ORDER
Gowri Shankar, Member (T)
1. This appeal is against the order passed by the Commissioner of Customs, Mumbai. The Commissioner passed his order in order to comply with the direction issued by the Tribunal in its order passed on 24-4-2001. The Tribunal by that order disposed of an appeal filed by the same appellant against the order of the Commissioner adjudicating on a notice issued to Gautam Diagnostic Centre. The notice proposed recovery of duty on a treadmill system with accessories imported by the appellant in 1988 and cleared without payment of duty in terms of exemption contained in notification 64/88. The notice alleged that the benefit of the exemption contained in notification was not available for three reasons – that the importer did not have facilities for housing indoor patients; a certificate from the Director General of Medical Services evidencing installation of the imported equipment had not been produced; and the condition contained in the notification requiring free treatment of not less than 40% of outpatients had not been complied with.
2. The Commissioner had found contravention on all three grounds, confirmed the demand and imposed penalty.
3. The Tribunal accepted the contention of the appellant placed before him that the absence of facilities for housing and treatment of indoor patients did not disentitle from claiming the benefit of the exemption, relying upon the ratio of the decision of the Tribunal in Surlux Diagnostic Ltd. v. CCE – 1992 (71) E.L.T. 569 followed by many other decisions. It noted that with regard to the second ground for denial – the absence of an installation certificate – it had been held by the Tribunal in its decision in St. Stephen’s Hospital v. CCE – 2000 (121) E.L.T. 91 that this condition contained in paragraph 4 to the table to the notification could not apply to hospital which was already in existence. It therefore accepted the claim of the appellant that installation certificate was not necessary, provided it could be shown that the hospital was already in existence when the import took place and remanded the matter to the Commissioner to decide upon it. It also remanded to the Commissioner the question to decide whether the condition regarding provision of free treatment to 40% had been complied with, accepted the plea of the appellant that the contents of the register that had been maintained by it in this regard and produced to the Commissioner had not been considered. The Tribunal said finally that “the Commissioner shall pass orders in the two aspects before him in accordance with law.”
4. In the order impugned before us, the Commissioner has dealt with all three aspects once again. His order denying the benefit of the exemption for the reason that the condition relating to the absence of indoor facilities and for failure to produce installation certificate has to be set aside. The decision of the Commissioner on the two issues have already been decided is clearly void and totally without authority in law.
5. It is in fact not necessary for us to consider now whether in fact the condition of the notification have been complied with or not. The show cause notice which was dated 25-5-98 proposes to recover duty on goods imported in December 1988 more than nine years earlier. It does not invoke any specific provision of law. Duty could not be demanded under Section 28 of the Act more than five years having elapsed after the date of importation and clearance. It is also stated by the appellant that no bond or undertaking to pay duty was confirmed when the goods were cleared. The show cause notice does not cite any such bond or undertaking nor is there provision in the notification for such a bond or undertaking. Assuming that the notice was issued under Section 28, the demand for duty therefore would be clearly barred by limitation. This view taken by the Tribunal in Jagdish Cancer & Research Centre v. CC – 2000 (117) E.L.T. 97 has not been found wrong by the Supreme Court on appeal. In that judgment, reported in 2001 (132) E.L.T. 257, the Supreme Court accepted the submission of the appellant (the Commissioner) before it that the show cause notice issued to the importer proposed confiscation of the goods under Section 125 of the Act and duty would be payable in terms of Sub-section (2) of that section. It said “where an order is passed for payment of customs duty along with an order of imposition of fine in lieu of confiscation of goods, it shall only be referable to Sub-section (2) of Section 125 of the Customs Act. It would not attract Section 28(1) of the Customs Act which covers case of duty not levied, short levied or erroneously refunded etc. The order for payment of duty under Section 125(2) would be an integral part of proceedings relating to confiscation and consequential orders thereon, on the ground as in this case that the importer had violated the conditions of notification subject to which exemption of goods was granted, without attracting the provisions of Section 28(1) of the Customs Act.” As we have noted the notice issued to the importer proposed confiscation of the goods under Section 125 and penalty. The Commissioner in the earlier order had ordered confiscation. Therefore, if and when the goods are redeemed by the import duty in addition to the redemption fine will have to be paid as provided in Sub-section (2) of Section 125. The contention of the departmental representative that goods have already been cleared is wholly irrelevant. We are concerned with the consequence of the order of clearance passed by the Commissioner. It appears that the goods have not been taken possession of by the Commissioner. If that is the case, that is entirely his doing and has not consequence on the confiscation order. This is in fact made clear in Sub-section (1) of Section 126 of the Act that any goods are confiscated under the Act, the goods shall thereupon vest with the Central Government. It was in fact obligatory upon the Commissioner under Sub-section (2) to take possession of the confiscated goods.
6. When the matter was initially adjudicated the penalty that the Commissioner imposed on the appellant was Rs. 25,000/-. He has in the order passed on the remand proceedings increased it to Rs. 50,000/-.
7. We have considered the submissions made by the appellant that the result of the appeal should not place the appellant in a position worse than at the time of filing an appeal, for which he placed reliance upon the judgment of the then Mysore High Court in Pathikonda Balasubba Setty v. Commissioner of Income Tax (1967) 65 ITR 252. The departmental representative was not able to cite any contrary decision. As we have discussed above, the goods are clearly liable to confiscation. The importer is also hence liable to penalty. Therefore, we accept the proposition that the appellant has made and hold that the penalty is determined to be Rs. 25,000/-.
8. Appeal allowed in part.