Customs Act, 1962: Sections 25(1), 28(1), 111(0), 112, 124 and 125.

Customs duty Order passed for payment of customs duty along with order of fine in lieu of confiscation-Held, it is referable to Section 125(2)- Section 28(1) is not attracted in such a case.

Customs duty Notification No. 64/88-Cus. Dated 1.3.1988-Hospital equipments-Import of Exemption from duty-Conditions necessary for exemption-Free treatment to atleast 40% of all outdoor patients-No period can be prescribed for achieving the given percentage-It is generally all through the period-Reservation of Beds in hospital for families having income of less than Rs. 500 per month-Beds should be reserved in the hospital where the equipment is installed Import of Teletherapy Unit-Failure to comply with conditions of exemption-Order confiscating goods and levy of penalty- Held valid.

A hospital equipment imported by the respondent-Centre was given duty free clearance in terms of Notification No. 64/88-Cus. dated 1.3.1988 subject to certain conditions specified in the Notification. Subsequently, it was found that the conditions of the Notification had been violated by the respondent. Consequently the Assistant Commissioner of Customs issued a show-cause notice to the respondent. The adjudicating authority rejected the objection raised by respondent that notice was not issued by competent officer and was also beyond time in terms of Section 28(1) of the Customs Act, 1962. It found that respondent had failed to comply with conditions of Notification viz. (1) to provide free treatment to at least 40% of the out door patients and (ii) Reserve 10% beds in hospital for patients belonging to families with an income of less than rupees five hundred per month. Accordingly, an order was passed confiscating the imported goods under Section 111(0) with an option to redeem the same under Section 125(2) on payment of fine of Rs. 50,000. A penalty of Rs. 5,000 was also imposed.

On appeal, the Customs, Excise and Gold (Control) Appellate Tribunal held that Section 28(1) was attracted and the Assistant Commissioner (Customs) was not the proper officer to issue show cause notice. It found that a new case was made out for confiscation of the imported goods on the ground of not providing free treatment, which was not the ground for confiscation  in Para 3 of notice. Accordingly CEGAT allowed the appeal setting aside the order of confiscation as well as the penalty imposed. The liability of customs duty was however upheld though found to be unenforceable for want of legal and valid show cause notice. Hence this appeal