TMI Blog2016 (8) TMI 86X X X X Extracts X X X X X X X X Extracts X X X X ..... - 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 National Institute of Echo Cardiography Cardiac Research (Petitioner No.1) and Dr. K. Aggarwal (Petitioner No.2) under Article 226 of the Constitution seeking inter alia, quashing of two notices dated 3rd July, 1997 and 9th July, 1997 issued by the Union of India through Ministry of Health Family Welfare, New Delhi, the orders dated 4th November, 1997 and 17th December, 1997 passed by the Directorate General of Health Services (DGHS) and the Show Cause Notice dated 3rd January, 1998 issued 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earch unit of Petitioner No.1 would be set up; 10% of the total number of cases treated by the unit as in-patients shall be free, and 40% of the out-patient consultations in the unit will be free and that the Petitioner No.1 would not, at its discretion, charge any person from amongst the hospital staff and their dependants for treatment. 6. Notification 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 Petitioner No.1 by a letter dated 25th May, 1988 to the Joint Secretary (Medical), Delhi Administration for onward transmission to the DGHS which reads as under: 1. That the Institution undertaken to provide diagnostic aid/or treatment facilities to all citizens of India without distinction of caste, creed, race, religion or Language. 2. Tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Institution has also given an undertaking that the equipments, apparatus and appliance to be imported by the institutions will only be used in the institution concerned and will not be removed there from for private use and will not be sold or otherwise disposed off without prior permission of the Government of India, Ministry of Health Family Welfare, D.G.H.S. New Delhi. 5. The Institution has not yet any indoor facilities. The institute had furnished the information, informed that during the 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tioner from the said Committee which was replied to on 18th February, 1997 by the Petitioners. A further response was submitted on 10th June, 1997 in response to another letter dated 19th May, 1997 received from the Rosha Committee. 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 Institute had imported the following medical equipment: 1. Aloka Colour Doppler Model SSD 860 2. Aloka Colour Doppler Model SSD 870 3. Mac 15 Electrocardiography 4. Apogee CX Colour Doppler Echocardiography The equipments Colour Doppler 860 and 870 are non functional; Aloka 860 since January 194 and Aloka 870 since March 1996. Both the models have been discontinued by the Aloka as spare parts are not available with the company. Apogee CX is presentl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8 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. The Petitioners state that in the said order it was observed that no reply had been received from either the Petitioners or the State Government in response to the Show Cause Notice dated 3rd July, 1997. It also referred to the fact that a deadline for receiving replies had been set by the High Court as 15th September, 1997 in the orders passed by it on 1st August, 1997 in W.P.(C) 409/1996 (People s Union for Civil Liberties v. Union of India). In the said order, the DGHS stated that since the Petitioner 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 notice was again encl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions for availing and retaining CDEC issued to it under notification No.64/88-Cus., dated 1.3.88. 21. 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, inter alia, that the Petitioners did not furnish any installation certification within the stipulated period and the hospital had not started functioning within the stipulated period and that it appeared that the Petitioner No.1 institute is not functioning and as such there is no facility for treatment of the indoor/outdoor patients . As a result of non fulfilment of the conditions stipulated in Customs Notification No.64/88, the Petitioner No.1 was asked to show cause as to why a duty of ₹ 5,05,796/- together with interest @ 20% should not be demanded apart from confiscation of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nfusion as to whether action could be taken in respect of the obligations/conditions to be fulfilled in terms of the CDEC for the period beyond the said Notification No.64/88 which was replaced by another Notification in 1994. He referred to the decision of the Madras High Court in Apollo Hospitals Enterprises Ltd. v. Union of India 2001 (133) ELT 58 (Mad.) and this Court in R.G. Stone Urological Research Institute v. UOI Ors. (173) 2010 DLT 385 both of which clarified that the DGHS could seek enforcement of the obligations under the 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 orders passed by this Court in W.P.(C) No.409/1996 (People s Union for Civil Liberties v. Union of India) as well as the Supreme Court in Mediwell Hospit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appear to be wholly unjustifiable. There appears to be a complete non-application of mind to the reply furnished by the Petitioner the receipt of which is in fact not denied in the counter affidavit filed by the DGHS. 32. 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 such order. The only conclusion that the Court can draw from this is that the Customs Department is clearly not interested in proceeding with the Show Cause Notice issued by it. 33. For the aforesaid reasons, the Court quashes the two Show Cause Notices dated 3rd July 1997 and 9th July 1997 and the corresponding orders dated 4th November 1997 and 17th December, 1997 issued by the DGHS withdrawing the four CDECs issued to Petitioner No.1. The Show Cause Notice dated 3rd January, 1998 issued by the Customs Department to Petitioner No1 is also quashed. 34. The writ petition is allowed in the above terms but with no order ..... 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