IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH AT HYDERABAD (Special Original Jurisdiction) FRIDAY, THE THIRTY FIRST DAY OF DECEMBER TWO THOUSAND AND FOUR PRESENT THE HON'BLE SRI JUSTICE.H.S. ANSARI AND THE HON'BLE SRI JUSTICE T.CH.SURYA RAO WRIT PETITION Nos.1701 of 1998 and 22195 of 2000 W.P.No.1701 of 1998 Between: M/s.Vijaya Diagnostic Centre & Cancer Hospital, Rep. by its partner, Dr.S.Surender Reddy, S/o.Linga Reddy, 3-6-20 , Tirumala Apartmants , Sky Line Theatre Lane, Hyderabad -29. ..... PETITIONER AND 1 Additional Deputy Director General (Medical), Nirman Bhavan New Delhi. 2 Director General of Health Services, Nirman Bhavan , Moulana Azad Road, New Delhi. 3 Asst. Commissioner of Customs(Enforcement Wing), Customs and Central Excise Building, Basheerbagh, Hyderabad. 4 Director General of Medical Education, A.P., Sultan Bazar , Hyderabad. (R4 is impleaded as per Court order Dt.2-9-98 in W.P.M.P.No. 29161/98) .....RESPONDENTS Petition under Article 226 of the Constitution of India praying that in the circumstances stated in the affidavit filed herein the High Court may be pleased to issue a writ, direction quashing the impugned letter F.No.37011/11/89-MG, Dt:31-10- 1997, (Annexure -D) issued by the 1st respondent as opposed to principles of natural Justice arbitrary in violation of notification 64/88, Dt:1-3-1988. Counsel for the Petitioner: Mr.S.RAVI Counsel for Respondent Nos.1 to 3: Mr.A.RAJASEKHAR REDDY, S.C. FOR CENTRAL GOVT. Counsel for Respondent No.4: G.P.FOR MEDICAL & HEALTH. WRIT PETITION No.22195 of 2000 Between: M/s.Vijaya Diagnostic Centre & Cancer Hospital, Rep.by its Sole Proprietor, Dr.S.Surender Reddy, S/o.Ramlinga Reddy 3-6-20, Tirumala Apartments, Sky Line Theatre Lane, Hyderabad -29. ..... PETITIONER AND 1 The Director General of Health Services (M.G.Section) Nirman Bhavan , New Delhi. 2 The Director of Medical Education, A.P., Hyderabad. 3 The Secretary to Govt., HM & FW Dept , Govt of A.P., Hyderabad. .....RESPONDENTS Petition under Article 226 of the Constitution of India praying that in the circumstances stated in the affidavit filed herein the High Court may be pleased to issue a writ, direction or order especially in the nature of writ of Mandamus declaring that the letter dated 06-09-2000 issued by the 1st respondent as being illegal, arbitrary and void. Counsel for the Petitioner: Mr.S.RAVI Counsel for the Respondent No.1: Mr.A.RAJASEKHAR REDDY, S.C. FOR CENTRAL GOVT. Counsel for the Respondent Nos.2 & 3:G.P.FOR MEDICAL & HEALTH. The Court made the following : ORDER: (per the Hon’ble Sri Justice M.H.S.Ansari) The above two writ petitions are by the same writ petitioner, Vijaya Diagnostic Centre and were heard analogously and are being disposed of by this common order. In W.P.No.1701 of 1998, the petitioner has questioned the order dated 31-10- 1997 whereby the Customs Duty Exemption Certificate (CDEC) issued was withdrawn and cancelled for the reason that they have not complied with the conditions with respect to the free facilities to be extended to 40% of out-patients and all patients of low income group whose income was less than Rs.500/- per month. It may be stated here that the order of cancellation was preceded by a show cause notice dated 3-7-1997 to which a reply dated 18-7-1997 was submitted by the petitioner. W.P.No.22195 of 2000 is filed questioning the order dated 6-9-2000 whereby CDEC issued on 1-11-1989 for import of Photometric Auto Analyser and Digital Gamma Camera was withdrawn. The action was preceded by a show cause notice dated 31- 12-1999, to which a reply was given by the petitioner on 10-1-2000. With respect of the Digital Gamma Camera, the show cause notice was issued on the ground that the petitioner institution is only a diagnostic centre not having indoor patient treatment facilities and thus not fulfilled the obligation of providing free indoor treatment. In the reply of the petitioner, it was stated that the name of the petitioner institution was changed to Sairam Hospital, however, it was not disputed that the equipment was imported in terms of Notification No.64/88. In particular, it was stated in the reply of the petitioner dated 16-7-1997 as under. After the installation, the institution was duly providing free Gamma Camera facility to 40% of the out patients and to all patients of low income group whose income is less than Rs.500/- p.m. as stipulated and due records of the services extended were submitted to the State Government Authority. This practice has been diligently followed. The House Committee, comprising of Members of the Legislative Assembly, Senior Govt. Doctors and Government Officers from the Medical and Health Department, appointed by the State Government had also visited and inspected the record. From the above, it would be apparent that the petitioner seems to be under the impression that the conditions to be fulfilled are in respect of the equipment and not with respect to the treatment in the hospital as out-patients and in-patients. From the averments in the writ application, the stand of the petitioner appears to be that there is no power conferred under Section 25(1) of the Customs Act to modify the notification restricting it to hospitals. Secondly, the contention appears to be that there is no power of review conferred on the authority that granted the certificate to withdraw the same. It is buttressed by the submission that the customs duty exemption and its validity extends only till it is produced before the customs authorities to claim the benefit of the exemption under Notification No.64/88 and the same was done and benefit was availed in the year 1989 and the same cannot be withdrawn, as it is sought to be done, by the impugned order. With regard to the Photometric Auto Analyser, the stand of the petitioner appears to be that they are not using the machine from April 1995 and that there are no patients admitted in hospital for want of this diagnostic test and hospitalisation is not required for doing the test with the said machine. It is thus apparent that the petitioner has not fulfilled the notificational conditions pursuant to which the CDECs were issued in respect of the two equipments in question. The contention as to whether the conditions stipulated in Notification No.64/88 are to be complied with at all times or only at the time of import of the equipment as also the further contention as to the power to review the decision are concerned, the matter is covered by the judgment of the Supreme Court in Mediwell Hospital & Health Care Pvt. Ltd. v. Union of India, wherein Notification No.64/88 has been construed and pertinent observations of the Supreme Court, which conclude the matter, are as under. ……………………….the very notification granting exemption must be construed to cast continuing obligation on the part of all those who have obtained the certificate from the appropriate authority and on the basis of that have imported equipments without payment of customs duty to give free treatment at least to 40 per cent of the outdoor patients as well as give free treatment to all the indoor patients belonging to the families with an income of less than Rs.500 per month. The competent authority, therefore, should continue to be vigilant and check whether the undertakings given by the applicants are 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 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. Needless to mention, the Government has granted exemption from payment of 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 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 realisation of the customs duty from them. From the above, it would be apparent that a continuing obligation is cast on the part of all those who have obtained the certificate to comply with the specified conditions and duty is cast upon the authority that gave the certificate of exemption to ensure that the obligations are being duly carried out and in the event they are satisfied, as, in the case on hand, the said obligations have not been discharged, they can enforce realisation of the customs duty from them. In the circumstances, the above two writ petitions are liable to be and are accordingly dismissed. However, there shall be no order as to costs. ____________________________ (M.H.S.ANSARI, J.) 31st December 2004. ____________________________ (T.Ch.SURYA RAO, J.) ARS To 1 The Additional Deputy Director General (Medical), Nirman Bhavan, New Delhi. 2 The Director General of Health Services, Nirman Bhavan, Moulana Azad Road, New Delhi. 3 The Asst. Commissioner of Customs (Enforcement Wing), Customs and Central Excise Building, Basheerbagh, Hyderabad. 4 Director General of Medical Education, A.P., Sultan Bazar , Hyderabad. 5 The Director of Medical Education, A.P., Hyderabad. 6 The Secretary to Govt., HM & FW Dept , Govt of A.P., Hyderabad. 7 Two C.C.s to Govt. Pleader for Medical & Health, High Court Bldgs., Hyderabad (OUT). 8 Two CD copies.