Madras High Court Upholds The Cancellation Of Customs Duty Exemption Certificate Issued To Apollo Hospitals

The Madras High Court has cancelled the cancellation of the customs duty exemption certificate (CDEC) issued to the Apollo Hospitals.

The bench of Justice S.M. Subramaniam has observed that the petitioner hospital has failed to establish that they have treated 40% of their outdoor patients in the hospital, where the imported medical equipment is installed. The petitioner hospital has also failed to establish that 10% of all the hospital beds are reserved for such patients who have received free treatment in the hospital where the imported medical equipment was installed.

The petitioners/hospitals imported various medical equipment between the years 1985 and 1993 under Customs Notification No. 64/88 dated March 1, 1988, and claimed exemption from payment of duty.

The petitioner stated that it had been complying with the procedures and the conditions stipulated in the notification, and the Customs Duty Exemption Certificate (CDEC) had been issued in respect of various equipment imported by the petitioner's hospitals between 1985 and 1993.

The Director General of Health Services, in order to overcome certain medical deficiencies that were noticed, brought out certain modifications to overcome the same. Accordingly, the Director General of Health Services, New Delhi, issued an order dated August 10, 1993.

As per the letter, the petitioner's hospitals submitted applications to the health authorities of the state government, who, after carrying out inspections and satisfying themselves with the compliance of the notification issued by the Director General of Health Services, recommended all the cases for issuance of CDECs to the petitioner's hospitals. The petitioner hospitals have not only been rendering free treatment to those patients as stipulated in the notification but also to patients referred from government general hospitals.

The petitioner contended that there is nothing on record to show about the non-compliance of the conditions imposed in Notification 64/88 during the period when the notification was in force. Therefore, recourse to Section 159-A of the Customs Act is completely untenable. The petitioners have received free treatment in outdoor centers, where their branch hospitals are located.

The department contended that there is a continuing onus on the part of the beneficiary to fulfill the conditions of the notification. The Notification No. 64/88-Customs augmented Section 25 (1) of the Customs Act, and the Act and relevant clause are still in force. Therefore, the petitioner hospitals have failed to comply with the conditions as well as the undertaking given by them to fulfill the requirements.

The court, while dismissing the petition, held that respondents have rightly and legitimately canceled the CDEC granted in favor of the petitioners, which is in consonance with the constitutional principles and the purpose and object of the conditions imposed in Notification No. 64/88 in the public interest from public funds, more so, the petitioners have given the undertaking to comply with the conditions.

Case Title: M/s. Apollo Hospitals Enterprises Ltd. Versus Union of India

Citation: 2023 LiveLaw (Mad) 139

Case No.: W.P.Nos.17899 & 17900 of 2010, 418 & 419 of 2011

Date: 26.04.2023

Counsel For Petitioner: C.Mani Shankar

Counsel For Respondent: AR.L.Sundaresan

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