Dismissed

M/S Shah Diagnostic Institute. v. Union of India and Ors.

Bombay HC7 Mar 2006WP/2476/1994

Case brief

AI extract

What is this about?

This court dismissed two writ petitions challenging the levy of customs duty and penalty on an imported MRI machine. The court upheld the collection of duty because the petitioner's diagnostic centre lacked inpatient facilities required under the exemption notifications for hospitals, rejecting constitutional challenges to those conditions.

What did the court decide?

Petitioners directed to pay duty of Rs.3,82,47,105/-, interest, and penalty of Rs.10,00,000/- within four weeks.

M/S Shah Diagnostic Institute. Vs Union of India and Ors. — Customs and Excise | Bombay HC (2006)

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 IN THE HIGH COURT OF JUDICATURE AT BOMBAY
 ORDINARY ORIGINAL CIVIL JURISDICTION

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 WRIT PETITION NO.2809 OF 1991
 M/s.Shah Diagnostic Institute
 Private Limited, a Company
 incorporated under the Companies
 Act, 1956, having its registered
 office at Kshamalaya 37, New
 Marine Lines, Bombay - 400 020 .. Petitioner.

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 V/s.
 1. Union of India.
 2. The Assistant Collector of
 Customs, Air Cargo Complex,
 having his office at Sahar
 Andheri (E), Bombay 400 099 .. Respondents.
 AND
 WRIT PETITION NO.2476 OF 1994
 1. M/s.Shah Diagnostic Institute
 Private Limited, a Company
 incorporated under the
 Companies Act, 1956,
 having its registered office
 at Kshamalaya 37, New Marine
 Lines, Bombay - 400 020
 2. Dr.Viral Shah of Bombay
 Inhabitant, being a Director
 of Petitioner No.1 abovenamed,
 having his office at 401,
 Kshamalaya 37, New Marine
 Lines, Bombay 400 020 .. Petitioner.
 V/s.
 1. The Union of India
 2. The Collector of Customs-II
 having his office at
 New Custom House, Ballard
 Estate, Bombay - 400 038
 3. The Assistant Collector of
 Customs, having his office

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 at New Custom House, Ballard
 Estate, Bombay - 400 038 .. Respondents.

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 Mr.Madhur Baya for the petitioner.

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 Mr.A.J. Rana, senior counsel with Mr.P.S. Jetly
 with Mrs.S.V. Bharucha for the respondents.

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 CORAM : R.M. LODHA &
 J.P. DEVADHAR, JJ.

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 DATED : 7TH MARCH, 2006.

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ORAL JUDGMENT (Per R.M. Lodha, J.) :

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 These two writ petitions raise identical
 issues; these were heard together and are being
 disposed of by this common judgment.

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 2. In Writ Petition No.2476 of 1994, the
 petitioner challenges the order dated 28th August,
 1994 passed by the Collector of Customs -II, Mumbai
 whereby he ordered recovery of the amount of duty of
 Rs.3,82,47,105/- from the petitioner and also imposed
 a penalty of Rs.10,00,000/-.

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 3. The facts obtaining in Writ Petition No.2476
 of 1994 may be briefly summarised thus :

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 i) The first petitioner M/s. Shah Diagnostic
 Institute Private Limited applied and was granted
 import licence bearing No.P/G/2099659 dated 17th
 December, 1985 for import of MRI Machine.

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 ii) Prior to the grant of import licence dated
 17th December, 1985 for import of MRI machine, the
 first petitioner applied for recommendation
 certificate to the Director of Health Services,
 Maharashtra. The said application was processed at
 various levels and ultimately on 7th September, 1989
 the Director General of Health Services, New Delhi
 granted certificate to the petitioner for the benefit
 of the Notification Nos.279/83-Cus dated 1st March,
 1983 and No.63/88-Cus dated 1st March, 1988.

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 iii) Pursuant to the import licence dated 17th
 December, 1985 and the certificate issued by the
 Director General of Health Services, New Delhi
 regarding satisfaction of the conditions of the
 Notification Nos.279/83 and 64/88, the petitioners
 imported one MRI machine in part shipments and
 cleared the same for home consumption after filing
 four bills of entry (No.1948 dated 12th March, 1987
 and Nos.122 & 123 dated 2nd May, 1988 and 11832 dated
 30th May, 1988).

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 iv) The petitioners applied for exemption under
 the Notification Nos.279/83 and 64/88. The MRI
 machine was allowed clearance at nil rate of duty.

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 4. By the show cause notices dated 14th

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 December, 1992, 5th June, 1993 and 10th November,
 1993, the petitioners were called upon to show cause
 as to why the duty amounting to Rs.3,82,47,105/- be
 not levied and recovered for non-levy of the duty and
 why the MRI machine be not confiscated and penalty be
 imposed upon the petitioners. Addendum to the said
 show cause notices were also issued.

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 5. The petitioners filed reply to the said
 notices and denied their liability of payment of duty
 for import of the MRI machine.

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 6. The petitioners were heard and ultimately by
 the impugned order dated 28th August, 1994, an order
 of recovery of the amount of duty in the sum of
 Rs.3,82,47,105/- was passed and the penalty of
 Rs.10,00,000/- was imposed. This order, as indicated
 above, is challenged in Writ Petition No.2476 of
 1994.

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 7. In so far as Writ Petition No.2809 of 1991 is

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 concerned, the petitioners have prayed for clearance
 of spare parts of MRI machine in terms of
 Notification No.64/88-Cus dated 1st March, 1988 on
 production of certificate of the competent authority
 as required there with some other incidental reliefs.

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 8. We heard Mr.Madhur Baya, the learned counsel
 for the petitioners and Mr.A.J. Rana, the learned
 senior counsel for the revenue.

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 9. Mr.Madhur Baya, the learned counsel for the
 petitioner raised the following contentions before us
 :

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 a) That clause 3(b) of the Notification
 No.279/83-Cus dated 1st March, 1983 and clause 2(b)
 of the Notification No.64/88-Cus dated 1st March,
 1988 are unconstitutional and ultravires of Articles
 14 and 19(1)(g) of the Constitution of India.

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 b) That the first petitioner is a diagnostic
 centre and is covered by the term ‘Hospital’ as given
 in the explanation to the Notification Nos.279/83 and
 64/88 and, therefore, even otherwise eligible to the
 benefit of the notifications.

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 c) That the petitioners substantially complied
 with the conditions of the said notifications and the
 non fulfilment of the conditions laid down in clauses
 3(b) and 2(b) of the Notification Nos.279/83 and
 64/88 respectively do not render the petitioners
 ineligible. According to him, the diagnostic centres
 cannot meet the criterion of reservation of beds for

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 its patients. He relied upon the legal maxim LEX NON
 COGIT AD IMPOSSIBILIA.

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 d) That the MRI machine has been installed in
 the premises of Breach Candy Hospital and Research
 Centre as per the agreement dated 2nd July, 1987
 between the petitioners and the Breach Candy Hospital
 and Research Centre and the Branch Candy Hospital and
 Research Centre satisfies the conditions of the
 notifications.

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 e) That the Notification No.64/88-Cus dated 1st
 March, 1988 came to an end on 1st March, 1994 and
 that brought to an end any liability of the
 petitioners in fulfilling the condition 2(b) of the
 said notification. According to him, Section 6 of
 the General Clauses Act has no application.

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 10. In support of his contentions, Mr.Baya relied
 upon the judgment of the Supreme Court in the case of
 Mediwell Hospital and Health Care Pvt.Ltd. V/s.
 Union of India, 1997 (89) E.L.T. 425 (S.C.) and the
 judgment of the Madras High Court in the case of
 Apollo Hospitals Enterprises Ltd. V/s. Union of
 India, 2001 (133) E.L.T. 58 (Mad.).

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 11. On the other hand, Mr.A.J. Rana, the learned

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 senior counsel for the respondents justified the
 impugned order. The learned senior counsel would
 submit that on the basis of the declarations made in
 the bills of entry; the certificate issued by the
 Director General of Health Services and the
 endorsement to the effect that the items mentioned
 therein are essential and exempted from payment of
 customs duty in terms of the Notification
 No.64/88-Cus dated 1st March, 1988, clearance was
 allowed. However, later on it was found that the
 first petitioner does not have any bed facility for
 inpatients and that the imported equipment has been
 installed at Breach Candy Hospital and Research
 Centre. It is apparent that condition No.3(b) of the
 Notification No.279/83 and condition No.2(b) of
 Notification No.64/88 were not satisfied. He would
 submit that the order dated 28th August, 1994 was
 passed by the respondent No.2 demanding customs duty
 in the sum of Rs.3,82,47,105/- and the penalty of
 Rs.10,00,000/- was imposed. The learned senior
 counsel for the respondents relied upon the judgment
 of the Supreme Court in the case of Commissioner of
 Customs (Import), Mumbai V/s. Jagdish Cancer &
 Research Centre, 2001 (132) E.L.T. 257 (S.C.).

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 12. We thoughtfully considered the submissions of
 the learned senior counsel and counsel for the

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 parties.

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Re : Contention (a)

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 13. In exercise of the powers conferred by
 sub-section (1) of Section 25 of the Customs Act,
 1962, the Central Government upon its satisfaction
 and in the public interest and in supersession of
 earlier notifications, issued Notification No.279/83
 Cus dated 1st March, 1983 exempting all medical
 equipment, apparatus and appliances not manufactured
 in India and essential for use in specified hospitals
 from basic import duty and additional duty in respect
 of the hospitals mentioned in the table appended to
 the notification on fulfilment of the conditions
 mentioned therein.

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 14. Para 3 of the Notification No.279/83-Cus
 dated 1st March, 1983 under the table, reads thus :

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 "3. All such hospital which may be
 certified by the said Ministry of Health and
 Family Welfare in each case, to be run for
 providing medical, surgical and diagnostic
 treatment not only without any distinction of
 caste, creed, race, religion or language but
 also.

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 (a) free, on an average, to at least 40
 percent of all their outdoor patients; and

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 (b) free to all indoor patients belonging
 to families with an income of less than
 rupees five hundred per month, and keeping
 for this purpose at least 10 per cent of all

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 the hospital beds reserved for such patients;
 and

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 (c) at reasonable charges, either on the
 basis of the income of the patients concerned
 or otherwise, to patients other than those
 specified in clauses (a) and (b)."

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 15. By further Notification NO.64/88 dated 1st
 March, 1988, the Central Government issued another
 exemption notification in respect of the hospital
 equipments imported by specified category of
 hospitals (charitable) subject to certification from
 Director General of Health Services when such
 equipments / apparatus / appliances were essential
 for the use in the hospitals specified in the table
 and upon fulfilment of conditions mentioned therein.

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 16. Para 2 under the table of the Notification
 No.64/88-Cus dated 1st March, 1988, reads thus :

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 "2. All such hospital which may be
 certified by the said Ministry of Health and
 Family Welfare, in each case, to be run for
 providing medical, surgical or diagnostic
 treatment not only without any distinction of
 caste, creed, race, religion or language but
 also

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 (a) free on an average, to at least 40
 per cent of all their outdoor patients; and

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 (b) free to all indoor patients belonging
 to families with an income of less than
 rupees five hundred month, and keeping for
 this purpose at least 10 per cent of all the
 hospital beds reserved for such patients;
 and

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 (c) at reasonable charges either on the
 basis of the patients concerned or otherwise

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 to patients other than those specified in
 clauses (a) and (b)."

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 17. The challenge to para 3(b) of Notification
 No.279/83-Cus dated 1st March, 1983 and para 2(b) of
 the Notification No.64/88-Cus dated 1st March, 1988
 is that the conditions mentioned in the said clauses
 that all such hospitals which may be certified by the
 Ministry of Health and Family Welfare shall provide
 free treatment to all indoor patients belonging to
 the families with an income of less than Rs.500/- per
 month and at least 10 per cent of all the hospital
 beds reserved for such patients are violative of
 Articles 14 and 19(1)(g) of the Constitution of India
 being arbitrary and unreasonable. According to the
 learned counsel, the diagnostic centres by their very
 nature do not require admission of the patients and
 the patients can go home immediately after diagnostic
 treatment and in view of the definition term
 ‘Hospital’ given in the notification, the conditions
 imposed in para 3(b) and 2(b) of the aforesaid
 notifications respectively regarding free diagnostic
 treatment to all indoor patients belonging to the
 families with an income of less than Rs.500/- per
 month and for this purpose keeping at least 10% of
 hospital beds reserved is irrational.

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 18. The contention of the learned counsel for the

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 petitioners does not appeal us. The petitioners
 applied for the benefit of the said notifications.
 As a matter of fact, they represented to the
 authorities that they fulfilled and/or undertook to
 fulfil the conditions mentioned in the said
 notifications and took clearance of the equipment on
 nil duty. When it came to the notice that the first
 petitioner has not fulfilled the pre-requisite
 conditions mentioned in clause 3(b) of the
 Notification dated 1st March, 1983 and clause 2(b) of
 the Notification dated 1st March, 1988 an order of
 recovery of duty and penalty has been passed, the
 petitioners seek to challenge the constitutionality
 of the notifications which can not be permitted and
 shows the dishonesty of the petitioners. As a matter
 of fact, the petitioners obtained a certificate from
 the Director General of Health Services as was
 required under the Notification No.64/88 to the
 effect that entire treatment facility will be
 provided to the families with an income of less than
 Rs.500/- per month whenever made available and for
 this purpose at least 10% of the hospital beds are
 reserved. Having got the certificate to that effect

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 from the Director General of Health Services by
 representing that the treatment facilities will be
 provided free to all families with an income of less
 than Rs.500/- per month and for this purpose at least

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 10% of hospital beds shall be kept reserved, we are
 of the view that it is not open to the petitioners to
 challenge the constitutional validity of clause 3(b)
 and 2(b) of the abovereferred notifications
 respectively.

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 19. Even otherwise, looking to the nature of the
 benefit granted under the notifications whereby the
 Central Government exempted basic import duty and the
 additional duty on medical diagnostic equipments and
 surgical equipments, we find nothing unreasonable on
 the part of the Central Government to impose
 condition for the exemption that free medical
 treatment to all the families with an income of less
 than Rs.500/- per month shall be given and
 reservation of at least 10% hospital beds for such
 inpatients shall be made. The condition imposed in
 para 3(b) of the notification No.279/83 and para 2(b)
 of Notification No.64/88 is reasonable and has nexus
 to the object sought to be achieved. By no stretch
 of imagination, the said condition can be said to be
 irrational, arbitrary, unreasonable or bereft of
 reason. The contention (a) of the learned counsel
 for the petitioners is, accordingly, rejected.

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Re : Contention (b)

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 20. That the diagnostic institute may be included
 within the meaning of term ‘Hospital’ as defined in
 the Notification No.64/88-Cus is not very material
 for deciding the controversy. The question is not
 that the diagnostic institute which is included
 within the meaning of term ‘Hospital’ is eligible for
 the benefit of the aforesaid notifications, or not.
 The question is whether the first petitioner meets
 the eligibility for exemption under the Notification
 No.64/88. It is not in dispute that the first
 petitioner - Shah Diagnostic Centre does not have any
 inpatient bed facilities. The very fact that the
 first petitioner has not inpatient bed facilities
 disentitles it from the benefit of exemption
 notifications. One of the essential conditions in
 the aforesaid notifications is that the ‘Hospital’ as
 defined therein must provide free medical and
 diagnostic treatment to all indoor patients belonging
 to the families with an income of less than Rs.500/-
 per month and 10% of its beds should be reserved for
 such patients. The first petitioner, admittedly,
 does not have any facility of inpatients and,
 therefore, obviously cannot fulfil this essential
 condition. That makes the first petitioner
 ineligible to the benefit of exemption. As a matter
 of fact, we find that the petitioners got the
 certificate from the Director General of Health

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 Services that the entire treatment facility will be
 provided free to all families with an income of less
 than Rs.500/- per month and for that purpose not less
 than 10% hospital beds are kept reserved by
 misrepresentation and rather fraud.

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 21. We, therefore, confirm the finding of the
 Collector of Customs that the first petitioner was
 ineligible for the benefit of exemption from payment
 of customs duty for import of MRI machine under the
 Notification No.64/88-Cus dated 1st March, 1988.

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Re : Contention (c)

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 22. The contention of the learned counsel for the
 petitioner that the diagnostic centres cannot meet
 the criteria of reservation of beds cannot help the
 case of the petitioners. If they cannot meet the
 criterion in reservation of beds stipulated by the
 notifications, surely they are not entitled to the
 exemption under the said notifications. Even if we
 assume that the diagnostic centres are included
 within the definition ‘Hospital’ as per the
 explanation set out in the notifications, exemption
 from payment of basic customs duty is only available
 upon fulfilment of the conditions stipulated in the
 notifications. The diagnostic centres (for the

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 purpose of notification deemed to be ‘Hospital’)
 which do not have the facility for inpatients as
 stipulated in para 2(b) of Notification No.64/88-Cus
 dated 1st March, 1988, cannot get the benefit of
 exemption under the said notification. The whole
 argument of the learned counsel for the petitioner in
 pressing into service the legal maxim LEX NON-COGIT
 AD IMPOSSIBILIA and the submission that the
 diagnostic centre cannot meet the criteria of
 reservation of beds is wholly misconceived. But for
 the exemption Notification No.64/88, the duty was
 payable on the import of MRI machine by the
 petitioners. For getting the benefits of the
 exemption notification, the first petitioner has to
 fulfil the conditions of the said notification. If
 it cannot, it has to pay the duty.

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Re : Contention (d)

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 23. It is contended that the imported machines
 have been installed in the premises of the Breach
 Candy Hospital and Research Centre as per the
 agreement dated 2nd July, 1987 and that the said
 Breach Candy Hospital and Research Centre satisfies
 the condition of the notification. Not only that the
 contention is misconceived but we find that the
 design of the petitioners in importing the hospital

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 equipment (MRI machine) for the purposes of Breach
 Candy Hospital and Research Centre under purported
 agreement dated 2nd July, 1987 was dishonest and
 fraud on the revenue authorities by seeking exemption
 under the aforesaid Notification No.64/88. Even the
 certificate that has been obtained by the petitioners
 from the Director General of Health Services record
 that the imported diagnostic equipment / apparatus /
 appliance will be used in the institute itself only
 and will not be removed therefrom. Such being the
 condition, how could the petitioners get exemption
 from payment of duty in importing the equipment in
 its name for installation at Breach Candy Hospital
 and Research Centre.

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 24. In Jagdish Cancer and Research Centre
 (supra), the three Judge Bench of the Supreme Court
 held thus :

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 "13. ........... In any case, over and
 above all, it has not been in dispute that
 the Centre did not have inpatient facility.
 According to the condition of notification
 10% of total beds in hospital are to be kept
 reserved for patients of the families having
 an income of less than Rs.500/- per month.
 The case of the Centre, in this connection,
 is that they had an arrangement with another
 hospital in the proximity which is a sister
 concern of the Centre, with whom the Centre
 had entered into an agreement for reserving
 10 per cent beds. Payments in respect of
 these inpatients is to be made by the Centre.
 We feel that the 10 per cent of the total
 number of beds are supposed to be reserved
 for patients of such families in the hospital

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 where the equipment is installed. The
 purpose of the notification for grant of
 exemption from payment of customs duty would
 not be served by making payment of
 expenditure incurred on some inpatients in
 some other hospital as alleged. It has also
 not been shown that alleged arrangements had
 the approval of the concerned authority or
 that it was brought to their notice at all."

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 25. In the light of the condition incorporated in
 the certificate issued by the Director General of
 Health Services and the aforesaid judgment of the
 Supreme Court, no doubt is left that installing the
 imported equipment at Breach Candy Hospital and
 Research Centre and then getting the exemption from
 payment of duty was not permissible. Whatever
 arrangement or agreement the first petitioner may
 have had with the Breach Candy Hospital and Research
 Centre, such arrangement or agreement shall not
 absolve the petitioner No.2 from its liability of
 fulfilment of the conditions prescribed in the
 Notification No.64/88-Cus dated 1st March, 1988.

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 26. In so far as the judgment of the Supreme
 Court in the case of Mediwell Hospital and Health
 Care Pvt. Ltd. (supra) is concerned, by two later
 decisions, two parts of the judgment in the case of
 Mediwell Hospital have been overruled. In the three
 Judge bench decision in the case of Faridabad CT Scan
 Centre V/s. D.G. Health Services, 1997 (95) E.L.T.
 161 (S.C.), the Supreme Court overruled the Mediwell

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 Hospital to the extent of invocation of Article 14.
 In the case of Faridabad CT Scan Centre, the three
 Judge Bench overruled the Mediwell Hospital (supra)
 to the extent indicated therein, held thus :

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 "3. We fail to see how Article 14 can be
 attracted in case where wrong orders are
 issued in favour of others. Wrong orders
 cannot be perpetuated with the help of
 Article 14 on the basis that such wrong
 orders were earlier passed in favour of some
 other persons and, therefore, there will be
 discrimination against others if correct
 orders are passed against them. In fact, in
 the case of Union of India (Railway Board) &
 Others V/s. J.V. Subhaiah and Others [1996
 (2) SCC 258], the same learned Judge in his
 judgment has observed in para 21 that the
 principle of equality enshrined under Article
 14 does not apply when the order relied upon
 is unsustainable in law and is illegal. Such
 an order cannot form the basis for holding
 that other employees are discriminated
 against under Article 14. The benefit of the
 exemption notification, in the present case,
 cannot, therefore, be extended to the
 petitioner on the ground that such benefit
 has been wrongly extended to others. With
 respect, the decision in Mediwell Hospital
 (supra) does not lay down the correct law on
 this point."

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 27. In Sri Sathya Sai Inst., High.Medi. Sciences
 V/s. Union of India, 2003 (158) E.L.T. 675 (S.C.),

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 the Supreme Court overruled some other part of the
 Mediwell Hospital where additional conditions were
 imposed. In Sri Sathya Sai Inst., High.Medi.
 Sciences, the three Judge Bench of the Supreme Court,
 held thus :

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 "[Order]. - This matter is placed before us
 as a Bench of this Court differed from the

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 view expressed by another Bench in Mediwell
 Hospital & Health Care Pvt.Ltd. v. Union of
 India & Others - 1997 (1) SCC 759 isofar as
 it imposes a condition to avail of the
 benefit of the exemption from payment of
 import duty in accordance with Exemption
 Notification No.64/88-Customs, dated 1st
 March, 1988 to issue an advertisement on
 monthly basis in a local newspaper that the
 total number of indigent patients treated
 free was at least 40% with full particulars
 and addresses of each of such indigent
 patient.

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 2. It is submitted on behalf of the
 petitioner that conditions for availing
 exemption had been fulfilled. However, in
 view of the decision of this court in
 Mediwell’s case, the DGHS asked the
 petitioner to further comply with the
 conditions imposed by this Court, as
 aforesaid. The petitioner contends that
 fulfilment of such conditions would entail
 huge expenditure and will unnecessarily add
 to the burden of the expenses of the hospital
 in question. A Bench of this Court felt that
 this Court having laid down guidelines in
 Para 13 of the judgment for the purpose of
 the competent authority to ensure that the
 conditions upon which the exemptions were
 granted were complied with, it would be
 unnecessary to have further condition imposed
 requiring the importers to advertise the
 same; that mere advertisement in a newspaper
 would not necessarily establish that
 importers have in fact complied with the
 condition or that the statement contained in
 the advertisement was correct; that further
 verification, in any event would be

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 necessary; that the object is to serve the
 indigent patients and if such object has been
 carried out without dispute to the full
 satisfaction of the respondent authority, it
 was unnecessary burden upon the petitioner to
 require a monthly advertisement to be
 published indicating the details of the
 indigent patients treated by them as directed
 in the Mediwell’s case (supra). It is in
 those circumstances, disagreeing with the
 view this matter was referred to a Larger
 Bench.

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 3. We have carefully perused the

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 judgment of this Court in Mediwell’s case and
 also the order of reference. We are of the
 view that when it was the prerogative of the
 Government to grant exemption, it was for
 them to impose appropriate conditions for the
 same. If that is so, this Court need not
 have interposed by reason of an order as
 made. Therefore, we think it appropriate
 that the directions issued in Para 14 of the
 Mediwell’s case shall stand overruled. If
 necessary, the Government may issue
 appropriate conditions for fulfilment of
 exemption."

¶102

 28. To the aforesaid extent, the Mediwell
 Hospital stands overruled. The observations made in
 paragraphs 9, 12 and 13 of the Mediwell’s case read

¶103

 thus :

¶104

 "9. It is true that no importer can claim
 absolute exemption from payment of customs
 duty as a right. The normal rule is that
 every import attracts duty under the Customs
 Tariff Act unless otherwise exempted by a
 Notification issued by the Central Government
 in exercise of power under Section 25 of the
 Act and the person claiming exemption
 certificate should establish that the
 pre-conditions prescribed under the
 notification are fully satisfied. In the
 context of the dispute between the parties
 and on reading the exemption notification as
 a whole it appears that the government
 intended to exempt such hospitals from
 payment of customs duty on import of

¶105

 equipments which are certified by the
 Ministry of Health and Family Welfare to the
 effect that it provides medical, surgical or
 diagnostic treatment. Thus a Diagnostic
 Centre run by a private individual purely on
 commercial basis may not be entitled to the
 exemption under the notification issued by
 the Central Government. The conclusion of
 the Central Government as well as that of the
 High Court on this score, therefore, may not
 be held to be incorrect and the appellant may
 not be entitled to seek for issuance of
 mandamus to Respondent No.2 on this ground.

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 12. While, therefore, we accept the
 contentions of Mr.Jaitley learned senior
 Counsel appearing for the appellant that the
 appellant was entitled to get the certificate
 from Respondent No.2 which would enable the
 appellant to import the equipment without
 payment of customs duty but at the same time
 we would like to observe that the very
 notification granting exemption must be
 construed to cast continuing obligation on
 the part of all those who have obtained the
 certificate from the appropriate authority
 and on the basis of that to have imported
 equipments without payment of customs duty to
 give free treatment atleast to 40 per cent of
 the outdoor patients as well as would give
 free treatment to all the indoor patients
 belonging to the families with an income of
 less than Rs.500/- p.m. The competent
 authority, therefore, should continue to be
 vigilant and check whether the undertakings
 given by the applicants are being duly
 complied with after getting the benefit of
 the exemption notification and importing the
 equipment without payment of customs duty and
 if on such enquiry the authorities are
 satisfied that the continuing obligation are
 not being carried out then it would be fully
 open to the authority to ask the person who
 have availed of the benefit of exemption to
 pay the duty payable in respect of the
 equipments which have been imported without
 payment of customs duty. 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 whose
 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 have
 granted such certificate 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 that the said obligations have not
 been discharged they can enforce realisation
 of the customs duty from them.

¶108

 13. It is needless to reiterate that all
 the persons including the appellant who had
 the benefit of importing the hospital
 equipment with exemption of customs duty

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 under the notification should notify in the
 local newspaper every month the total number
 of patients they have treated and the 40% of
 them are the indigent persons below
 stipulated income of Rs.500/- per month with
 full particulars and address thereof which
 would ensure that the application to treat
 40% of the patients free of cost would
 continuously be fulfilled. In the event of
 default, there should be coercive official
 action to perform their obligation undertaken
 by all such persons. This condition becomes
 a part of the exemption order application and
 strictly be enforced by all concerned
 including the Police personnels when
 complaints of non-compliance were made by the
 indigent persons, or denial of such treatment
 in the concerned hospital or diagnostic
 centres, as the case may be."

¶111

 29. These observations made in para 9, 12 and 13,
 in fact goes against the petitioners.

¶112

 30. The judgment of the Madras High Court in the
 case of Apollo Hospitals Enterprises Limited does not
 help the case of the petitioner at all in the facts
 that we have already indicated above.

¶113

Re : Contention (e)

¶114

 31. Now, we may deal with the last contention of
 the petitioners that the Notification No.64/88-Cus
 dated 1st March, 1988 came to an end on 1st March,
 1994 and, therefore, the conditions imposed in the
 said notification came to an end and ceased to be
 effective. The learned counsel submitted that
 Section 6 of the General Clauses Act cannot be made

¶115

¶116

 applicable to such notification.

¶117

 32. This argument of the learned counsel

¶118

 over-looks and ignores Section 159A of the Customs
 Act which was introduced by the Finance Act, 2001.
 Section 159A reads thus :

¶119

 "159A. Effect of amendments, etc., of rules,
 regulations, notifications or orders. -
 Where any rule, regulation, notification or
 order made or issued under this Act or any
 notification or order issued under such rule
 or regulation, is amended, repealed,
 superseded or rescinded, then, unless a
 different intention appears, such amendment,
 repeal, supersession or rescinding shall not-

¶120

 (a) receive anything not in force or
 existing at the time at which the
 amendment, repeal,m supersession or
 rescinding takes effect; or

¶121

 (b) affect the previous operation of any
 rule, regulation, notification or
 order so amended, repealed,
 superseded or rescinded or anything
 duly done or suffered thereunder; or

¶122

 (c) affect any right, privilege,
 obligation or liability acquired,
 accrued or incurred under any rule,
 regulation, notification or order so
 amended, repealed, superseded or
 rescinded; or

¶123

 (d) affect any penalty, forfeiture or
 punishment incurred in respect of any
 offence committed under or in
 violation of any rule, regulation,
 notification or order so amended,
 repealed, superseded or rescinded;
 or

¶124

 (e) affect any investigation, legal
 proceeding or remedy in respect of
 any such right, privilege,
 obligation, liability, penalty,

¶125

¶126

 forfeiture or punishment as
 aforesaid,

¶127

 and any such investigation, legal proceeding
 or remedy may be instituted, continued or
 enforced and any such penalty, forfeiture or
 punishment may be imposed as if the rule,
 regulation, notification or order, as the
 case may be, had not been amended, repealed,
 superseded or rescinded.

¶128

 33. That section 159A is deemed to have been

¶129

 inserted on and from 1st February, 1963 cannot be
 questioned. It, therefore, has to be held that
 Section 159A was operating on 1st April, 1994 when
 the Notification No.64/88-Cus was rescinded. In
 other words, rescission of the Notification No.64/88
 does not affect the liability acquired, accrued or
 incurred by the petitioners with regard to fulfilment
 of clause 2(b) of the said notification.

¶130

 34. We find no merit in both the writ petitions.

¶131

 The petitioners are now directed to pay the duty in
 the sum of Rs.3,82,47,105/- along with simple
 interest at the rate of 6% per annum on the said
 amount from the date of demand and the penalty of
 Rs.10,00,000/- within four weeks from today. In case
 the duty is not paid within four weeks, the
 petitioners shall be liable to pay the simple
 interest at the rate of 9% per annum on the sum of
 Rs.3,82,47,105/- from the date of demand.

¶132

¶133

 35. Both the writ petitions are, accordingly,
 dismissed with costs which we quantify at Rs.10,000/-

¶134

 in each writ petition.

¶135

 36. Oral prayer for stay is rejected.

¶136

 (R.M. LODHA, J.)

¶137

 (J.P. DEVADHAR, J.)

M/S Shah Diagnostic Institute. v. Union of India and Ors.

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M/S Shah Diagnostic Institute. v. Union of India and Ors.

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