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2016 (8) TMI 86 - DELHI HIGH COURT

2016 (8) TMI 86 - DELHI HIGH COURT - 2016 (338) E.L.T. 8 (Del.) - Validity of show causes notices - failure to adjudicate even after a long time - Held that:- As far as the Customs Department is concerned, there appears to be no valid reason why it did not proceed with the adjudication of the Show Cause Notice issued by it, for well over 17 years now despite the specific orders of the Court permitting it to do so and to even pass a final order. They were only restrained from giving effect to suc .....

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toms Department to Petitioner No1 is also quashed. - Decided in favor of petitioners. - W.P.(C) 485/1998 - Dated:- 21-1-2016 - S. MURALIDHAR AND VIBHU BAKHRU JJ Mr Rahul Gupta, Mr Shekhar Gupta, Mr Umang Gupta, and Ms Ira Gupta, Advocates for the Petitioners. Ms Meera Bhatia, Senior Standing Counsel with Mr Satyendra Kumar with Mr A. S. Singh, Advocate Ms Bhuvneshwari Pathak, Advocate AND Mr Rahul Kaushik, Advocate for the Respondent. ORDER: 1. This is a petition filed by M/s Navin C. Nanda Nati .....

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ed by the Commissioner of Customs. The consequential declaration sought is that the Customs Duty Exemption Certificates (CDECs) dated 4th July 1988, 9th March 1992, 25th March 1992 and 23rd August 1993 are valid and binding upon the Respondents. 2. The background to the present petition is that the aforementioned entity (Petitioner No.1) is a registered firm of which Dr K. K. Aggarwal (Petitioner No.2), who is one of the two partners, is a Senior Consultant Cardiologist. The other partner Col. K .....

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for the setting up of a Colour Doppler Echo Cardiography" equipment in the Department of Cardiology of the Hospital. The understanding was that Petitioner No.1 would provide free diagnostic services to 40% of the outpatients and 10% of the inpatients of the hospitals as per rules and regulations of the hospital. It is stated that this understanding was reduced to writing by way of a certificate issued by the Medical Superintendant of the Moolchand hospital on 6th December, 1997. 4. Thereaf .....

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i Administration by a letter dated 22nd February, 1988 conveying its no objection to the grant of an import licence. It was stated therein that for all practical purposes the Petitioner institution appeared to be part of the Department of Cardiology of Moolchand Hospital . On that basis, on 26th February, 1988, the Delhi Administration forwarded the application to the Chief Controller of Imports and Exports, New Delhi also conveying their no objection. 5. An agreement was entered into between Pe .....

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on No. 64/88-CUSTOMS was issued on 1st March, 1988 granting an exemption from customs duty on the import of certain medical equipment upon certification from DGHS. The Petitioners applied in terms of the said notification for grant of a CDEC. The DHS, Delhi Administration, by letter dated 19th April 1988, conveyed its recommendation for grant of the CDEC. In the said letter a reference was made to the agreement between Petitioner No.1 and Moolchand Hospital. An undertaking was given by Petitione .....

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t facilities will be provided free of cost to all families with income of less than ₹ 500/- per months and for this purpose not less than 10% of the total bed strength give institution will be reserved for such patients. 4. That the charges levied from other indoor patients will be reasonable either on the basis of the income of the patients/guardians or otherwise. 5. That the Hospital equipment/apportine [sic] and appliances imported/to be imported by the Institution will only be used in .....

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ations from the Petitioner, a CDEC was issued to the Petitioner on 4th July, 1988 and this certificate was endorsed on an invoice of the equipment sought to be imported. It was clarified by Petitioner No. 1 that the Aloka Colour Doppler was to be imported for installation in the premises of the Moolchand Hospital under a mutual agreement. According to the Petitioners all the conditions for grant of the CDEC were complied with. 8. It is stated that the Petitioners continued in the same manner in .....

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eatment facilities to all citizen of India without distinction of Caste, creed, race, religion or language. 2. Certified that the Institution provides diagnostic preventive or curative care free of cost to 2360 patients out of 5835 patients which is not less than 40% of all out door patients treated in the year July, 1988 to December, 1989. 3. Certified that the charges levied from other patients are reasonable either on the basis of the income of the patients/guardians or otherwise. 4. The Inst .....

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period July, 1988 to June, 1989, out of the total of 3918 patients examined, 1291 were the admitted patients of cardiology department of Mool Chand K.R. Hospital (Where this diagnostic Centre is located). Out of this, 149 were rendered free services. And during the period July 89 to December 89, out of the total of 1917 patients examined, 715 were the admitted in patients of the cardiology deptt. of Mool Chand K.R. Hospital. Out of which 83 were done free. Showing that they are rendering 11.5% .....

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is being compensated by giving free services on the Alka Colour Doppler to the indoor patients of Mool Chand K. R. Hospital. And the percentage of free patients is more than 10%. Moreover, this institute has given an undertaking that they are ready to provide free services to all the referred patients from various hospitals functioning under Delhi Admn. So, it is felt that this facility of referral system can be of much use for the patients of Delhi Admn. Hospitals where this sophisticated inves .....

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9th March and 25th March, 1992. 10. In 1993, an application was made for issuance of a CDEC in respect of one more Colour Doppler Echocardiogram machine after following the same procedure and this was granted on 23rd August, 1993. 11. In the meanwhile, a Public Interest Litigation, being W.P.(C) No.409/1996 (People s Union for Civil Liberties v. Union of India), was filed, inter alia, alleging that the Respondents had wrongly granted CDEC to some non-deserving and ineligible persons/institution .....

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ittee. 12. On 11th July, 1997 the first Show Cause Notice was received by the Petitioners from the DHS asking them to submit a list of equipment for which the CDECs were issued and whether the said equipment imported was functional. On 16th July, 1997, the Petitioner responded to the above letter and stated that the Petitioner No.1 institute had imported the following equipments: This is in reference to your letter dated 11/7/1997 regarding import of medical equipment by our Institute. The Insti .....

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hine is also been used for conducting various free diagnostic camps Mac 15 Electrocardiograph has been used now for over six years and as the technology over a period of time has changed the machine is not under commercial use for the last one year. The machine at present is being used for various free heart check up camps being organised by the Institute. Over a period of time the Institute has acquired newer models for doing the above diagnostic services. 13. In the meanwhile on 3rd July 1997 .....

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was discharged. 14. This was followed by a second Show Cause Notice dated 9th July, 1997 to the same effect. The Petitioner then replied to the DGHS on 16th July, 1997, inter alia, pointing out that the Petitioner No.1 had been fulfilling its obligations to provide free services to 40% of the outpatients and 10% of the inpatients of the hospitals. It was also pointed out that Petitioner No.1 was attached to the various Delhi Administration Hospitals as per the directions issued by the Directorat .....

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sed with the writ petition. This provided the month wise data of treatment of both outpatients and inpatients for the years 1988-89 to 1996-97. 16. The Petitioners state that they received order dated 4th November, 1997 issued by the DGHS withdrawing the CDEC dated 4th July, 1988 issued in terms of the Notification No.64/88 dated 1st March, 1988 for the Colour Doppler Echo Cardiography equipment and the CDEC No.47/88 dated 9th March, 1992 issued in respect of spare parts for the said machine. Th .....

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itioner had not responded to the Show Cause Notices, the DGHS had on the basis of the information available with it, come to the conclusion that the Petitioner No.1 is only a diagnostic centre, not having indoor patients treatment facilities and therefore does not fulfil the conditions for availing and retaining CDEC. 17. On 9th November, 1997, the Petitioners addressed a letter to the DGHS pointing out that the Show Cause Notice had already been responded to in July 1997. A copy of the said not .....

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e. We hereby request your kindself to take the above into consideration and revised your decision to withdraw various CDEC s issued to us. 18. A letter was also addressed on 19th November, 1997 to the Secretary (Medical), Government of Delhi by the Petitioners requesting his personal intervention for him forward to the verified records of the institute to the DGHS at the earliest. 19. In response to a letter received from the DGHS, the Petitioner on 24th November, 1997 enclosed in a proforma the .....

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the order, it was stated as under: 3. On scrutiny, it has been observed that your Institute had (a) no indoor treatment facilities of its own: (b) no data has been given with regard to total number of OPD cases, number of OPD cases treated free and number of patients with income less than ₹ 500/- p.m. treated free; (c) Claims have not been verified/certified by the State Govt: (d) observation of Hon ble Supreme Court about continuing obligation and clarification of Deptt. of Revenue that D .....

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1. The Petitioner wrote a letter dated 25th December, 1997 to the DGHS enclosing the earlier correspondence with the DGHS, Delhi Administration and again pointed out that Petitioner No.1 institute was not a diagnostic centre but the official lab of the Moolchand Hospital and had been providing free services to the indoor and outdoor patients which in fact had been verified by the State Health authorities. 22. On 3rd January, 1998, the Commissioner of Customs issued a Show Cause Notice stating, i .....

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; 5,05,796/- together with interest @ 20% should not be demanded apart from confiscation of the imported machinery. 23. The Petitioner replied to the above Show Cause Notice on 20th January, 1998 seeking for some time. The allegations of the Show Cause Notice were denied and it was stated that the Petitioner No.1 had furnished all the information and certificates as to the instalment of the machinery and that it had also started functioning in the stipulated period. It was pointed out that the c .....

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ect to till the next date except by the leave of the court. 26. By the subsequent order dated 4th May, 1999 the interim order was made absolute. In response to the notice issued in the writ petition, a reply has been filed by the DGHS. 27. Mr Rahul Gupta, learned counsel appearing for the Petitioner, points out that in neither of the orders of the DGHS dated 4th November, 1997 or 17th December, 1997, was a reference made to the replies filed by the Petitioner to the Show Cause Notices. The order .....

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he decisions in Mediwell Hospital and Health Care Pvt. Ltd. (supra) as further modified in Sri Sathya Sai Institute v. UOI 2003 (158) ELT 675 (SC). 28. Mr Gupta pointed out that pursuant to orders of this Court in the PIL and the Supreme Court, show cause notices were issued to several importers of medical equipment alleging violation of the conditions attached to the CDECs issued in terms of the Notification No.64/88 dated 1st March, 1988. There was confusion as to whether action could be taken .....

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he said Notification No.64/88 only during the period in which the said notification was in existence. 29. Learned counsel for the Respondents sought to defend the impugned SCNs and orders. Learned counsel appearing on behalf of the Customs was unable to confirm whether any adjudication order was in fact passed pursuant to the Show Cause Notice dated 3rd January, 1998. 30. A perusal of the Show Cause Notices issued to the Petitioner by the DGHS reveal that the action was triggered pursuant to the .....

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to the Show Cause Notice. In response to the said averment, it is simply stated in the counter affidavit filed on behalf of the DGHS that this is a matter of record. In other words, there is no denial that the DGHS did receive the Petitioners' reply dated 16th July, 1997 and yet in the first impugned order dated 4th November, 1997, it is stated that the Petitioner had failed to file a reply before the dead line fixed by this Court in W.P.(C) No.409/1996, i.e., 15th September, 1997. It is onl .....

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reference is made to the replies actually furnished by the Petitioner not only on 16th July, 1997, but also subsequently. It is also stated that no recommendation was received by the State Government. With the Petitioner having furnished the details of the free treatment being given by it to the indoor and outdoor patients in fulfilment of the required conditions attached to the CDEC, the onus shifted to the Respondents to have these details verified and to point out to the Petitioner if there .....

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