R.K.ABICHANDANI, J. - (1.) The petitioner which is a Public Charitable Trust, registered under the provisions of the Bombay Public Trust Act and a Society registered under the Societies Registration Act, imported Cardiac Catheterisation Laboratory from Seimens, Germany for its use for coronary angiography and angioplasty as well as its use to diagnose heart defects etc., challenges the directions/order dated 25.1.99, by which the Director General of Health Services rejected the application of the petitioner for issuance of installation certificate in respect of the said equipment and withdrew the Customs Duty Exemption Certificate which was issued by the Director on 18.3.94, in respect of the same.
(2.) The petitioner had imported the said equipment and cleared it without payment of duty on the strength of the exemption certificate which was issued on 18.3.94, as per Annexure:A to the petition under the notification dated 1.3.88 at Annexure:B to the petition. According to the petitioner, there was delay in setting up the equipment on account of non-receipt of structural plans necessary for installation, and also in setting up of peripheral facilities. There was delay even on the part of the supplier in carrying out installation and the equipment became operational finally on 28.3.96. 2.1 Out-patient Department of the hospital started functioning on limited basis in January, 1995 and thereafter, the hospital started functioning on a full-fledged basis from January, 1997. Object of the hospital, according to the petitioner, was to give treatment to all patients irrespective of their cast, creed or economic status. It is the petitioner's case that it does not at all commercially exploit the equipment, and runs it on a huge budgetary deficit which is met by the donations. According to the petitioner, though the Duty Exemption Certificate, dated 18.3.94 was granted on the basis that the hospital fell under Item-4 of the Table incorporated in the notification, the hospital, when it started functioning was relatable to a hospital specified in para-1 of the Table in view of Clause-(iv) of the Item-4 under which the respondent no.2 had categorized the petitioner in the Duty Exemption Certificate. This is why the petitioner wrote a letter, dated 6.2.98, as per Annexure:C to the petition, stating that the hospital would also fall in para-1 of that Table. 2.2 Since the installation certificate was not produced as per the undertaking given by the petitioner at the time of getting the equipment cleared without payment of customs duty on the strength of the Exemption Certificate, the respondent no. 3-Commissioner of Customs (Import), issued a Show Cause Notice-cum-Demand Notice, requiring the petitioner to show cause why the customs duty of Rs. 66,26,949/should not be demanded and confirmed under Section 28(1) of the Customs Act, 1962, and the equipment in question not be confiscated under Section 111(o) of the Customs Act, on the ground that the Installation and Hospital Running Certificate had not been submitted by the petitioner, and that it was not providing free treatment on an average to atleast 40% of the outdoor patients. The petitioner contested the notice by reply dated 22.3.98, a copy of which is at Annexure:E to the petition. 2.3 In the above background, the petitioner made an application on 5.3.'98 to the respondent no.2-Director of Health Services for issuance of the installation certificate, as postulated in the notification. However, the said application came to be rejected on 25.1.'99 by the respondent no. 2, who, simultaneously, also withdrew the Customs Duty Exemption Certificate which was issued on 18.3.94. 2.4 According to the petitioner, from the total number of patients treated in the out-patient Department by the hospital, 45% of the total patients were treated free which was more than the required percentage of 40%. The petitioner was a Public Charitable Trust and had complied with the terms of the notification, and withdrawal of the certificate without giving any opportunity of being heard to the petitioner was in violation of the principles of natural justice and void. It was further contended that the respondent no. 2 was bound to grant installation certificate, because, the equipment was already installed and the hospital had started functioning. Moreover, the State of Gujarat had, after due verification, recommended the grant of such certificate. By virtue of the interim relief that has been operative, the impugned order dated 25th January, 1999 has been stayed.
(3.) In the affidavit-in-reply filed by the Regional Director on behalf of the respondents, it was contended that the case of the petitioner was scrutinised on the basis of the information furnished by the petitioner, and it was found that the petitioner did not fulfill the conditions enumerated in the notification. It was further contended that the petitioner was issued Customs Duty Exemption Certificate for Category-4 hospital, and, therefore, as per the provisions of the notification dated 1.3.'88, it was required to fulfill the conditions pertaining to Category-2 hospital, which entailed giving of free treatment, on an average, to atleast 40% of all outdoor patients and free treatment to all indoor patients belonging to families having income of less than Rs. 500/- per month. According to the respondents, it was found by the respondent no. 2 that the petitioner did not fulfill the conditions of giving free treatment to atleast 40% O.P.D. patients and free treatment to all indoor patients belonging to the families having income of less than Rs. 500/- per month. Therefore, the petitioner, was not entitled to continue the benefit of Customs Duty Exemption Certificate.;