M/S. ANDROMEDA FOUNDATION INDIA P. LTD.versusD.G.H.S. AND ORS.

                           [2008] 9 $.C.R. 74


                               '
         M/S. ANDROMEDA FOUNDATION INDIA P. LTD.                         ~
A
                                    v.
                          D.G.H.S. AND ORS.
                   (Civil Appeal No.3620 of 2008)
                             MAY 16, 2008
B
    [TARUN CHATTERJEE AND HARJIT SINGH BEDI, JJ.]
                                                                         -<

       Customs Act, 1962_ - Notification dated 1.3.1988 and
  10.8.1993 - Import of medical equipment availing conces-
c sion in terms of exemption Notification - Authorities called
  upon importer to furnish specific details but it failed to do so -
  Withdrawal of exemption certificate - Propriety of - Held:
  Proper as the conduct of the importer was not satisfactory -
  Having imported medical equipment on concessional terms,
  it was incumbent on importer to have scrupulously observed
D
  the condition of imports and follow guidelines designed to             ~

  ensure that equipment was properly utilized and furnish infor-
  mation required by authorities.
          Appeal - Representation filed by respondent before Au-
E   thorities - Pending decision of representation, respondent filed
    writ petition - Writ petition dismissed - In appeal, request for
    direction to authorities to decide the representation first- Held:
    Not tenable.
        The appellant was established for the purpose of con-
F                                                                        t-
  ducting diagnostic tests and treating patients with spe-
  cific Andrological problems. On 1st March 1988, a Notifi-
  cation was issued by the Government of India whereby
  medical equipment imported for specified purposes, was
  exempted from the payment of customs duty. Taking ad-
G vantage of the aforesaid Notification, the appellant im-
  ported three machines. Respondent No.1 asked the ap-
  pellant to furnish some additional information, which was              'l"
  supplied but, Respondent No.1 was not satisfied, despite

H                                  74
   ANDROMEDA FOUNDATION INDIA P. LTD. v. D.G.H.S. 75
                  AND ORS.

being called upon to furnish specific details time and A
again, appellant did not do so. On 6th October 1997 the
appellant was refused the installation certificate for the
imported medical equipment. The appellant wrote to re-
spondent No.1 that the required information had been sup-
plied. On 9th December 1997 respondent No.1 replied that B
the requisite information had not been furnished and in
particular referred to the details of the use of the "Hand
Held Recording Doppler" and the details of the free ser-
vices which had to be given to the poorest individuals,
and thus withdrew the Customs Duty Exemption Certifi- c
cate which had been issued to the appellant. The appel-
lant submitted a detailed Memorandum to respondent
No.1 on 6th February 1998 but to no effect. The appellant
filed the Writ Petition challenging the order dated 9th De-
cember 1997 and praying for direction to respondent No.1
                                                              0
to issue the Installation Certificate with respect to the im-
ported equipment. High Court dismissed the writ petition.
Hence the present appeal.
     Dismissing the appeal, the Court
      HELD: 1. Undoubtedly, the representation dated 6th E
February 1998 had been filed by the appellant before the
concerned respondent and the same has not yet been
decided. The plea of the appellant that it would be proper
to set aside the order of the High Court and to issue a
direction that the representation be first decided, cannot F
be accepted at this belated stage as the appellant had filed
a writ petition seeking the courts' intervention in the mat-
ter and having failed he cannot now claim a decision on
the representation. 5.124 of the Customs Act has abso-
lutely no applicability to the facts of the present case as G
this provision deals with the confiscation of goods, which
is not the case before this Court. On the contrary,
appellant's the conduct has been most unsatisfactory, as
despite being called upon to furnish specific details, time
and again, it had not done so. The information furnished H
    76       SUPREME COURT REPORTS               [2008] 9 S.C.R.


A by the appellant on 20th July 1997 does not even remotely
  fulfill the requirement as per proforma that had been laid
  down in the Notification dated 10th August 1993. Having
  imported medical equipment on concessional terms, it
  was incumbent on the appellant to have scrupulously ob-
8 served the conditions of the import and to follow the guide-
  lines designed to ensure that the equipment was being
  properly utilized. [Paras 6,7] [80-C-H, 81-A]
        2. The extract of the OPD register furnished by the
  appellant in its own format with regard to the provision of
C free facilities to the poor, hides more than it reveals. [Para
  8] [84-A]
         3. It was observed in *Mediwe// Hospital and Health
  Care's case that the competent authority, should continue
  to be vigilant and check whether the undertakings given
0
  by the applicants are being duly complied with after get-
  ting the benefit of the exemption notification and import-
  ing the equipment without payment of customs duty and
  if on such enquiry the authorities are satisfied that the
  continuing obligations are not being carried out then it
E would be fully open to the authority to ask the persons
  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. There
  is large scale misuse of the medical equipment imported
F under the exemption notification, and in the light of the
  observations in Mediwell's case, it is essential that the au-
  thorities regularly monitor the use of the equipment. [Para
  7 and 9] [81-8,C, 84-8]
G        *Mediwell Hospital & Health Care Pvt. Ltd. v. Union of
    India & Ors. (1997) 1 SCC 759; Commissioner of Customs
    (Import), Mumbai v. Jagdish Cancer & Research Centre
    (2001) 6 sec 483 - relied on.
       CIVILAPPELLATE JURISDICTION: Civil Appeal No. 3620
H of 2008
            ANDRO.MEDA FOUNDATION INDIA P. LTD. v. D.G.H.S.             77
                 / AND ORS. [HARJIT SINGH BEDI, J]
1            From the final Judgment and Order dated 8.11.2005 of A
        the High Court of Judicature Andhra Pradesh at Hyderabad in
        Writ Petition No. 14754 of 1999
              Rana Mukherjee, Siddharth Gautam and Goodwill lndeevar
        for the Appellant.
                                                                             B
..          R. Basant, Rekha Pandey and Sushma Suri for the Re-
        spondents.
              The Judgment of the Court was delivered by

              HARJIT SINGH BEDl,J. 1. Leave granted.                         c
              2. This appeal is directed against the judgment of the
        Andhra Pradesh High Court which, while exercising its writ ju-
        risdiction under Article 226 of the Constitution, has dismissed
        the Writ Petition questioning the validity of the order dated 9th
,.._    December 1997 issued by the Director General Health Ser-             D
        vices, New Delhi. The facts of the case are as under:
                 3. The appellant herein, is a private limited company es-
          tablished for the purpose of conducting diagnostic tests and
       ·· treating patients with specific Andrological problems. On 1st
                                                                              E
          March 1988, a Notification was issued by the Government of
       . India whereby medical equipment imported for specified pur-
          poses, was exempted from the payment of customs duty. Tak-
          ing advantage of the aforesaid Notification, the appellant got
'I
          sanction to import four machines (though only three were im-
          ported) and also furnished the necessary documents to the au- F
          thorities. Respondent No.2, the Director, Medical Education sub-
          mitted a report to respondent No.3, Secretary to the Govern-
          ment, Health, Medical & Family Welfare Department, Govt. of
          A.P., intimating that he had conducted an inspection of the
          appellant's hospital with respect to the use of the imported equip- G

,         ment and the free services that were to be provided to the poor
          in accordance with the terms of the exemption Notification. Tak-
          ing note of the report aforesaid, respondent No.3 forwarded
          the recommendation to respondent No.1 for the issuance of an
          installation certificate. It appears that respondent No.1 thereat- H
    78       SUPREME COURT REPORTS                  (2008] 9 S.C.R.


A ter asked for some additional information which too was col-
  lected and conveyed to the said officer vide letter dated 29th
  March 1996. The appellant, however, received two letters dated
  18th June 1997 and 14th July 1997 requiring itto furnish yet more
  information with respect to the use of the "Hand Held Record-
s ing Doppler" for which an authorization for import had been is-
  sued.The appellant in its reply dated 28th July 1997 pointed out
  that this equipment had not been imported, but gave the other
  details to the respondent. Respondent No.1, however, wrote
  another letter dated 5th October 1997 to the appellant giving 1O
C days time to furnish the information that had been sought. Some
  additional information was supplied but it appears that respon-
  dent No.1 was not satisfied on which, vide annexure P5 dated
  5th October 1997 the appellant was refused the installation cer-
  tificate for the imported medical equipment. The appellant once
D again wrote to respondent No.1 that the required information
  had been supplied on which a reply dated 9th December 1997
  was received from respondent No.1 that the information had, in
  fact, not been furnished and in particular referred to the details
  of the use of the "Hand Held Recording Doppler" and the de-
  tails of the free services which had to be given to the poorest
E individuals. Vide order dated 9th December 1997, respondent
  No.1 thereupon withdrew the Customs Duty Exemption Certifi-
  cate which had been issued to the appellant. The appellant sub-
  mitted a detailed Memorandum to respondent No.1on6th Feb-
  ruary 1998 but to no effect. Being aggrieved thereby, the appel-
F lant filed th~ present Writ Petition challenging the order dated
  9th December 1997 and praying for a direction to respondent
  No.1 to issue the Installation Certificate with respect to the im-
  ported equipment. A counter affidavit was filed in response to
  the Writ Petition and on a consideration of the matter, the Divi-
G sion Bench of the High Court dismissed the Writ Petition by the
  impugned judgment dated Sth November, 2005. It is in these
  circumstances that the present matter is before us.
          4. Mr. Rana Mukherjee, the learned counsel for the appel-
    lant, has raised several arguments in the course of the hearing.
H
               ANDROMEDA FOUNDATION INDIA P. LTD. v. D.G.H.S. 79
                     AND ORS. [HARJIT SINGH BEOI, J.]
      -+
            He has first and foremost submitted that as the representation A
           filed by the appellant was still pending decision, it would be
            appropriate that a direction be issued for a decision in that
           matter. He has also submitted that from the impugned judgment
            it appeared that the exemption granted to the appellant had been
           cancelled due to the following reasons: (1) that the data with B
     ,._    respect to the use of the "Hand Held Recording Doppler" had
            not been supplied, (2) that the data pertaining to the OPD/IPD
            cases had not been supplied,(3) free OPD for one equipment
            had been found to be less than 40% for one year and (4) that
           information furnished by the institute did not clarify the OPD/   c
           IPD free facilities, that were required to be given to those whose
           income was Jess than Rs.500/- per month and the information
            required had not been furnished in the prescribed format. He
           has pleaded that as per the information given to the respon-
     .>-
           dents, the Hand Held Recording Doppler had not been imported
                                                                              D
           and as far as point Nos. 2 and 3 are concerned, there was only
           a marginal deviation with respect to the facilities provided to
           the poorer sections of the population and the required informa-
           lion had, in fact, been supplied to the respondents as per their
           direction. He has in this connection referred us to extracts of
           the OPD register which has been appended with the reply. It E
           has accordingly been pleaded that in the light of the judgments
           of this Court in Commissioner of Customs (Import), Mumbai
           vs.' Jagdish Cancer & Research Centre (2001) 6 SCC 483, a
'I         marginal devi.ation would not involve penal consequence. It has
           also been submitted that as per the provisions of section 124 F
           of the Customs Act, 1962, it was incumbent to have given the
           appellant a show cause notice before making the impugned
           order and as this procedure too had not been adopted, the High
           Court judgment was not maintainable.
                                                                              G
                  5. The learned counsel for the respondent has, however,
'{         pointed out that as per the guidelines issued by the Ministry on
           101h August 1993 superceding the earlier ones, a proforma for
           the more effective monitoring of the use of the equipment had
           been devised and as these guidelines had not been followed
                                                                              H
    80        SUPREME COURT REPORTS                   [2008) 9 S.C.R.


A by the appellant, despite being called upon to do so, and as the         t
  necessary information had not been furnished by the appellant
  in the prescribed format, there was no merit in the petition. For
  this plea, the learned counsel has also relied upon Jagdish
  Cancer & Research Centre's case (supra). It has also been
B pleaded that in the light of the judgment in Mediwell Hospital &
  Health Care Pvt. Ltd. vs. Union of India & Ors. (1997) 1 SCC             _._
  759, the submission of the necessary information in the pre-
  scribed format was a continuing obligation and as such it was
  incumbent on the appellant to have furnished the information as
c per the guidelines and on its failure to do so, the action that had
  been taken was fully justified.
          6. We have considered the arguments advanced by the
  learned counsel for the parties. Undoubtedly, the representa-
  tion dated 6th February 1998 had been filed by the appellant
D before the concerned respondent and the same has not yet been            4
  decided. It has accordingly been submitted by Mr. Mukherjee
  that it would be proper to set aside the order of the High Court
  and to issue a direction that the representation be first decided.
  We are unable to accept this plea at this belated stage as the
E appellant had filed a writ petition seeking the courts' interven-
  tion in the matter and having failed he cannot now claim a deci-
  sion on the representation. We also find that section 124 of the
  Customs Act has absolutely no applicability to the facts of the
  present case as this provision deals with the confiscation of
                                                                               ;.-
F goods, which is not the case before us.
          7. On the contrary, we are of the opinion that the appellant's
  general conduct has been most unsatisfactory, as despite be-
  ing called upon to furnish specific details time and again, it had
  not done so. We have seen the information furnished by the
G appellant on 20th July 1997, a copy appended as annexure P4
  to the SLP Paper Book. We find that it does not even remotely .
                                                                               ..,.
  fulfill the requirement as per proforma that had been laid down
   in the Notification dated 1Oth August 1993. We have no doubt
  that having imported medical equipment on concessional terms,
H it was incumbent on the appellant to have scrupulously observed
    ANDROMEDA FOUNDATION INDIA P. LTD. v. D.G.H.S. 81
          AND ORS. [HARJIT SINGH BED!, J.]

the conditions of the import and to follow the guidelines designed   A
to ensure that the equipment was being properly utilized. In
Mediwell Hospital & Health Care's case (supra) this is was
what the Court had to say:
     'The competent authority, therefore, should continue to be
     vigilant and check whether the undertakings given by the 8
     applicants are being 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
     obligations are not being carried out then it would be fully C
     open to to the authority to ask the persons 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 D
     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 per month would be
     able to receive free treatment in the Institute. That objective
     must be achieved at any cost, and the very authority who E
     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 realization of the customs F
     duty from them.
     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 under the
     notification should notify in the local newspaper every G
     month the total number of patients they have treated and
     whether 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 condition
     to treat 40% of the patients free of cost would continuously H
           82        SUPREME COURT REPORTS                    [2008) 9 S.C.R.

       A        be fulfilled. In the event of default, there should be coercive   t
                official action to perform their obligation undertaking by all
                such persons. This condition becomes: a part of the
                exemption order application and strictly be enforced by all
                concerned including the police personnel when complaints
       B        of non-compliance are made by the indigent persons, on
                denial of sµch treatment in the hospital concerned or
                diagnostic centres, a the case may be."
                  6. It has been fairly pointed out by both the learned coun-
           sel that this judgment has been overruled in a subsequent mat-
       c   ter on a different point, but the observations hereinabove quoted
           still hold the field. In Jagdish Cancer & Research Centre's case
           (supra), this Court was again called upon to consider the impli-
           cations of the non-compliance with the conditions of import and
           it was observed thus:
       D                                                                          ·-\.
                "Learned counsel for the respondent has next urged that
                looking to the total picture of the free treatment provided
                by the Centre, it is to be noticed that shortfall in providing
                free treatment is marginal. The percentage of persons
                provided free treatment cannot be precise. During a certain
       E        period, it may be a little less or a little higher. He has also
                drawn our attention to a chart prepared by the respondent
                and filed with an affidavit before CEGAT, showing that the
                treatment provided to outdoor patients is 39.8 per cent
                and instead of 10 cent indoor patients it is 8.9. per cent.
       F        In connection with this submission, it may be observed
ti'!
                that this aspect of the matter has been considered by the
                Commissioner as well as CEGAT in some details and
                ultimately it has been found that there was a shortfall which
                is also not disputed by the respondent. A perusal of the
       G        condition in the notification indicates that on an average,
                 at least" 40 per cent of all outdoor patients should be
                 provided free tr.eatment. It is, thus, at least 40 per cent or
                 maybe above. It is submitted that the condition nowhere
                 indicates that within what period the prescribed percentage
       H         is to be achieved. It is submitted that it should be during
   ANDROMEDA FOUNDATION INDIA P. LTD. v. D.G.H.S.             83
         AND ORS. [HARJIT SINGH BEDI, J.]

     the life of the equipment imported. Thus, shortfall of a A
     particular year may be made good in the following year.
     We are not impressed by this argument. It would, not at all,
     be necessary to prescribe any period to achieve the given
     percentage of patients treated free. It should generally be
     all through the period. It being at least 40 per cent, there  s
     is hardly any occasion to say that in case there is more
     than 40 per cent in a given period, that may make good
     the deficiency in the previous or the following year. In any
     case, over and above all, it has not been in dispute that
     the Centre did not have inpatient facility. According to the c
     condition of notification, 10% of the total beds in the hospital
     are to be kept reserved for patients of 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 D
     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 10 per cent of the total number of
     beds are supposed to be reserved for patients of such
     families in the hospital where the equipment is installed. E
     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 the alleged arrangements had the approval of the F
     authority concerned or that it was brought to their notice at
     all."

     8. It has been contended by Mr. Mukherjee that as per the
information provided by the appellant in his proforma, there was   G
only a marginal deviation in the provision of free facilities to
those having an income of less than Rs.500 per month. We see
from a perusal of the record that this was not the only factor
which had led to the action against the appellant as several cu-
mulative factors had been taken into account, the primary one
                                                                   H
   84        SUPREME COURT REPORTS                   [2008] 9 S.C.R.


A being the non-submission of the information in the prescribed
  format. We have also perused the extract of the OPD register
  furnished by the appellant in its own format with regard to the
  provision of free facilities to the poor. We cannot but remark
  that it hides more than it reveals.
B        9. We are also conscious of the large scale misuse of the
   medical equipment imported under the exemption notification,
   and in the light of the observations in Mediwe/l's case supra, it
   is essential that the authorities regulatory monitor the use of the
   equipment. We accordingly find no merit in this appeal. Dis-
   missed.
   D.G.                                          Appeal dismissed