9911796707
TMI Blog2012 (6) TMI 6X X X X Extracts X X X X X X X X Extracts X X X X ..... are cancelled; and (iii) The Application filed by the Petitioner for re-categorization under category 1 of the exemption notification stands rejected. 2. The Petitioner has been registered as a Public Charitable Trust under the Bombay Public Trusts Act, 1950 since 16th June 1953. The Petitioner runs a multi-specialty hospital in Mumbai. The Petitioner desired to import diagnostic equipment for use in the hospital and sought to avail of an exemption from the payment of customs duty under a notification dated 1st March 1988 issued under Section 25 of the Customs Act, 1962. At the material time, CDECs were granted to the Petitioner under which it availed of the benefit of a duty free import of medical diagnostic equipment. 3. Under a Customs Exemption Notification dated 1st March 1988, the Central Government exempted all equipment, apparatus and appliances, including spare parts and accessories but excluding consumables the import of which was approved either generally or in each case by the Union Ministry of Health and Family Welfare or by the DGHS as essential for use in any hospital, from customs duty. In order to be eligible, a hospital had to fall within one of the f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 30/- should not be charged and why the equipment/spares should not be confiscated under Section 111(o) of the Customs Act, 1962 and why a penalty should not be imposed under Section 112. Upon adjudication, an order was passed by the adjudicating authority confirming the demand for duty, imposing a redemption fine of Rs. 4 lacs and a penalty of Rs. 40,000/-. Against the order of adjudication dated 13th September 2000, the Petitioner filed an Appeal before the Central Excise and Services Tax Appellate Tribunal (CESTAT). 6. On 2 February 2001, the CDECs, which were granted to the Petitioner were cancelled by the Deputy Director General in the DGHS. The Petitioner challenged the cancellation of its CDECs in writ proceedings filed before this Court in 2001 [WP 651 of 2001]. A Division Bench of this Court by a judgment dated 26th November 2008, set aside the cancellation on the ground that there was a breach of the principles of natural justice, but left it open to the authority to issue a notice to show cause and to pass an appropriate order in accordance with law. 7. The Customs Appeal that was filed by the Petitioner before the CESTAT challenging the demand for duty and im ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y 1 of the exemption notification dated 1st March 1988; (ii) The Respondents had at no stage in these proceedings disputed the fact that the Petitioner fulfilled the requirements of category 1. The Petitioner had been registered as a Public Charitable Trust under the provisions of the Bombay Public Trusts Act, 1950 since 1953; (iii) The basis on which the Application for re-categorization had been rejected by the Deputy Director General is erroneous. The basis of the impugned order is that since registration was sought for and was granted under category 2 and the Petitioner had undertaken to comply with its obligations attached to that category, that would preclude it from seeking categorization in category 1; (iv) In the present case, the Petitioner had not accepted the cancellation of its CDECs and had instituted writ proceedings before this Court in 2001 to challenge the cancellation. The Petition was allowed by the Division Bench of this Court in 2008. Hence, the Supreme Court in its judgment dated 8th April 2009 in the Petitioner's own case observed that on the date of the application for change in categorization, the issue of categorization was a live issue. The Supreme Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om 1989. On 6th August 1993 a communication was addressed by the Assistant Director General in the DGHS to the Public Health Department of the State Government, recording therein that the Union Ministry of Health and Family Welfare had modified the existing procedure and guidelines pertaining to the grant of duty exemption certificates. The annexure to the letter called upon the State Health Authority to furnish additional information inter alia indicating the category in which the Applicant fell for classification. In respect of category 2 hospitals, the State Health Authority was required to certify the fulfilment of the conditions stipulated in the exemption notification. The letter dated 6th August 1993, a copy of which was addressed to the Medical Superintendent of the Petitioner, required the Petitioner to furnish an affidavit accepting liability to pay customs duty on failure of the compliance with the conditions specified in notification 64 of 1988. On 14th September 1993, a certificate was issued by the Directorate of Health Services of the State Government stating that the Petitioner fell within category 2 and certifying that the requirements of the notification were bein ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is this controversy which ultimately came before the High Court in Customs Appeal Nos. 52, 53 and 55 of 2008." 15. The Division Bench of this Court had, by its decision which was carried in Appeal to the Supreme Court, come to the conclusion that the case was covered by the decision of the Supreme Court in Jaslok Hospital. In Jaslok Hospital CDECs had been issued to the hospital under the same exemption notification dated 1st March 1988 in pursuance of which medical equipment was imported between 1988 and 1994. The CDECs certified that the hospital in that case was covered by category 2 of the table. The CDECs were cancelled on 14th November 2000 for breach of the conditions attached to category 2. After a lapse of three years, the hospital made a representation to the Union Ministry of Health and Family Welfare in 2003 which was rejected by the DGHS. The order of the DGHS was challenged before this Court together with the cancellation of the CDECs. Before this Court a statement was made on behalf of the hospital that it did not press the challenge to the communication by which the CDECs were cancelled and the challenge was only confined to the subsequent order passed by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for determination in this case, is whether the case of the appellant herein stands covered by the judgment in the case of Jaslok Hospital (supra). In that case Jaslok Hospital was categorized under Category 2. That categorization was cancelled. There was no challenge to the cancellation of the categorization and without such a challenge an application was made for change in category. Under those circumstances, this Court observed that in order to enable a hospital to claim change in the categorization, the hospital must be in some category on the dote on which application is made for change in categorization. It is important to note that in the case of Jaslok Hospital (supra), the said hospital applied for re-categorization after three years of the cancellation/withdrawal of CDEC. On the other hand, in the present case, we find that the appellant had applied for categorization as category 1 hospital. On account of the alleged mistake on the part of DGHS, while granting CDEC categorized the appellant herein as category 2 instead of category 1. Further, DGHS cancelled CDEC ex-parte without giving any notice or hearing to the appellant herein stating that the conditions of Category ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nable. 19. The Supreme Court allowed the Appeal filed by the Hospital and came to the conclusion that the fact that the hospital had sought an exemption under category 2 and not under category 3 initially, would not preclude it from submitting an application for re-categorization. Even if the applicant was entitled to benefit under two different notifications or even under two different heads, it could claim a more favourable benefit and it was the duty of the authority to grant a benefit to which the applicant was otherwise entitled. In that context, the Supreme Court held as follows :- "16. In the instant case, the ground which weighed with the Deputy Director General (Medical), DGHS for non-considering the prayer of the appellant was that earlier, exemption was sought under category 2 of exemption notification, not under category 3 of exemption notification and exemption under category 2 was withdrawn. This is hardly a ground sustainable in law. On the contrary, well-settled law is that in case the applicant is entitled to benefit under two different notifications or under two different heads, he can claim more benefit and it is the duty of the authorities to grant s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l in category 2. It was on this basis that the Petitioner came to be categorized in category 2. The Petitioner had filed an affidavit agreeing to comply with a condition stipulated in the exemption notification. The fact that the Petitioner had been categorized in category 2 did not preclude the Petitioner from seeking a change in category from category 2 to category 1. Whether the Petitioner does fulfil the requirement of category 1, is a separate matter altogether. The plea for a change in the categorization could not however, have been rejected consistent with the law laid down by the Supreme Court on the ground that the earlier categorization was based on a request made by the Petitioner. The Deputy Director General has observed that the Petitioner has never been approved as a charitable hospital either by the DGHS or the Union Ministry of Health and Family Welfare. On this aspect of the matter, it is the submission on behalf of the Petitioner that the Petitioner falls within the description of a hospital run or substantially aided by a charitable organization. Having regard to the fact that the Petitioner has been registered as a Public Charitable Trust under the Bombay Public ..... X X X X Extracts X X X X X X X X Extracts X X X X
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