2005 (6) TMI 104 - AT - Customs

Summary

Issues:
1. Duty demand confirmation on the hospital
2. Confiscation of medical equipment imported by the hospital
3. Imposition of penalties on the hospital and its secretary
4. Interpretation of conditions for duty-free import under Notification No. 64/88-Cus.

Analysis:
1. The Commissioner of Customs Air Cargo Complex confirmed a duty demand of Rs. 7,24,808 on the hospital. The hospital was found to be charging fees from patients for various services, which the appellants argued did not violate the conditions of providing free treatment. However, the Tribunal held that the collection of fees for case paper and admission did not align with the requirement of providing free medical treatment, leading to a contravention of the conditions for duty-free import. The Tribunal ruled that the hospital was not entitled to import medical equipment duty-free.

2. The medical equipment imported by the hospital was confiscated under Notification No. 64/88-Cus. for violating the condition of providing free treatment to patients. The goods were allowed redemption on payment of a fine of Rs. 5,02,095. The Tribunal upheld the confiscation of goods due to the hospital's failure to comply with the conditions of the notification.

3. Penalties amounting to Rs. 2,51,048 were imposed on the hospital and its secretary under Section 112(a) of the Customs Act, 1962. The Tribunal acknowledged that the penalty imposed on the hospital was too high and reduced it to Rs. 50,000. However, the penalty on the secretary was set aside as there was no evidence to establish the elements of Section 112(a) against him.

4. The Tribunal carefully interpreted the conditions specified in the notification for duty-free import of medical equipment. It emphasized the requirement of providing free medical treatment to a certain percentage of patients, both indoor and outdoor, based on their income levels. The Tribunal's decision was based on the hospital's failure to meet these conditions, leading to the conclusion that duty-free import privileges were not applicable. The Tribunal partially allowed the appeal filed by the hospital and fully allowed the appeal filed by the secretary, adjusting penalties and confirming duty demands accordingly.