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Judgment
D.D. Sinha, J.—Rule made returnable forthwith. Heard finally by the consent of Mr. K.H. Deshpande, learned Senior Counsel for the Applicant and Mr. S.K. Mishra, learned Assistant Solicitor General of India for Respondent Nos. 1 to 3.
Mr. K.H. Deshpande, learned Senior Counsel has submitted that the facts which have given rise to filing of present review application as well as Custom Appeal No. 1 of 2005, in the nutshell, are as under:
The applicant purchased two machines namely (1) Echo Cardiograph with Colour Mapping with Standard Accessories and (2) Computerized Stress System with Tread Mills for the purpose of treatment of patients in the hospital. However, those machines were not then manufactured in India and hence, the same were required to be imported. The instant Custom Appeal relates to Computerised Stress System with Tread Mills machine (hereinafter referred to as "the said equipment").
The applicant purchased the said equipment at the value of Rs. 6,76,573/- and it was imported vide bill of entry No. 90/14788 dated 9th April, 1990 at the Air Cargo Complex, New Delhi. The applicant claimed total exemption from payment of Custom duty as per Notification No. 64/1988, dated 1-3-1988. The applicant was granted exemption from payment of Custom duty on the basis of Custom Duty Exemption Certificate (CDEC) dated 9-2-1990 issued by the then Director General of Technical Development, holding that the applicant is eligible for grant of said Certificate, in terms of said Notification.
The learned Senior Counsel has contended that respondent No. 1 issued a Show Cause notice dated 14-7-2000 bearing No. C-SIIB/CUS/32/2000, u/s 124 read with Section 25(1) of the said Act alleging that the applicant has failed to comply with the condition Nos. 2(a) and 2(b) of the Notification. It was also alleged that the applicant failed to attain prescribed percentage of giving free treatment to indoor and outdoor patients, as required by the said Notification. The applicant filed reply to the said Show Cause Notice on 8-9-2001. On 20-9-2002, respondent No. 2/Additional Commissioner of Customs (Adjudication), New Delhi passed an order, operative part of which reads thus:
ORDER
In view of the above discussion, I pass the following order:
(a) I order the confiscation of Computerised Stress Systems with Tread Mill having assessable value at Rs. 6,96,573/- imported through Air Cargo Unit, New Delhi vide Bill of Entry No. 90/14788, dated 7-4-1990 u/s 111(O) of the Customs Act, 1962. However, I give the importer an option to redeem the goods on payment of redemption fine of Rs. 70,000/- (Rupees Seventy Thousand only).
(b) I also confirm the demand for duty of Rs. 7,95,051/- (Rupees Seven Lacs Ninety Five Thousand and Fifty one only) and direct the importer to pay the same forthwith along with interest thereon calculated @ 20% per annum from the date of clearance of goods till the date of payment of duty u/s 28AB of the Customs Act, 1962.
(c) I impose a penalty of Rs. 10,000/- (Ten Thousand only) on the importer under the provisions of Section 112(a) of the Customs Act.
(d) I drop the charges against the DGHS.
The applicant preferred an appeal No. CC(A)/127/Cargo/D-I/2004 before Commissioner of Customs (Appeals)/respondent No. 1'' which was allowed vide order dated 31-3-2004. The Appellate Authority held that initiation of demand after lapse of time specified u/s 28 was not legal and proper and therefore, the demand for duty was in express violation of statutory provisions and hence, is liable to be set aside.
The Commissioner of Customs preferred an appeal before the Customs, Excise and Service Tax, Appellate Tribunal, New Delhi challenging the order dated 31-3-2004 by filing an appeal which was allowed by order dated 13-12-2004. Being aggrieved by the order dated 13-12-2004 2005 (99) ECC 179 , the appellant has preferred instant Custom Appeal No. 1 of 2005 before this Court, which is admitted on 24-6-2005 on the substantial questions of law incorporated in Ground Nos. (a) to (i) of the present appeal.
Mr. K.H. Deshpande, Learned Senior Counsel for appellant/applicant has submitted that, it is pertinent to note that the second machine which was imported from Norway by the applicant namely Echo Cardiograph with Colour Mapping with Standard Accessories was received at Mumbai Airport on 19-6-2000. It is further submitted that a Show Cause notice was issued by the Commissioner of Customs, Mumbai; the Show Cause Notice was initially challenged by filing Writ Petition before the Nagpur Bench of Bombay High Court.; however, the petition was dismissed. It is further submitted that, against dismissal of the petition, SLP was preferred before the Supreme Court, which was also dismissed; however, the Supreme Court granted liberty to the applicant to file reply to the Show Cause Notices and to take recourse to the legal remedies available under the Customs Act, 1962. It is contended that the applicant accordingly filed reply to the Show Cause Notice with the Commissioner of Customs, Mumbai on 28-9-2001. The Commissioner of Customs passed final order on 1-4-2002 and raised demand of duty plus penalty in addition to demand of fine, of Rs. 25.87 lacs on the ground that the appellant had violated the conditions of notification No. 64/88. The applicant preferred appeal before the CESTAT at Mumbai. The CESTAT Mumbai passed final order rejecting the points relating to the claim of the applicant in the matter of exemption available under the Notification 64/88. However, by the said order, the Commissioner of Customs, Mumbai was asked to examine the eligibility of petitioner and applicability of Notification No. 65/88 to the case of applicant and pass suitable order as per law.
It is contended by the learned Senior Counsel that, so far as rejection of points covered by Part-I of the order of CESTAT is concerned, SLP is admitted and is pending for final hearing before the Supreme Court. So far as eligibility and applicability of Notification No. 65/88 and 140/90 to the case of present applicant is concerned, the Commissioner of Customs Mumbai has passed final order dated 3-6-2009 which was received by the applicant on or before 8-6-2009, wherein the Commissioner of Customs has held that the applicant is entitled to have benefit of exemption available under the notification Nos. 65/88 and 140/90.
Mr. K.H. Deshpande, learned Senior Counsel has submitted that, before passing of the order dated 3-6-2009 by the Commissioner of Customs, Mumbai, the applicant, without prejudice to the contentions raised in the Customs Appeal, had filed Civil Application No. 5561 of 2008, dated 4-8-2008 in Customs Appeal No. 1 of 2005 for interim directions. Said application was dismissed by the Division Bench of this Court on 7-10-2008, which is sought to be reviewed by filing present review application.
Mr. K.H. Deshpande, learned Senior Counsel for the applicant has submitted that the applicant has moved review application for reviewing the order dated 7-10-2008 mainly in view of the subsequent events such as order dated 3-6-2009 passed by the Commissioner of Customs, Mumbai in case of the applicant only, but, in respect of another machine which was imported from Norway i.e. Echo Cardiograph with Colour Mapping with Standard Accessories received at Mumbai Airport and on which the applicant had also claimed total exemption from payment of Custom duty under Notification No. 64/88, dated 1-3-1988, which also was granted on the basis of Custom Duty Exemption Certificate issued by the then Director General of Technical Development. It is contended that another machine i.e. Computerised Stress System with Tread Mill received by the applicant at Air Cargo Complex, New Delhi; the applicant had claimed total exemption from payment of Custom duty under same notification No. 64/88 dated. 1-3-1988. It is contended that the Commissioner of Customs, Mumbai vide order dated 3-6-2009 held that the applicant is entitled to have benefit of exemption available under Notification No. 65/88 and 140/90 so far as " machine i.e. Echo Cardiograph with Colour Mapping with Standard Accessories is concerned. The learned Senior Counsel has contended that the department did not file any appeal against the order dated 3-6-2009 passed by the Commissioner of Customs, Mumbai and suffered the said order. It is in such circumstances, the applicant has filed review application and submitted that, if the department has accepted the decision of the Commissioner of Customs, Mumbai regarding entitlement of the applicant to have a benefit of exemption available under notification Nos. 65/88 and 140/90 on one machine out of two imported by the applicant and the order of Commissioner of Customs, Mumbai is not appealed against, in that event, there is no justification why the department should deny the same benefit of exemption under Notification Nos. 65/88 and 140/90 to the applicant on the another machine i.e. Computerised Stress Systems with Tread Mill in the similar factual and legal situation.
Mr. K.H. Deshpande, learned Senior Counsel has submitted that Show Cause notice dated 14-7-2000 was issued u/s 124 read with Section 25(1) of the Customs Act. Section 124 does not pertain to assessment of custom duty. Provisions of Section 25 of the Act pertains to power to grant exemption from custom duty. In exercise of power conferred by Section 25 of the Act, Notification No. 64/88, dated 1-3-1988 was issued granting exemption from payment of entire custom duty to eligible hospitals fulfilling certain conditions stipulated in the said notification. The applicant was granted Custom Duty Exemption Certificate in terms of said notification. In the Show Cause notice dated 14-2-2000 it was alleged that the petitioner failed to comply with Condition Nos. 2 (a) and 2(b) of the said notification and the applicant was asked to show cause as to why the exemption granted u/s 25 of the said Act should not be cancelled and the said equipment should not be confiscated u/s 124 of the Act. It is contended that the net result of the order confirming show cause notice is that the applicant was deprived of the exemption in terms of Notification No. 64/88. The question as to what was the custom duty payable upon assessable value of said equipment did not arise in the proceedings initiated on the basis of said Show Cause notice.
Learned Senior Counsel further contended that the question is how the custom duty is to be assessed upon confiscation of goods and how much custom duty becomes recoverable from the applicant upon confirmation of Show Cause notice will have to be determined u/s 28 read with Section 125 of the said Act by the competent Authority, which shall be independent of decision of Show Cause notice u/s 124 read with Section 25(1) of the said Act. It is submitted that none of the parties have till this date carried out such exercise of determining custom duty payable upon confiscation of goods/equipments. Without prejudice to all these contentions raised in the Custom Appeal No. 1 of 2005, the applicant has submitted that, the respondents are required to be directed to perform their statutory obligation of determining the assessment of custom duty in terms of Section 28 and Section 125 of the said Act read with Notification No. 140/1990, dated 20-3-1990 and notification No. 65/2008, dated 1-3-1988. The CESTAT, Bombay after taking into consideration this aspect, vide order dated 18-6-2008 remanded back the matter to the Commissioner of Customs, Mumbai in respect of another machine of the applicant to consider eligibility and applicability of notification No. 65/88 and 140/90 and therefore, petitioner has filed present review petition for reviewing the order dated 7-10-2008 and prayed that similar direction be given to the Commissioner of Customs, Delhi.
Mr. S.K. Mishra, Assistant Solicitor General of India for Respondent Nos. 1 to 3 has contended that the order impugned dated 7-10-2008 is a well reasoned order and therefore, there is no case made out for review of the said order. It is further submitted that the applicant imported the machine in question and claimed exemption from payment of customs duty as per Notification No. 64/88 dated 1-3-1988; however, since the applicant failed to comply with Condition Nos. 2(a) and 2(b) of the notification, Show Cause notice was issued to the applicant and after receipt of reply of the applicant, the Additional Commissioner of Customs, New Delhi passed an order dated 2-9-2002 regarding confiscation of the machine in question and imposed fine and confirmed payment of customs duty along with interest thereof including penalty. It is further contended that the appeal preferred by the applicant before the Commissioner of Customs (Appeal) though was allowed by order dated 31-3-2004, however said order was set aside by the Custom, Excise and Service Tax Appellate Tribunal, New Delhi vide order dated 13-3-2004 on the ground that the petitioner failed to fulfill Condition Nos. 2(a) and 2(b) of the Notification No. 64/88, dated 1-3-1988 and said order is impugned in Custom Appeal No. 1/2005.
Learned Counsel for respondents has not disputed that vide order dated 3-6-2009 passed by the Commissioner of Custom, Mumbai, after the matter was remanded by CESTAT, Mumbai, the benefit of exemption available under Notification No. 65/88 read with 140/90 on the another machine imported by the applicant was allowed. However, such benefit was given by the Commissioner of Customs, Mumbai only after reconsidering eligibility of the applicant when the matter was remanded by the CESTAT, Mumbai.
We have considered the rival contentions canvassed by the respective counsel. In the instant case, the following facts are not in dispute:
That the applicant imported two machines namely:
(i) (a) Echo Cardiograph with Colour Mapping with Standard Accessories.
(b) Computerised Stress Systems with Tread Mill.
(ii) Both these machines at the relevant time were not manufactured in India and hence, were required to be imported. Since the machines were imported for the purpose of treatment of patients in the hospital, the applicant claimed total exemption under Notification No. 64/88, dated 1-3-1988. Machine No. 1 was received at Mumbai Airport. Machine No. 2 was received at Air Cargo Complex, New Delhi.
(iii) The Custom Departments, New Delhi and Bombay alleged that the applicant in both the cases failed to comply with Condition Nos. 2(a) and 2(b) of Notification No. 64/88 and issued show cause notices to the applicant. On receipt of replies, the Additional Custom Commissioner, New Delhi passed order dated 28-9-2002 of confiscation of Computerised Stress Systems with Tread Mill with payment of redemption fine, demanded Custom duty and imposed penalty. The applicant preferred appeal before the Commissioner of Custom (Appeals) which was allowed on 31-3-2004 and the said order was set aside by the Customs, Excise and Service Tax Appellate Tribunal, New Delhi vide order dated 13-12-2004, against which Custom Appeal No. 1 of 2005 is admitted.
(iv) Similarly, so far as Machine - Echo Cardiograph with Colour Mapping with Standard Accessories, which was received at Mumbai Airport by the applicant is concerned, on 19-6-2000 a show cause notice was issued by Commissioner of Customs, Mumbai. Reply to the said Show Cause Notice was filed by the applicant. The Commissioner of Customs passed an order on 1-4-2002 and raised demand of Custom duty plus penalty plus fine for violation of conditions of Notification No. 64/88. The applicant preferred Appeal before CESTAT at Mumbai. The CESTAT, Mumbai passed an order dated 18-6-2008 rejecting the claim of applicant in the matter of exemption from payment of custom duty as per Notification No. 64 of 88. However, the case is remanded back to the Commissioner of Customs, Mumbai who was asked to examine the eligibility of applicant vis-a-vis Notification No. 65/88. So far as rejection of claim of applicant in respect of exemption from the payment of duty under Notification No. 64/1988 is concerned, SLP is filed in the Supreme Court, which is admitted and is pending for final hearing.
(v) It is not in dispute that, pursuant to remand of the matter to the Commissioner of Customs, Mumbai by CESTAT for considering eligibility of applicant vis-a-vis Notification No. 65/88, the Commissioner of Customs, Mumbai has passed final order in this regard dated 3-6-2009 and the operative part of the said order reads thus:
ORDER
(a) I allow the benefit of exemption of notification No. 65/88-Cus., dated 1-3-1988 read with notification No. 140/90-Cusv dated 20-3-1990 and confirm duty demand to the extent of Rs. 6,98,056/- (Rupees Six lakh Ninety-Eight Thousand and Fifty-six only), u/s 125(2) of the Customs Act.
(b) The hospital has to comply with order as passed in the initial Order-in-Original dated 27-03-2002 in respect of redemption fine and penalty which order has been upheld by the Honourable CESTAT.
There is nothing on record to show that the department has preferred appeal against the order dated 3-6-2009 passed by the Commissioner of Customs, Mumbai.
From the above mentioned facts, it is evident that both the machines imported by the applicant were for the purpose of treating patients in the hospital and the applicant had claimed exemption from payment of custom duty as per Notification No. 64/1988 dated 1-3-1988. However, the Customs, Excise and Service Tax Appellate Tribunal, New Delhi vide order dated 13-12-2004 held that one of the machines i.e. Computerized Stress System with Tread Mill is liable to be confiscated and the applicant is liable to pay penalty, custom duty; whereas the Customs, Excise and Service Tax Appellate Tribunal, Mumbai vide order dated 18-6-2008 though rejected the claim of applicant pertaining to Notification No. 64/88; however, remanded the case of applicant to Commission of Customs, Mumbai, who was asked to examine and consider eligibility of the applicant in respect of benefits pertaining to Notification No. 65/88 read with 140/90. The Commissioner of Customs, Mumbai vide order dated 3-6-2009 held that the applicant is entitled to get benefit under Notification No. 65/88 read with Notification No. 140/90. It is pertinent to note that the Department of Customs has accepted the said order and has not preferred any appeal against the same.
It is not in dispute that when Civil Application No. 5561 of 2008 came to be rejected by this Court vide order dated 7-10-2008, at that time the appeal filed by the applicant against the order passed by the Commissioner of Customs, Mumbai dated 1-4-2002 was pending before the CESTAT, Mumbai. The CESTAT, Mumbai vide order dated 18-6-2008 remanded the issue to decide eligibility of applicant in respect of Notification No. 65/88 read with 140/90 to the Commissioner of Customs, Mumbai, who, by order dated 3-6-2009 held that the applicant is eligible to avail the said benefit. In the backdrop of the above referred facts, it is evident that, on 7-10-2008 i.e. the date on which Civil Application No. 5561 of 2008 filed by the applicant was heard and dismissed by this Court, order dated 3-6-2009 passed by the Commissioner of Customs, Mumbai was not in existence and therefore, the said fact could not be placed before this Court by the applicant nor the Court could consider the same. It is pertinent to note that the department did not file appeal either against the order dated 18-6-2008 passed by the CESTAT nor the order dated 3-6-2009 passed by the Commissioner of Customs, Mumbai and accepted both the orders. It is in these changed circumstances and considering the fact that the department has accepted the orders passed by the CESTAT and the Commissioner of Customs, Mumbai, we feel it appropriate to pass the following order:
ORDER
Impugned Order dated 7-10-2008 passed in Civil Application No. 5561 of 2008 is hereby revoked.
Respondent No. 2 is directed to consider whether the applicant is eligible to get benefit in terms of Notification Nos. 65/88, dated 1-3-1988 and Notification No. 140/90, dated 30-2-1990. It is made clear that we have neither adjudicated upon the issue nor considered eligibility of the applicant in this regard on merits and it is for respondent No. 2 to consider the same on merits of the matter and in accordance with law, without prejudice to the rights of the parties in Custom Appeal No. 1/2005.
Order dated 13-12-2004 2005 (99) ECC 179 passed by the CESTAT, New Delhi, impugned in Custom Appeal No. 1/2005 shall not come in the way of considering eligibility of the applicant pertaining to the said notifications since it is without prejudice to the rights of the parties in Custom Appeal No. 1/2005.
Misc. Civil Application (Review) No. 1198 of 2009 is allowed in the above terms. No order as to costs.