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Lions Club of Poona Vs. Commissioner of Customs (ACC & Import), Mumbai - (Customs, Excise and Service Tax Appellate Tribunal) (03 Jun 2019)

Control by Government authorities requires managerial control on day to day functioning of such society in order to claim exemption provided for purchase of hospital equipment



Rejection of Appellant's claim for exemption of customs duty under Notification No. 63/88-Cus against purchase of hospital equipment (C.T. Scanner) by the Commissioner of Customs is assailed in present second round of appeal. In present case, Appellant is a charitable trust who purchased certain hospital equipment way back in 1989 including Hitachi whole body x-ray C.T. Scanner and availed duty exemption under Notification No. 63/88 (1-3-1988) but subsequently, vide two show cause notices issued by two different Customs authorities, it was asked to discharge duty demand and pay penalty or show cause why the goods were not to be confiscated. The adjudication order confirmed allegation made in the show cause and also confirmed duty demand etc..

Commissioner of Customs gave his finding vide his order that, Appellant did not qualify to avail exemption Notification 63/88 Cus conditionalities and issued direction for confiscation of goods, redemption of fine as well as penalty that was earlier adjudicated in the order-in-original and confirmed by the CESTAT.

As per Notification No. 63/88-Cus dated 1st march 1988, it can be seen that exemption is provided to the hospital equipment when imported by Central, State Government hospitals etc. or society registered under any law for the time being relating to registration of societies, which are being controlled by any of the authorities of the Central Government, State government, Union Territory Administration or local authorities. The meaning of word "control" is the power to influence or direct or supervise the behavior and conduct of people or organization in the course of event and "government control" signifies the control exercised over the action or affairs by the State.

As found from the order of the Commissioner of Customs (Import), the only claim that was established by the Appellant relating to control of the State Government is filing of returns under the Act and nothing more was substantiated before him. The Commissioner of Customs (Import) had given his views that such control by Government authorities requires managerial control on day to day functioning of such society, which is admittedly found absent in the case of the Appellant. Therefore, Commissioner had given his finding that requirements of exemption notification were not fulfilled in that aspect.

Furthermore, another condition available in Notification 63/88 that the hospital, which includes expression like trust or society, had to produce a certificate from the Director of Health Services of the Government of India or the Ministry of Health and Family welfare in the Government of India to the effect that the said hospital falls in either of the categories specified in the table (which includes registered society). Such certificate was not produced by the appellant to make it eligible for exemption under notification No. 63/88-Cus.

Conversely, Appellant failed to substantiate that Commissioner's finding was wrong in respect of production of such certificate and in respect of exercise of Government control over its functioning that would necessitate interference of the Tribunal in the order passed by the Commissioner (Appeals). The Appeal is dismissed and the order passed by the Commissioner (Appeals) is hereby confirmed.


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