ORDER
K.S. Venkataramani, Member (T)
1. This is an application for stay of duty demand Rs. 3,30,38,532.00 on finalisation of earlier provisional assessments by the Assistant Collector of Customs, Air Cargo, New Delhi in his order dated 17-6-1994, which has been upheld by the Collector of Customs (Appeals), IGI Airport, New Customs House, New Delhi in the impugned order dated 31-3-1995.
2. Shri A. Hidayatullah, Sr. Counsel, appeared for the applicants alongwith Sh. L.P. Asthana, ld. Consultant and Ld. Counsels Ms. Tasneem Ahmadi and Ms. Urmil Narang. The ld. counsel submitted that applicants are engaged in research in the field of cardiac and cardio-vascular research. They imported 29 consignments of medical and other instruments for research claiming exemption under Notification 70/81-Cus., dated 26-3-1981 and Notification 321 /87-Cus., dated 21-9-1981. They had also submitted certificates as required therein to the effect that the goods imported are essential for research and that the applicants are not engaged in any commercial activity.
The goods were cleared on provisional assessment pending certain enquiries by the Department. A show cause notice was issued on 31-3-1993 alleging that the various medical equipments imported are not purely for scientific research and that further there was evidence that the applicants were engaged in patient care on commercial considerations with regular schedule of charges for various treatment. So, the assessments were proposed to be finalised without extending the exemption. The ld. Sr. Counsel urged that the Assistant Collector, having issued the show cause notice in respect of 21 Bills of Entry and quantifying the amount demanded as Rs. 1,95,19,746.00 passed his order finalising the assessments to include 8 more consignments for higher amount of Rs. 3,30,38,532.00 not mentioned in the show cause notice. The Sr. Counsel urged that this aspect itself vitiates the demand being beyond the scope of show cause notice. As regards the validity of the certificates produced by the applicants, the ld. Sr. Counsel referred to the Directory of Recognised Scientific and Industrial Research Organisations published by the Ministry of Science & Technology, Department of Scientific & Industrial Research. The preface, thereto, indicates that the Govt. of India felt the need for a co-ordinated approach in the matter of recognition of research institutions and the Department of Scientific & Industrial Research constituted an inter-Ministerial Screening Committee where representative of all Ministries concerned with research were represented, and, in the case of medical research a representative of the Indian Council of Medical Research was represented. The applicants are listed as a recognised research institute in the Directory alongwith other organisations which are undertaking patient care like All India Institute of Medical Sciences, Delhi, Breach Candy Medical Research Centre, Bombay. The ld. Sr. Counsel pointed out that the Directory also contains the guidelines which are applied by the Ministry for according recognition. The exclusion of commercial motive is contained in para 4.9 saying that the organisation should be non-profit oriented and that all amounts received by way of fees charged, etc. should be used as reinvestment by the organisation for undertaking research work. The ld. Sr. Counsel submitted that the applicants satisfied this condition. Every patient, who enters the institute is a research subject and the medical equipment import is only for use in the research projects of the applicants. The ld. Sr. Counsel urged that when the Ministry of Science & Technology has issued the certificate as per the guidelines stated above, the Customs authorities cannot go behind the certificate and deny the exemption to the applicants. Reliance in this context was placed on Bombay High Court judgment in the case of Bombay Chemicals v. Appellate Collector of Customs – 1990 (49) E.L.T. 190 wherein the Court held that Customs authorities have no right to sit in judgment over the certificates which are obligatory to be furnished to the customs authorities for the purpose of obtaining exemptions. The other case law on the same lines cited were:
Bombay Chemicals v. U.O.I. -1982 (10) E.L.T. 171 (Bombay High Court)
Titan Watches v. U.O.I. -1994 (69) E.L.T. 22 (Madras High Court)
Surbex Diagnostics v. Collector of Customs -1994 (71) E.L.T. 569 (Tribunal).
The ld. Sr. Counsel, further, contended that the present order denying the exemption and demanding duty is contrary to the past practice of assessment of the goods in question, as the Customs House had been allowing the benefit of both the exemption notifications to the earlier imports. This is not permissible urged the ld. Sr. Counsel, citing and relying upon Calcutta High Court decision in the case of Mercantile Express v. Assistant Collector of Customs -1978 (2) E.L.T. 552 holding that customs are bound by their own precedents in administering taxing statutes and cannot on their own modify their own previous decisions. The applicants do not plead financial hardship in making the pre-deposit. It was submitted that there is a prima facie case on merits in favour of the applicants, the pre-deposit of duty should be dispensed with.
3. Shri K.K. Jha, ld. SDR opposed the stay and contended that there was no infirmity in the Assistant Collector’s order confirming the demand for a higher amount because this is a case where goods had been cleared earlier on being assessed to duty provisionally in terms of Section 18 of Customs Act, 1962 which was read out by ld. SDR. The clearances were effected against provisional duty assessment bond and the demand for duty consequent upon finalisation of assessment follows from the terms of the bond. Section 18 itself contains provision for such adjustment of duty, the ld. SDR pointed out. The ld. S.D.R. in this regard referred to reasoning in the Collector (Appeals) order saying that the absence of further show cause notice for the goods covered by other Bills of Entry cannot be said to have adversely affected the applicants. On the validity of the certificate issued by the Ministry of Science and Technology, the ld. S.D.R. drew attention to para 9 of the Collector (Appeals) order wherein the Collector, while observing that it was not for the Assistant Collector to comment on the propriety of the issue of the certificate to the applicants by the Ministry of Science & Technology, had yet found on fact that as per Govt. of India’s Allocation of Business Rules, 1961, the Ministry of Science and Technology was only given the function of Registration and Recognition of R & D units. But, the Collector (Appeals) found, that the subject Medical and Bio-medical Research was a subject allocated to Ministry of Health. Therefore, that was the Ministry administratively concerned with appellants as a medical research institute. Yet no certificate from them had been produced which in fact is the condition stipulated for exemption. The ld. SDR also referred to the clarification obtained by the Department from the Health Ministry that the Ministry was nor aware of any charitable work undertaken by the applicants, which contradicted the information given by the Ministry of Science & Technology that the applicants are non-commercial charitable society functioning under the Charitable Societies Act. The Id. SDR, further, contended that the applicants have not furnished satisfactory evidence to establish that the equipment imported was for use in research work. The Department on the other hand, found that these equipments were for use in patient care as in any other hospital. The ld. SDR, further, argued that past clearances of the goods under exemption will not be a bar for the Department to have a fresh look at the eligibility to exemption because of the well-settled principle that the doctrine of promissory estoppel cannot be invoked against the Govt. or public authority. The ld. SDR, therefore, urged that the application be rejected.
4. The submissions made by both sides have been considered. The question is whether the certificate issued by the Principal Scientific Officer, Ministry of Science & Technology should be accepted for granting the exemption under Notification 70/81 and 321/87. Perusal of the two notifications shows that the Ministry administratively concerned with the research institution could be other than Ministry of Science & Technology. This is clearly brought out in the later Notification 321/87 in which condition (34 thereof requires the research institution claiming the exemption thereunder, to produce “a certificate from an officer of the Govt. of India not below the rank of Deputy Secretary in the Ministry of Science & Technology OR in the Ministry or Department administratively concerned with the Research Institution certifying in each case, that the consumable goods and parts in respect of which exemption is claimed are such as are required in the research activity of the Research Institution not engaged in any commercial activities and recommends the grant of exemption under the notification…” (emphasis supplied). It is also clear the under Notification 70/81 condition (ii) requires furnishing of the certificate regarding essentiality of the goods for use in research and the noncommercial nature of the Research Institute only from an Under Secretary or equivalent officer in the Ministry administratively concerned with the Research Institution. The finding given by the Collector (Appeals) in this regard is hence relevant. It has been found that as per the Allocation of Business Rules, 1961 of the Govt. of India, the Ministry of Science & Technology, Deptt. of Scientific and Industrial Research, has been allocated “Registration and Recognition of R & D Units”, but that the subject “Medical and Bio-medical Research” has specifically been allocated to the Department of Health in the Ministry of Health & Family Welfare which subject is figuring at Sl. No. 65 in the list of Business allocated to the Health Ministry. In such circumstances, having regard to the stipulation in condition (ii) of the notification it would appear, prima facie, that the lower authorities stand that for the purpose of exemption under the notification a certificate from the Ministry of Science & Technology is not acceptable is well-founded. For the same reason as noted above, prima facie, it would also not meet the condition prescribed in the notification to say that the certificate issued by the Ministry of Science & Technology should suffice because it has been issued following scrutiny by an Inter-Ministerial Co-ordination Committee. As regards the contention that the Customs authorities are bound to accept the certificate issued by the Ministry of Technology unques-tioningly, it is seen that in the present case, it is not merely the contents of the certificate that it being questioned, but also the jurisdiction of the certificate issuing authority on the ground that the certificate produced has not been issued by the Ministry administratively concerned with the applicants. In this respect the applicants’ case differs factually from those in the case law cited by them in this regard.
It has also been submitted that the demand is vitiated as it confirms an amount larger than indicated in the show cause notice. But it is noted that the Assistant Collector’s show cause notice and the order have been issued finalising earlier provisional assessments done on execution of bond as per Section 18 Customs Act, 1962. Section 18 of Customs Act, it is noted, begins with, “Notwithstanding anything contained in this Act…” which would indicate that action under this Section can be taken independently of action that may be taken under any other Section. [See Bombay High Court judgment in Rajaram Dwarkadas Chhabria v. U.O.I. -1988 (36) E.L.T. 293 (Bom.).
Section 18 has self-contained provision for adjustment of duty amount on finalisation of assessment either way by payment of short assessment or refund of excess payment. Therefore, prima facie, there is no infirmity in the findings in this regard by Collector (Appeals) in the order impugned.
5. It has been urged that since the Customs House had extended the exemption to previous imports, it is not permissible for them now to take a different stand. However, it is found that the Calcutta High Court decision relied upon in this regard related to classification of the goods imported as between the two competing items under the erstwhile Indian Customs Tariff, whereas here it is a case of determining the eligibility of the imported goods for exemption from duty. It has been observed by the Supreme Court, in the context of grant of exemption under Central Excise, in the case of Madras Fertilizers v. Assistant Collector of Central Excise -JT 1944 (1) SC 150, that if the Assistant Collector granted an exemption contrary to law it was always open to him to rectify the error. Rule 173B Central Excise Rules empowered the authorities to do so. In that case it was further observed by the Supreme Court that the authorities wrongly allowing the exemption in similar circumstances in the past may constitute a well-founded grievances, but, the Supreme Court held that would not entitle the party to the exemption.
6. In the result, it is held that no prima facie case has been made out for total waiver of pre-deposit of duty. It is accordingly, ordered in terms of Section 129E of Customs Act that the appeal be heard on merits on condition of the applicants herein depositing a sum of Rs. one crore fifty lakh in cash on or before 30-11-1995. On such compliance the pre-deposit of balance duty amount is dispensed with and recovery thereof stayed pending disposal of the appeal. To come up for ascertaining compliance on 8-12-1995.