[Order per : G.A. Brahma Deva, Member (J)]. - This appeal arises out of and is directed against the Order-in-Original dated 7-8-2000 passed by the Commissioner of Customs, Bangalore.
2. Issue relates to denial of benefit of exemption in terms of Notification No. 64/88-Cus., dated 1-3-88. The appellant society had imported four medical equipments claiming exemption from Customs duty under Notification No. 64/88-Cus., dated 1-8-88. According to the department, the appellant society had failed to satisfy the post-importation conditions of Notification No. 64/88-Cus., dated 1-3-88 with regard to providing free treatment to the poor out-patients as well as in-patients. Further it sent equipments at Manav Charitable Hospital, Bangalore or removed the same from the premises of the Research Society to the premises of Manav Charitable Hospital, Bangalore and brought back to the appellant society and also unauthorisedly allowed the said hospital to use the said equipment to treat the patients other than the appellant Research Society patients. Accordingly, a Show-cause notice dated 7-2-2000 has been issued to the appellants as to why
“(a) The benefit of exemption of duty under Customs Notification No. 64/88 Cus, dt. 1-3-88 should not be denied in respect of the medical equipments valued at Rs. 15,72,379/- mentioned at para 3 supra (except Sl. No. 1 which has been imported through ACC, Chennai) and the Customs duty amounting to Rs. 21,58,681/- (Rupees Twenty-one Lakhs Fifty Eight Thousand Six Hundred Eighty-one only) equal to the duty foregone on the said medical equipments, imported through ACC, Bangalore, should not be demanded under Section 28(i) of the Customs Act, 1962.
(b) The impugned goods i.e. medical equipments mentioned at Sl. No. 2 to 4 at para 3 above, seized on 22-9-1999 from the premises of Research Society, Bangalore, which had been removed unauthorisedly from the premises of the Research Society to Manav Charitable Hospital, Bangalore and brought back to Research Society, should not be held liable for confiscation under Section 111(o) of the Customs Act, 1962.
(c) interest at the rate of 20% should not be charged and recovered from them as contemplated under Section 28AB of Customs Act, 1962, and
(d) a penalty should not be imposed on them under Section 114A of the Customs Act, 1962, ibid.”
3. Show-cause notice was duly answered by the appellants denying the charges. The Commissioner who adjudicated the proceedings negatived the submissions made by the party confirming the demand. He passed the following order :
(i) “I demand a sum of Rs. 21,58,681/- (Rupees twenty one lakhs Fifty eight thousand six hundred & eighty one only) from M/s. IMRS, Bangalore being the duty amount involved on the 3 equipments imported by them through ACC, Bangalore under Section 28(1) of the Customs Act, 1962.
(ii) I order confiscation of the medical equipments mentioned at Sl. No. 2 to 4 at para 3 above, seized from the premises of M/s. IMRS on 22-9-99 under Sec. 111(o) of the Customs Act, 1962. However, considering the facts and circumstances of the case and the period during which these machines have been issued, I allow the said equipments to be redeemed on payment of fine of Rs. 2,00,000/- (Rupees two lakhs only), in lieu of confiscation, under Section 125 of the Customs Act, 1962.
(iii) I order that the interest at the rate of 20% should be paid by M/s. IMRS as contemplated under Section 28 AB of the Customs Act, 1962.
(iv) I impose a Penalty of Rs. 21,58,681/- (Rupees twenty one lakhs fifty eight thousand and six eighty one only) under Section 114 A of the Customs Act, l962.”
4. Shri Ravi Shankar, learned Counsel appearing for the appellants submitted that the demand for imports made under final assessment of bills of entry dated 4-4-90 and 7-7-91 respectively have been made after 10 years from the relevant date and accordingly demand is barred by time. He emphatically argued that the Statutory Authorities acting under the Excise and Customs Laws are bound by the provisions of statute relying upon the decision of the Supreme Court in the case of Miles India Ltd. v. ACC [] and CCE v. Raghuvar India Ltd., reported in []. He said that demand can be raised within the stipulated time as envisaged under Section 28 of the Customs Act i.e. normal period of six months and maximum period under Section 28 is five years if there was suppression of facts by the importer and at any rate it cannot be extended beyond the period of 5 years. In the instant case, Show-cause notice has been issued on 17-2-2000 and accordingly there was no justification to raise the demand for the period relating to 91, after a decade. He contended that Statutory Authorities are to be exercised within the limitation provided for in the Statute, and it is well settled that no court is empowered to direct a Statutory Authority to ignore the period of limitation prescribed under a Statute to make an assessment as it was held by the Apex Court in the case of Hope Textiles Ltd. v. U.O.I. reported in [1994 (205) ITR 508 (SC)]. He submitted that while deciding the time bar issue, the Commissioner has grossly erred in relying upon the decision of the Karnataka High Court in the case of Medical Relief Society of South Kanara v. U.O.I. [] without taking note of the decision of the Division Bench of the same High Court in the case of Yellamma Dasappa Hospital v. CC reported in (Kar.) = TLR 2000 KAR 1092.
5. On merits he said that show cause notice has been issued charging that appellant society had not fulfilled the condition of the Notification inasmuch as equipment was temporarily shifted to Manav Charitable Hospital. He submitted that equipment was shifted to Manav Charitable Hospital for a short period since civil work was going on in the premises of the appellants hospital and Show-Cause notice itself admits that the goods were brought back to the appellants premises and furthermore the equipments were seized at the appellants premises and not at Manav Charitable Hospital. He submitted that the appellant could not have followed any procedure in obtaining the permission as the Notification in question having not laid down any procedure or formulated any procedure of approval to remove the equipment. Removal or shifting to other premises is not a pre-condition to deny the benefit. But whether party has misused the exemption Notification during that short period is a question to be considered. He said that no misuse of exemption notification has taken place even during the temporary removal of the equipment from the hospital and its use in Manav Charitable Hospital, since free treatment was given during that period.
6. Next, he contended that the Commissioner is wrong in arriving at the conclusion that they had not maintained books of accounts in the prescribed format. It is contrary to the provisions of Notification since the Notification does not prescribe such formats. He submitted that information collected by the Department clearly established that not only was free treatment given, but also free food apart from the appellants having bore the conveyance expenses to the patients coming for treatment to the hospital. He submitted that in fact 100% of the treatment was given free as against 40% prescribed in the Notification and this aspect has not been properly considered by the authorities while passing the order. It is not even the case of the Department that charges were collected at the Hospital or at the Manav Charitable Hospital where the equipments were temporarily kept.
7. The appellants counsel also questioned the levy of penalty under Section 114A as well as penal interest under Section 28AB, on the ground that the said provisions were not in force at the time of the import relying upon the various decisions including Markendeya Prasad Radha Krishnan v. CCE Cal-II reported in [ = 1998 (25) RLT 919]. It was also submitted that this view was upheld by the Supreme Court as reported in 1999 (107) E.L.T. at Page A 121 under Court Room Highlights.
8. Shri George Thomas, learned DR appearing for the Revenue justified the action of the adjudicating authority in denying the benefit in terms of Notification 64/88, as well as imposing fine and penalties. He submitted that Commissioner was right in holding that demand was not barred by time relying upon the decision of the Karnataka High Court in the case of Medical Relief Society of South Canara v. U.O.I. (supra). He said that if the post-import conditions are not fulfilled as specified in the Notification, proceedings for recovery of the exempted customs duty or the confiscation of the equipment in such circumstances does not fall foul of Section 28 as it was held therein. In this context, he referred to the decision of the High Court (supra) Para 43 of the said Order which is as under :
“A plain reading of the above would show that goods, which are exempted from payment of duty subject to any condition are liable to be confiscated in case the conditions subject to which the same are exempted from duty are not satisfied unless the non-observance thereof sanctioned by the proper officer. The medical equipment in the instant case was imported subject to the condition that the petitioner continuously discharge the obligation of providing a medical, surgical and diagnostic treatment to atleast 40% of its Outdoor Patients and to Indoor Patients with a family income of less than Rs. 500/- per month. Failure to discharge that obligation was liable to expose the equipment to confiscation besides binding the respondent to recover the amount of duty payable on the same. Proceedings for recovery of the exempted customs duty or the confiscation of the equipment in the above circumstances does not fall foul of Section 28.”
9. Referring to the decision of the Supreme Court in the case of Mediwell Hospital and Health Care Pvt. Ltd. v. U.O.I. reported in (S.C.), he submitted that the Government has accorded exemption from payment of customs duty to hospital equipment with the sole object that 40% of all out-door patients and entire in-door patients of the low income groups whose income is less than Rs. 5,000/- per month receive free treatment in the institute. That objective must be achieved at any cost and the very authority who have granted such certification 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 with the said obligation having been discharged they can enforce realization of the customs duty from them.
10. We have carefully considered the submissions made by both sides and perused the records. Mainly two issues are to be considered in this appeal.
(i) Whether demand was barred by time.
(ii) Whether the department was justified in denying the benefit of exemption in terms of Notification 64/88-Customs, dated 1-3-88 on the ground that post-importation conditions were not fulfilled and thereby raising a demand as well as imposing fine and penalties.
11. The appellants imported certain medical equipments. They claimed exemption under 64/88-Customs, dated 1-3-88 to the extent of Rs. 21,58,681 by producing necessary customs duty exemption certificate. The imports were made on 4-4-90 and 7-7-91 respectively. On examining the bills of entry as well as relevant exemption certificate goods were assessed finally allowing exemption as claimed. It is not a case that the provisional assessment was made at the time of importation and/or enforcing the bond. If it was a provisional assessment the position would have been different. Show cause Notice has been issued only on 17-2-2000 on the ground that the party has failed to comply with the provisions of aforesaid notification. Demand was raised nearly after a decade as it was pointed out by the appellants counsel. The demand is made under Section 28 of the Customs Act. As per the provisions of the Section 28 of the Act, demand can be raised for six months in the normal circumstances and maximum of five years if there was allegation of suppression of facts. There is force in the arguments advanced on behalf of the appellants that statutory authorities are to be exercised within the limitation provided for in the statute. In the case of Miles India Ltd. [], Doaba Cooperative Sugar Mills [] and Raghuvar India Ltd. [ (S.C.)], the Apex Court held that appellate tribunal as well as customs authorities are bound by statutory period of limitation.
12. In the case of Doaba Cooperative Sugar Mills, Supreme Court held that authorities functioning under an Act are bound by its provisions. However proceedings beyond this period can be initiated in the civil court.
In the case of Raghuvar India Ltd., it was held in para-13 thereof that
“Any law or stipulation prescribing a period of limitation to do or not to do a thing after the expiry of period so stipulated has the consequence of creation and destruction of rights and, therefore, must be specifically enacted and prescribed therefore. It is not for the Courts to import any specific period of limitation by implication, where there is really none, though Courts may always hold when any such exercise of power had the effect of disturbing rights of a citizen that it should be exercised within a reasonable period. Section 11A is not an amnibus provision which provides any period of limitation for all or any and every kind of action to be taken under the Act or the Rules but will be attracted only to cases where any duty of excise has not been levied or paid or has been short-levied or short-paid or erroneously refunded.”
13. The department has heavily relied upon the decision of the Karnataka High Court (single Judge) in Medical Relief Society of South Canara v. U.O.I. [] in support of its contention that proceedings for recovery of the exempted customs duty on the classification of the equipment in such circumstances does not fall foul of Section 28 of Customs Act, 1962. On the other hand it was argued on behalf of the appellants that it is well settled that no court is empowered to direct a Statutory Authority to ignore the period of limitation prescribed under a Statute to make an assessment relying upon the decision of the Supreme Court in Hope Textiles Ltd. [1994 (205) ITR 508 (SC)]. In that case it was held that writ of mandamus can be issued to a statutory authority to compel it to perform its statutory obligation. It may not be issued to compel him to pass an order in violation of statutory provision. In view of the rulings of the Apex Court, statutory authorities cannot go beyond the provisions of statutes, we do not find any justification to raise the demand after the expiry of 5 years from the relevant date as per Section 28 of the Act. The demand is barred by time. Accordingly appellants succeed on this issue.
14. Next question arises for our consideration is whether Department was right in denying the benefit of exemption in terms of Notification 64/88-Cus. on the ground of non-fulfilment of conditions. As can be seen from the show cause notice as well as impugned order, emphasis is on removal of equipments to Manav Charitable Hospital for a temporary period and accordingly failed to fulfil the condition of the notification. It was submitted that temporary movement to and from Manav Charitable Hospital did not result in mis-use of the equipment. It was also submitted that the notification having not laid down any procedure or formality of approval to remove the equipment, the appellant could not have followed any such procedure. We find that if there was any irregularity in not taking the permission, for removal of equipment that may be a case for penalty for not following such procedure. But the point to be considered in this case is whether such equipment has been misused during that short period or in other words whether appellant society has failed to discharge the obligation in treating the patients as specified in the notification. We do not find any clear finding on this issue. We are also not convinced with the findings of the Commissioner that they have not maintained the account in prescribed proforma. No such proforma was prescribed in the Notification as it was pointed out by the counsel. It was for the department to make a detailed enquiry and investigations to find out the deficiency if any in fulfilling the condition of the notification and since such findings are not forthcoming on detailed examination, we do not find any justification in raising the demands. We also take note of the decisions in the case of Gujarat Imaging and Research Institute [ (T) = 1996 (12) RLT 629] as well as in the case of South Delhi Cancer Detection and Research Institute and Others [ (T) = l999 (32) RLT 128] Tribunal has taken the view that demands by customs authorities on the ground of non-fulfilment of condition of the Notification is not justified since deficiency in percentage of free patient can be made good in subsequent period as no time period is prescribed in the Notification.
15. Following the ratio of the aforesaid decision, in the facts and circumstance of the case, particularly in the absence of detailed examination, the matter will have to go back for reconsideration and to give a clear finding whether appellant society has failed to fulfil the conditions specified in the Notification to deny the benefit. But we do not feel it necessary to refer it back to the adjudicating authority for reconsideration on merits, since we are allowing the appeal on time bar issue. Penal action is also uncalled for in the facts and circumstances of this case. In the view we have taken we set aside the impugned order and in the result appeal is allowed. Ordered accordingly.
| Sd/-(G.A. Brahma Deva)Member (J) |
16. [Order per : S.S. Sekhon, Member (T)]. - I have gone through the order prepared by learned Member (J) but I am very sorry to find myself in conflict with the opinion. Therein about the need of “no necessity to send back to the adjudicating authority for reconsideration on merits, since we are allowing the appeal on time bar issue”.
17. I therefore proceed to record my order. Since I have had the privilege of going through the order prepared by learned Member (J), I am not repeating the issues involved and the submission made herein, which are brought out in the order of Member (J). However, after considering the same, I find -
(a) The Apex Court in the case of Mediwell Hospital & Health Care (P) Ltd., v. U.O.I. [ (S.C.)], at p. 432, while considering the very same Notification i.e. Notification No. 64/88-Cus, observed, in para 12 of this reported decision -
“…....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 where 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 granted such certificate of exemption would ensure that the obligation imposed on the person availing of the exemption notification are being duly carried out and on being satisfied that the said obligation have not been discharged they can enforce realization of the Customs duty from them.”
and thereafter in para 13 of the same decision, the Hon’ble Supreme Court has directed strict “Coercive official action to perform the obligation undertaken”, which they have termed to be part of the conditions of the Notification ‘to be strictly enforced by all concerned’.
When I find that, I am not only in agreement, but being bound with the view taken by the Tribunal in the case of Gujarat Imaging & Research Institute [ (Tri.) = 1996 (12) RLT 629] and South Delhi Cancer Detection & Research Institute & Ors. [ (Tri.) = 1999 (32) RLT 128], that demand on grounds of non-fulfilment of condition of the Notification is not justified, since deficiency in free patients can be made good in subsequent period as no time being prescribed by the Notification. Then I in view of the law and directions laid down by the Supreme Court in Mediwell’s case (supra), I find no reason for the Commissioner to have initiated the present proceedings; as no material is forthcoming in the order, as to what “Coercive Official Measures” the Customs Authorities, undertook which they were duty bound as per Apex Court directions, to implement the condition of the Notification. The Supreme Court’s directions in Mediwell’s case (supra) can only be read to mean that it has to be ensured that the compliance of 40% free treatment is achieved as far as possible and only on an absolute failure as last resort “Official Course” could be resorted to recover duty.
(b) Since goods were cleared by an order under Section 47, in this case, after ‘levy of appropriate duty’, the case is not of ‘not levy’ or ‘short levy’ or ‘erroneous refund’. The case is of a liability for confiscation under Section 111(o) and thereafter a consequential liability of demand of duty under Section 125(2) for goods found liable for confiscation. Once such a demand is liable to be made under Section 125(2), time limit will have to be read under Section 28(3)(d) of the Customs Act, 1962. To limit the relevant date for demands, under 125(2) to 28(3)(a) in such cases, as is being urged, would not be in order. A demand may arise in case of goods cleared under Section 47, on a levy of NIL rate or exempted rate, and if found liable for confiscation under Section 111(o), then a demand under Section 125(2) will arise. If such demand has to be within the time prescribed with reference to Section 28(3)(a) then we would be fettering issuing of the liability of demand of duty under Section 125(2) and liability for confiscation under Section 111(o) to the time limits of Section 28(3)(a). This cannot be done, since under Section 111(o) and or 125(2), there is no limitation of time prescribed.
(c) The impugned orders of the Commissioner, therefore resorting to recover duty, impose penalty and fine, without complying with the Supreme Court directions, are therefore, to my mind, not as per law, premature and hasty. The occasion for liability to confiscation for violation of Section 111(o) and duty liability has not come.
Therefore the question of a demand of duty under Section 125(2) of Customs Act, 1962 has not arisen and the question of time bar does not arise.
(d) The demands issued herein are therefore not barred by limitation prescribed by Section 28(3)(d), since the limitation prescribed therein is the outer limit and the demands could be made thereunder, even if the question of reckoning the time has not arisen.
(e) I find no reason to uphold any penalty since liability for confiscation and demands are not being found to be upheld at this stage.
18. In view of my findings, I would respectfully agree with the order allowing the appeal as a remand for de novo adjudication on merits, after complying with the law as laid down by the Supreme Court in Mediwell’s decisions (supra), as the liability for confiscation and demands consequent thereto are not barred by limitation. The question of penalty would arise only if the liabilities of confiscation and demand could be determined.
| Sd/-(S.S. Sekhon)Member (T) |
POINT OF DIFFERENCE
19. In view of the difference of opinion in between the two Members of the Bench, the matter is placed before the Hon'ble President to refer it to a 3rd Member to resolve the issue. The following point is to be considered by the 3rd Member.
“In the facts and the circumstances whether the appeal deserves to be allowed on time bar issue as it was held by the Member (J) or the demand is not barred by time and matter is required to be remanded as per the view of the Member (T)”.
| Sd/-(S.S. Sekhon)Member (T) | Sd/-(G.A. Brahma Deva)Member (J) |
20. [Order per : V.K. Agrawal, Member (T)]. - The issue referred to in this matter is whether the appeal filed by M/s. INYS Medical Research Society against Adjudication Order No. 23/2000, dated 8-6-2000 passed by the Commissioner of Customs deserves to be allowed on time bar or the demand of Customs duty is not barred by time and matter is required to be remanded.
21. Shri K.S. Ravi Shankar, learned Advocate, submitted that the entire case of the Department is built on Section 28 of the Customs Act alone as the duty of Customs was demanded under Section 28 in the show-cause notice; that the said Section specifically provides a period of one year from the relevant date for demanding duty if the imports have been made by hospital; that, therefore, the question of invoking the provisions of Section 125(2) of the Customs Act does not arise at all; that further Section 125(2) of the Act is only declaratory in nature as it provides that the owner of the goods shall, in addition, be liable to any duty and charges payable in respect of goods in respect of which a fine in lieu of confiscation has been imposed; that it is evident from the Section before its amendment in 1985 as it provided at that time that for the removal of doubt it is declared that fine in lieu of confiscation shall be in addition to any duty payable in respect of goods; that Section 125(2) does not contain any machinery for recovery of duty as provided in Section 28 of the Customs Act. He relied upon the decision in the case of HCL HP Ltd. v. Commissioner of Customs, New Delhi [ (T)] wherein it was held as under :
“Collector’s reasoning to ignore Section 28 and demand duty on the basis of provisions of Section 125 of the Customs Act is not correct in law. A bare reading of Section 28 indicates that duty has to be recovered under Section 28 within the period of limitation laid down if there has been a short levy...... Simply because the goods duly cleared by the authorities are available for seizure and confiscation, Section 28 cannot be ignored for recovery of differential duty. Section 125 in our view will apply in the cases where the date of short levy or importation is not available and the confiscated goods are not proved to be duty paid.”
22. Reliance was also placed on the decision in the case of Tata Infotech Ltd. v. Commissioner of Customs, (T)] wherein the following was held :
“Harmonizing the two, Section 125 would appear to come to play in cases where notice cannot be issued under Section 28 for the reason that there was no documentation relating to details of imports of the goods. In that event the provisions of sub-section (2) of Section 125 would be applicable, i.e., in cases where goods are ordered to be confiscated without the point of their legal importation having been established. Where such legal importation is established, this provision will not apply for recovery of short levy.”
23. He also referred to the decisions in the case of STP Ltd. v. CCE, Patna [ (S.C.)] in which it was held that “if there is any doubt in the construction of any provision of a taxing statute, the doubt must be resolved in favour of the assessee.”
24. The learned Counsel, further, submitted that demand for duty not levied or short levied has to be made within the specified time limit from the relevant date; that as held by the Supreme Court in the case of Geep Flash Light Industries Ltd. v. U.O.I., [ (S.C.) as per sub-section (3) of Section 28, “relevant date” is the date on which the proper officer makes an order for the clearance of the goods; that in the present matter the imports were made on 4-4-1990 and 7-7-1991 and the assessments were final, not provisional, show cause notice issued on 17-2-2000 is time barred under Section 28 of the Act. He also contended that the Tribunal cannot make out a fresh case by invoking Section 125 for confirmation of the demand contrary to the original charge and findings of the Adjudicating Authority under Section 28; that if Section 125 is made the basis, that would expand the scope of the original charge in show cause notice and the Appellant would be put in a worse-off situation than they were when the impugned Order was passed and this would be bad in law. He relied upon the decision in the case of State of Kerala v. Vijaya Stores [AIR 1979 SC 355] wherein it was held that in the absence of an appeal or cross objections by the Department against the Order, “the Appellate Tribunal will have no jurisdiction or power to enhance the assessment.” Reliance was also placed by the learned Advocate on the decision in the case of Parshuram Pottery Works Co. Ltd. v. I.T.O., [1977 (106) ITR 1 (SC)] to contend that there must be a point of finality in all legal proceedings; that stale issues should not be reactivated beyond a particular stage and that lapse of time must induce repose in and set at rest judicial and quasi-judicial controversies as it must in other sphere of human activity.
25. The learned Counsel also submitted that the decision in the case of Mediwell Hospital and Health Care (P) Ltd. v. U.O.I., [ (S.C.)] was considered by, the Appellate Tribunal in the case of C.T. Scan Research Centre (P) Ltd. v. Commissioner of Customs [2001 (45) RLT 29]. In the said case the goods claiming benefit of Notification No. 64/88-Cus. was imported in July, 1991 and the show cause notice was issued in September, 1998 for non-fulfilment of post-importation conditions. The Tribunal held that “Section 28 of the Customs Act provide a time period of 6 months for demand of duty and in the case of fraud, collusion, etc., 5 years. We find that since the show cause notice has been issued beyond permissible period of 5 years provided under Section 28 of the Customs Act, hence, decision of the Supreme Court in the case of Mediwell Hospital & Health Care Pvt. Ltd. vs. U.O.I. (supra) cannot be said to apply to the facts of the present case as the demand is time barred.” The learned Counsel, therefore, contended that the present show cause notice has also been issued much after the expiry of 5 years period the demand is time barred. Reliance was also placed on the decision in the case of South Delhi Cancer Detection and Research Institute v. Commissioner of Customs [ (Tri.) = 1999 (32) RLT 128] where the Tribunal find force in the arguments advanced on behalf of the Assessee that no time limit was stipulated in the Notification to comply with the conditions specified therein. The learned Advocate mentioned that similar views were expressed by Tribunal in the case of Gujarat Imaging & Research Institute v. C.C., Bombay [ (Tri.) = 1996 (12) RLT 629] wherein it was held that the requirement of treating 40% of the outdoor patients free of charge under Notification No. 64/88-Cus. was on an average and not on any particular date. The Tribunal held in the said case that the demand for the Customs duty or imposition of the penalty cannot be justified as no span of period is provided in the Notification and the deficiency would be made good in the subsequent period. Finally the learned Counsel submitted that remand of the matter to the Adjudication Authority is not necessary in view of the clearcut findings of the Hon’ble Member (Technical) to the effect that the impugned Order of the Commissioner is not as per law, premature and hasty; that in view of this observation there is no need to remand the matter to the Commissioner. Reliance was placed on the decision in the case of Dimple Overseas v. Collector of Customs, Kandla [ (S.C.)] and M.G. Shahni & Co. v. C.C. [ (S.C.)].
26. Countering the arguments Shri George Thomas, learned D.R., submitted that the impugned goods were imported by the Appellants availing exemption under Notification 64/88 which specifies conditions to the effect that hospital will provide free treatment, on an average, to atleast 40% of all out-door patients and free treatment to all indoor patients belonging to families within an income of less than Rs. 500/- per month; that Karnataka High Court in the case of Medical Relief Society of South Kanara v. U.O.I., [ (Kar.)] has held that “failure to discharge that obligation was liable to expose the equipment to confiscation besides entitling the Respondents to recover the amount of duty payable on the same. Proceedings for recovery of the exempted Customs duty or the confiscation of the equipment in the above circumstances does not fall foul of Section 28.” The learned D.R. pointed out that Karnataka High Court dismissed the appeal with costs. He also mentioned that the Karnataka High Court has followed the decision of the Supreme Court in Mediwell Hospital case. He also relied upon the decision in the case of Yellamma Dasappa Hospital v. Commissioner of Customs, Bangalore [ (Kar.)] wherein the Karnataka High Court followed the decision of the Supreme Court in Mediwell Hospital case regarding continuing obligation of the hospital and the right of the Customs Department in demanding the Customs duty after following the procedure prescribed in law. The learned D.R. emphasised that in view of the decision of the Apex Court and Karnataka High Court, within whose jurisdiction the Appellants fall, there is continuing obligation on their part as they have imported equipments without payment of Customs duty; that as the Appellants have not complied with the post-importation conditions the Department is well within its right to demand the duty which is not time barred. He also mentioned that the decisions relied upon by the learned Advocate are of no avail in view of the decision of the Supreme Court and High Court directly on the issue involved in the matter. Finally he mentioned that the provisions of Section 125(2) of the Customs Act are very clear that in addition to the fine in lieu of confiscation the owner of the goods shall be liable to any duty payable in respect of goods; that it is not a declaratory Section as it specifically provide for the payment of duty payable on the goods; that merely because before 1985 amendment sub-section used the words “Removal of doubts”, amended sections cannot be interpreted on the basis of those words; that Statement of Objects and Reasons for Amendment of sub-section (2) of Section 125 makes it clear that the sub-section was amended so as to specifically provide that whenever any fine in lieu of confiscation of goods is imposed on any owner of the goods, such owner shall be liable for duty and charges payable in respect of such goods.
27. Learned Advocate in reply mentioned that the Karnataka High Court has nowhere in its judgment has mentioned that Section 28 gives infinite time limit; that no Court can direct any authority to go outside the limitation. He relied upon the decision in the case of Hope Textile Ltd. v. U.O.I. [1994 (205) ITR 508] wherein it was mentioned that a High Court cannot give direction to the authority under the Act to ignore the period of limitation prescribed in the Act.
28. I have considered the submissions of both the sides. The issue which has been referred to me as a third Member is whether the demand of Customs duty is time barred or not. The learned Advocate for the Appellants have referred to the provisions of Section 28 of the Customs Act and certain decisions of the Tribunal in support of his contention that the show cause notice which was issued in February, 2000 for demanding duty in respect of goods cleared in April, 1990 and July, 1991 is hopelessly time barred. It is not in dispute that the medical equipments were imported by the Appellants availing the exemption under Notification No. 64/88-Cus, dated 1-3-88 which provides exemption from payment of duty to the equipments, apparatus, appliances for use in any hospital subject to the conditions enumerated in the table appended to the Notification. This Notification was considered by the Supreme Court in the case of Mediwell Hospital and Health Care (supra) and it was held by the Apex Court that “……............Notification granting exemption must be construed to cast continuing obligation on the part of all those who have obtained the certificate from appropriate authority and on the basis of that have imported equipments without payment of Customs duty to give free treatment to atleast 40% of the outdoor patients as well as would give free treatment to all indoor patients belonging to the families with an income of less than Rs. 500/- per month.……........ If on such inquiry the authorities are satisfied that the continuing obligations are not being carried out then it would be fully opened to the authorities to ask the person who have availed of the benefit of exemption to pay the duty payable in respect of equipments which have been imported without payment of Customs duty.…….......... 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 person availing of the exemption Notification are being duly carried out and on being satisfied they can enforce realisation of the Customs duty from them.”
29. It is thus clear that the fulfilment of post-importation conditions has been considered by the Apex Court as a continuing obligation on the part of the importer who had imported the goods without payment of duty under the Notification. In case of not complying with the condition of treatment of the patients, the Supreme Court has held that the realisation of Customs duty can be enforced from them. Not only this, the Supreme Court has also read further obligation on the importer such as their duty to notify in the local newspaper the total number of patients and the 40% of them are the indigent persons below stipulated income of Rs. 500/- per month with full particulars and addresses thereof which would ensure that the condition to treat 40% of the patients free of cost would continuously fulfilled. The Apex Court specifically mentioned in the judgment that this condition becomes a part of exemption Order application and strictly be enforced by all concerned including the police personnel when complaints of non-compliance were made by the indigent persons. The Karnataka High Court in the case of Medical Relief Society clearly held that “Proceedings for recovery of exempted Customs duty or the confiscation of the equipment in the above circumstances does not fall foul of Section 28.” The learned D.R. has rightly emphasised that in view of the decision of Karnataka High Court and the Supreme Court the demand of duty cannot be held to be time barred. The judicial propriety demands that the law as pronounced by the Supreme Court and the only decision of a High Court available has to be followed in deciding the matters. The Tribunal in the case of Lamps, Caps, and Filaments Ltd. v. Collector of Customs, Bombay [] followed the decision of the Delhi High Court as it was the only decision of a High Court on the subject observing that “as per practice of the Tribunal, it is bound to follow the same.” The ratio of the decision in the case of Hope Textile Ltd. is not applicable as the facts are completely different. In the said case the assessee wanted a writ of mandamus compelling Income Tax Officer to make an order of assessment beyond the period of limitation prescribed under the Act. I am, therefore, of the view that the demand is not barred by time. As both the learned Members have come to the conclusion that there was no clear finding on the issue whether benefit of exemption under Notification No. 64/88 is to be denied to the Appellants, the matter has to be remanded to the Adjudicating Authority.
| Sd/-(V.K. Agrawal)Member (Technical)Dated : 31st August, 2001 |
FINAL ORDER
30. By majority it is held that demand is not barred by time. Appeal is allowed by way of remand for de novo adjudication on merits.
| Sd/-(S.S. Sekhon)Member (T) | Sd/-(G.A. Brahma Deva)Member (J) |
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