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TMI Blog2005 (10) TMI 112X X X X Extracts X X X X X X X X Extracts X X X X ..... ingly taken us through various case laws relevant to the case. Brief Facts of the Case 2. The appellants were issued two show cause notices dated 29-9-98 and 17-3-99 proposing confiscation of medical equipments, spares and accessories earlier imported by the appellants duty free under Notification No. 64/88-Cus., dated 1-3-88, and collectively valued at Rs. 8,24,78,366/- (Rs. 34,91,567/- + Rs. 7,89,86,799/-). These notices also proposed recovery of customs duty amounting to Rs. 11,52,06,608/- (Rs. 39,36,742/- + Rs. 11,12,69,866/-) as well as penal action against the appellants. The impugned imports took place during 1988-1994. 3. It was inter alia alleged in the said show cause notices that the appellants had made wilful misstatements in their applications for obtaining customs duty exemption certificates and had suppressed the facts about the non-fulfilment of the conditions of the Notification No. 64/88. It was also alleged that the appellants had failed to fulfil the conditions of the said notification, that they were well aware of the continuous obligation cast on them at the time of import and that, therefore, they should not have opted for the scheme. 4. The impugned orde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cation of offending goods under the Customs Act was beyond his jurisdiction in terms of Notification No. 64/88. (iii) Whether the demands raised by the Commissioner of Customs were barred by time in terms of the proviso to Section 28 of the Act. 7. In a very detailed order, the three-member Bench of the Tribunal came to the following conclusions in Lady Amphthil (supra) :- (i) Post-importation violation of the conditions of the exemption Notification would appropriately fall within the Customs jurisdiction and not within the jurisdiction of the certificate issuing authority that is MoH/DGHS (vide Para 38). (ii) Customs can start recovery proceeding, recovery will be for the amount which was exempted, and equipment can be confiscated under Section 111(o) of the Customs Act, 1962 (vide Para 40 and Para 60). (iii) Since liability to pay duty and confiscation of the goods can arise only subsequent to the date of clearance of the goods when there is infringement of the conditions, Section 28 does not apply (vide Para 56). In a case of continuing obligation, the date of clearance of the goods cannot be the date for determining limitation. Date for raising demand should be counte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dustries v. H.M. Singh - 1988 (36) E.L.T. 462 (Bom.) and Mohandas Issardas v. A.N. Sattanathan - [2000 (125) E.L.T. 206 (Bom.) = (1954) Bom. L.R. Vol. LVI P. 1156]. (ii) Directions contained in Paragraph 13 of the said decision in Mediwell (supra) has been overruled by a Larger Bench of the Apex Court in Sri Sathya Sai lnst. v. U.O.I. - 2003 (158) E.L.T. 675 (S.C.). (iii) A Larger Bench of the Apex Court has overruled the decision in Mediwell (supra) in Faridabad CT Scan Centre v. DGHS - 1997 (95) E.L.T. 161 (S.C.) holding that benefit of an exemption notification is not to be extended to some one on the ground that such benefit had wrongly been extended to others. As such, Mediwell (supra) is no longer good law and hence cannot be taken as authority for recovery of duty. (5) Section 143 applies to non fulfilment of conditions prior to import, and does not provide authority for recovery of duty when post importation conditions are violated. (6) The adjudicating Commissioner in Paragraph 43 of the impugned order has observed that "even though the hospital has in strict terms failed to meet the conditions of the exemption, it is undeniable that it has been doing considerable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Bulk Trading - 2002 (046) ARBLR 675 SC. (iii) Corrocraft Ltd. v. Pan American Airways - AIR 1975 SC 1951. (iv) CIT v. J.H. Gotla - 1985 48 CTR (SC) 363. (v) Skandia Insurance Co. Ltd. v. Kokilaben Chandravadan - 1987 (002) SCC (654) SC. (7) Notifications are to be strictly construed and since exemptions from taxation increase the burden against unexempted class of taxpayers, the same should be construed against the subject in case of ambiguity as held in MMTC Ltd. v. CC - 2001 (133) E.LT. 310 (Del-HC). (8) Lady Amphthil (supra) correctly interprets that Section 28 is not applicable and hence, in the absence of any specific limitation period, the liability arises only when there is infringement of the condition in the notification. Medical Relief Society (supra) [1999 (111) E.L.T. 327 (Kar.)] also supports the view that Section 28 does not come in the way of recovery duty which can be made in terms of the notification. Findings 10. We have carefully considered all the arguments advanced from both sides as well as the case records, written submissions and the cited case laws. We briefly consider the legal provisions first in relation to the main argument by the appella ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of time. This view is supported by the ratio of the following two decisions of the Honourable Bombay High Court and the Apex Court :- (i) Prakash Cotton Mills Pvt. Ltd. v. S.K. Bhardwaj, A.C.C.E. - 1987 (32) E.LT. 534 (Bombay) (ii) Commissioner v. Raghuvar (India) Ltd. - 2000 (118) E.L.T. 311 (S.C.) 13. We find that while Section 12 gives the power to levy customs duty, Section 25 gives the power to grant exemption of duty in the public interest either absolutely or subject to conditions. In the case of Notification No. 64/88, the exemption granted is conditional. The conditions relating to (i) free treatment of 40% outdoor patients and (ii) reservation of 10% of beds for free treatment of patients with family income less than Rs. 500 p.m. make it manifestly clear what the public interest behind the said exemption is. If these conditions are not fulfilled after importation and the public interest is not served, the exemption becomes unavailable and full duty as leviable under Section 12 becomes payable. 14. We note that the impugned notification has not provided for obtaining any bond or bank guarantee for recovery of duty in the event of failure to fulfil the conditions of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he benefit of exemption to pay the duty payable in respect of the equipments which have been imported without payment of customs duty. Needless to mention the Government has granted exemption from payment of customs duty with the sole object that 40% of all outdoor patients and entire indoor patients of the low income group whose income is less than Rs. 500/- p.m. would be able to receive free treatment in the Institute. That objective must be achieved at any cost, and the very authority who have granted such certificate of exemption would ensure that the obligation imposed on the persons availing of the exemption notification are being duly carried out and on being satisfied that the said obligations have not been discharged they can enforce realization of the customs duty from them." The Apex Court has thus clearly held that the said Notification No. 65/88 casts a continuing obligation and that in the event of failure to discharge that obligation, duty is demandable. 16. The learned senior Advocate for the appellants has argued at length that Paragraphs 12 and 13 of Mediwell (supra) are not to be taken as ratio decidendi or obiter dicta as they are in the nature of casual obser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or reconsideration. 19. The learned senior Counsel argues that by implication, Mediwell (supra) requires duty to be demanded in accordance with Section 125(2) only and no duty is demandable under that Section, if the appellants do not redeem the impugned goods after confiscation. In this regard we observe the following :- (i) Mediwell (supra) and Medical Relief Society (supra) make no reference to Section 125(2) and allow recovery of duty to be made independent of the said Section. (ii) Section 125(2) states that where any fine in lieu of confiscation of goods is imposed, the owner shall, in addition, be liable to any duty and charges payable on the goods. It merely clarifies that confiscated goods cannot be released on payment of fine alone. It, nowhere, says that if confiscated goods are not redeemed, the duty demand, if otherwise payable, gets extinguished. Jagadish Cancer (supra) also says that there is a mandatory requirement on the adjudicating officer before permitting the redemption of the goods to levy any duty. It also nowhere says that duty shall not be payable if the goods are not redeemed. (iii) We find that the Department has merely placed the goods under seizu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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