Madras HC upholds Cancellation of Customs Exemption Certificate issued to Apollo Hospitals [Read Order]

In a recent judgement, the Madras High Court has cancelled the cancellation of the customs duty exemption certificate issued to the Apollo Hospitals.

The petitioners are leading Multi-Specialty Hospitals and pioneers in the field of treatment of serious diseases. Some of the petitioners had received ISO 9002 from the Bureau of Indian Standards. The petitioners/Hospitals require sophisticated equipment to keep up with international standards and therefore, they have to import various medical equipment including Linear Accelerators, Cobalt Therapy Units, Magnetic Resonant Imagers (MRI), CT Scan, etc.,

The petitioners/hospitals imported various medical equipment between the year 1985 till 1993 under Customs Notification No.64/88 dated 01.03.1988 and claimed exemption from payment of duty. The petitioners state that they had been complying with the procedures and the conditions stipulated in the Notification and the 2nd respondent had been issued Customs Duty Exemption Certificate (CDEC) in respect of various equipment imported by the petitioners/hospitals between 1985 and 1993.

The petitioners/hospitals submitted applications to the Health authorities of the State Government, who after visiting the petitioners/hospitals and after carrying out inspections and satisfying themselves with the compliance of the notification issued by the Director General of Health Services, recommend all the cases to the second respondent for issuance of CDECs to the petitioners/hospitals. The petitioners/hospitals have been rendering free treatment to those patients as stipulated in the notification and to patients referred from Government General Hospitals.

As certain applications for granting CDEC were pending for a long time, the petitioners/hospitals requested the DGHS to forward the certificates in view of the pressure from the Customs Department. The 2nd respondent cancelled CDECs already.

The Director of Health Services, New Delhi found that the writ petitioners hospitals have not treated 40% of the outdoor patients and its indoor patients free of cost. Hence, they have not fulfilled the post-import conditions as undertaken at the time of importation of goods. Thus, the writ petitioners are found to be not eligible to avail/retain the CDECs issued to them under notification No.64/88 Cus dated 01.03.1988.

The Single Judge bench of Justice S.M. Subramaniam has observed that the petitioners could not establish that they have treated 40% of their outdoor patients in the hospital, where the imported medical equipment is installed and further they have failed to establish that 10% of all the hospital beds are reserved for such patients, who have taken free treatment in the hospital, where the imported medical equipment is installed.

The Court observed that the respondents have rightly and legitimately cancelled the Customs Duty Exemption Certificate (CDEC) granted in favour of the petitioners, which aligns with the Constitutional principles and the purpose and object of the conditions imposed in Notification No.64/88 in public interest from public funds and dismissed the petition.

To Read the full text of the Order CLICK HERE

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