no relevance whatsoever. The Commissioner's order is therefore upheld. 30.8 As regards the eligibility to exemption under Notification No. 65/88, the matter is remanded back to the Commissioner to consider the eligibility to notification and to pass suitable orders as per law. 26. Appeal No. C/52/03 - Gujarat Cancer....
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....ner to consider the eligibility of exemption under Notification No. 65/88 to the appellants and to allow the same if found admissible. 28. C/1468/02 - Harkisandas N. Hospital and Research Centre v. CC (ACC), Mumbai : 33.1 Shri Rohan Shah, ld. Advocate for the appellants submitted that the show cause notice does not specifically demand duty and only proposes confiscation and imposition of penalty though duty has been quantified to show the loss of revenue to the exchequer as DGHS was also made a party to the show cause notice. The show cause notice however notices the Supreme Court decision in Mediwell Hospital case which imposes an ongoing obligation but still did not specifically demanded duty. The order-in-original, while referring to the facts of the show cause notice, also does not refer to the demand of duty in the show cause notice. However in para 21 of the order duty has been held as demandable without citing any legal provision. It was submitted that besides Supreme Court decision in Metal Forging case referred to earlier, Madras High Court has in the case of Nuwood - 1981 (8) E.L.T. 184 (Mad.) held that order passed in violation of principles of natural justice is nulli....
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....ered from patients in casuality except for a brief period of 1-8-99 to 1-12-99 all free indoor patients were provided free diagnostic services. In heart surgery and kidney transplant cases where the patients were required to make payments for the treatment, they have always found donors who have paid these charges and thus in effect no charges were recovered from the indoor patients. Reference was invited to the decision of the Supreme Court in Indian Medical Association case (1995) 6 SCC 651 wherein in para 43 deals with the type of persons given free treatment and in para 55(5) it was held that service rendered free of charge by a medical practitioner attached to a hospital/nursing home .... Where such services are rendered free of charge to everybody would not be service as defined in Sec. 2(1)(o) of the Act. The payment of a token amount for registration purpose only at the hospital would not alter the position. In view of this it was submitted that there is no violation on their part and therefore entire order needs to be struck aside. 33.2 The ld. DR submits that so far as the principles of natural justice are concerned the show cause notice has to be read as a whole as held....
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..... Advocate for the appellant admitted that conditions for rendering free treatment to the extent of 40% of the OPD patients have not been fulfilled even during the currency of the notification and therefore he is not disputing the denial of exemption notification and the demand of duty. His only submission is that while the value of equipment is just Rs. 3,49,354/- the redemption fine has been imposed to the extent of Rs. 6,26,306/- which is much more than the market value of the goods and is therefore totally arbitrary. Similarly a penalty of Rs. 11,26,145/- has been imposed on the hospital which is also exorbitant, arbitrary and totally uncalled for. It was a case of interpretation of notifications and the penalty should be proportionate to the gravity of the offence. In this regard he referred to the decision of the Supreme Court reported in AIR 1987 Supreme Court 2386, Calcutta High Court decision in the case of J.B. Shah - 1991 (55) E.L.T. 333 (Cal.) wherein it is held that the purpose of penalty is deterrence and not retribution. It was pointed out that in other similar cases involving goods worth several lakhs of rupees a token penalty and redemption fine of Rs. 10,000/- Rs.....
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....ent has to approach the patients relation manager for concession where the concession is granted considering the economic background of the patient. The concession ranges from 25% to total free and documents showing grant of such concession were shown to us during the course of hearing. It was submitted that the Commissioner has in para 11 of the order-in-original stated that the free treatment provided was in excess of 12% and in some cases higher i.e. 20% but much below the required minimum of 40%. It was submitted that these findings are factually incorrect as they have provided free treatment up to 40%, but since this issue is never raised in the show cause notice, the Commissioner cannot go beyond it. 35.3 The other allegation in the show cause notice is that the 10% beds were not reserved for indoor patients having income less than Rs. 500/- p.m. and that no separate records were maintained for those earning less than Rs. 500/- p.m. It was submitted that their occupancy was never above 90% and therefore 10% beds were always available for poor patients. Besides, Revenue has not been able to give any evidence to show that any patient was turned away for want of bed. 35.4 The ....
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....ld by the Karnataka High Court in Medical Relief Society case. He also invited attention to the information submitted by the hospital regarding free treatment given to the indoor patients from which it was evident that medicines were also being charged for from most of the patients. 35.7 We have considered the submissions. We find that the admitted fact is that the CDECs have been withdrawn and the hospital was charging registration fee of Rs. 10/- from patients and that there was no mandatory reservation of 10% beds for poor patients having income less than Rs. 500/- p.m. and in view of the same, confiscation, demand of duty, redemption fine and penalties have been rightly imposed in view of the Supreme Court decision in the case of Jagdish Cancer and Jaslock Hospital, Kerala High Court in Maulana Hospital, Karnataka High Court decision in Medical Relief Society case, Bombay High Court decision in Wockhardt case and Tribunal decision in Bai Jerbai Wadia Hospital for Children case. 35.8 As regards the quantum of fine and penalty, we certainly notice that it is quite excessive and arbitrary as in appellants own case in respect of other equipments being subject matter of Appeal No.....
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.... only up to 20% is an admitted fact as per the statement of Shri Phillip and as per the Bombay High Court decision in Shah Diagnostic case, the liability is a continuous one which is not effected by the rescission of the notification. In view of the same the Commissioner's order does not require any interference. 36.4 We have considered the submission. We find that it is an admitted fact that CDECs were cancelled and this order has not been challenged by the appellant and that the free treatment to the OPD patients at least after the rescission of notification was to the extent of 20% only and therefore as per our findings on the common issues Commissioner's order does not require any interference and is accordingly upheld. 36.5 As regards eligibility to Notification No. 65/88 the matter is remanded back to the Commissioner with a direction that he should look into the eligibility of Notification No. 65/88 and to extend the same if found admissible. 32. Appeal No. C/162/2000 - Deendayal Cancer Research Institute v. CC (Airport), Mumbai : 37.1 The hearing in the matter was held on 4th, 11th, 19th, 25th, 26th, 27th March 2008, 21st to 24th April 2008 and 28th to 30th April ....