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TMI Blog2018 (8) TMI 1121X X X X Extracts X X X X X X X X Extracts X X X X ..... in addition to confiscation of the impugned goods under section 111(o) of Customs Act, 1962 with option to redeem the same on payment of fine of `15,00,000 besides imposition of penalty of `15,00,000 under section 112 of Customs Act, 1962 on the importer. 2. A brief background to the contours of the dispute is essential to a clearer appreciation of the proceedings. The imports were effected in 1991 and, while confiscation of goods may be proceeded with under section 111 without reference to elapse of time, recovery of duty is constrained by the limits that bind statutory authorities in section 28 of Customs Act, 1962. Furthermore, the exemption notification did not prescribe any time frame to determine compliance with the conditions prescribed therein. This conundrum was resolved judicially, particularly in the imports of medical equipment against conditional exemption, and sustained by the principle of continuing obligation enunciated in Mediwell Hospital & Health Care Pvt Ltd v. Union of India and others [1997 (89) ELT 425 (SC)] and the alternative empowerment for recovery under section 125 (2) when goods are confiscated enunciated in Commissioner of Customs (Import), Mumbai v. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... treatment to each and every patient with income less than Rs. 500 per month, failure to furnish evidence that 10% of the beds were allotted to patients for treatment with the imported equipment, failure to evince, with acceptable records, that those accorded free radiotherapy were indoor patients or outdoor patients and failure to produce evidence of reasonableness of charges collected from other patients. 6. Learned Counsel for appellant seeks relief primarily on the ground that the conditions in the notification had been complied with. Though Learned Authorised Representative, while reiterating the findings of the original authority, has relied upon a number of decisions, all of these do not have to be dealt with in view of the accepted premises on which proceedings were initiated. In the context of factual submissions, these are not of much relevance and, to the extent that they are, we shall, at the appropriate places, refer to them. 7. The first issue to be considered is the correctness on the part of the adjudicating authority to disentitle the appellant from the privilege of notification no 64/88-Cus dated 1st March 1988. This, in our opinion, is an incorrect finding. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owever, on a plain reading of the said provision, we are of the view that such a provision would not apply in case where option to pay fine in lieu of confiscation is not exercised by the importer. Trigger point is the exercise of a positive option to pay the fine and redeem the confiscated goods. Only when this contingency is met, the duty becomes payable. In the present case, admittedly, such an option was not exercised and the confiscated machinery was not redeemed by the Institute. As a matter of fact, thus, no fine has been paid. xxxx 16. Indubitably, unless an option is exercised, fine does not become payable. Sub-section (2) of Section 125 uses the expression "imposed" by stating "where any fine in lieu of confiscation of goods is imposed". In Black law dictionary (Tenth edition), the word 'impose' is defined as "To levy or exact (a tax or duty)". Thus, it has to be a levy or exact which is become payable and has to be paid. Likewise, the word 'impose' is defined by Oxford English Dictionary, as relevant for the purpose of the present case, as "Lay or inflict (a tax, duty, charge, obligation, etc.) (on or upon), esp. forcibly; compel compliance with; force (oneself) on o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... when such an option was not exercised, it could have taken separate and independent action by issuing show cause notice to the effect that the Institute had violated the terms of exemption notification and therefore, was liable to pay duty.' 9. In doing so, the Hon'ble Supreme Court, though not dealing with appeal against the decision cited by Learned Authorized Representative, has, nevertheless, rendered the finding on the submission made on behalf of Revenue that '15. Mr. K. Radhakrishnan, learned senior counsel appearing for the Department, argued that even if an option was not exercised, the moment it was stated in the order of the Commissioner that fine is being "imposed", sub-section (2) would get attracted. We do not agree with the aforesaid submission of Mr. Radhakrishnan. The order confiscating the goods has already been reproduced above. Insofar as the payment of fine is concerned, only option was given (and that was only course of action which could be visualized under Section 125). The order categorically states that "the importer "may" redeem the confiscated goods on payment of fine of Rs. 1,00,000 (Rs. One lakh only)".' which is the pith and substance of the deci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he 'duty exemption certificate', there was a disclaimer of being obliged to issue such a certificate. 12. In this circumstance, the consequence of such withdrawal is an aspect that is moot to the eligibility for import with the privileges under the notification. We have found supra that eligibility at the time of import is clearly distinguishable from the obligation to fulfil post- importation condition with the attendant detriment of confiscation. That is the clear thread in the decision of the Hon'ble Supreme Court in re Jagdish Cancer & Research Centre, the 'duty exemption certificate', being relevant to determine eligibility for import, is not material to action under section 111(o) of Customs Act, 1962 which is contingent upon non-conformity with germane post-importation conditions. Had the impugned order chosen, under section 28 of Customs Act, 1962 to recover duty that had not been collected at the time of import, owing to non-eligibility, this may have been sufficient cause. That is now an academic issue with the demand having been made under other provisions and the application of limitation of five years from date of import. Therefore, the subsequent withdrawal of a vali ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that 40% of the patients have been accorded free treatment and, in the absence of contrary evidence, we conclude that there is no ground to hold that appellant had failed to fulfil this condition. 16. The condition of free treatment to indoor patients with income below the prescribed threshold stands on two limbs and the conjunction 'and' makes it indubitably clear that these have be to viewed for compliance in terms of complementing each other. Accordingly, to conform to the condition, not less than a tenth of the beds must be earmarked for patients in this category and whose treatment must be effected without any charge. That a tenth of the beds had been so earmarked is clear from the data furnished to the adjudicating authority and has not been controverted. The charging of patients who occupied beds in excess of that so earmarked is not, therefore, a transgression from the stipulations prescribed for continual conformity. The finding of the adjudicating authority that the compliance is in conformity only when the beds so earmarked are relatable to treatment with the imported equipment is clearly executive overreach in the absence of any such delineation in the conditions appen ..... X X X X Extracts X X X X X X X X Extracts X X X X
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