Key Quantitative Figures

  • Customs duty demand: Rs. 1,89,45,984/- (One Crore Eighty Nine Lakhs Forty Five Thousand Nine Hundred Eighty Four)
  • Redemption fine: Rs. 3,00,000/- (Three Lakhs)
  • Penalty: Rs. 18,94,598/- (Eighteen Lakhs Ninety Four Thousand Five Hundred Ninety Eight)
  • Total assessable value of imported equipment: Rs. 4,52,89,841/-
  • Interest payable under Section 125(2) of Customs Act, 1962

Dates of Action

  • Date of receipt of order: 28.10.2026
  • Order issuance date: 27.10.2026
  • Original show cause notice date: 24.07.2000
  • Import period: 1990 to 1993
  • Field enquiry: 1999-2000
  • DGHS inspection: 20.09.2000
  • DGHS withdrawal of CDEC: 30.01.2001

Parties Involved

  • Regulatory authority: Joint Commissioner of Customs, Office of the Principal Commissioner of Customs (Air Cargo), Chennai
  • Adjudicating officer: Dr. Shubhdeep Kaur, IRS
  • Directorate General of Health Services (DGHS), Ministry of Health and Family Welfare

Details of Violation

The hospital imported medical equipment during 1990-1993 under 20 Bills of Entry totaling Rs. 4,52,89,841/- availing duty exemption under Notification No. 64/88-Cus. dated 01.03.1988. The notification required:

  • Free treatment to at least 40% of all outdoor patients
  • Reservation of 10% hospital beds for indoor patients from families with income less than Rs. 500/- per month
  • Treatment at reasonable charges to other patients

Evidence of Non-compliance

Customs field enquiry and DGHS inspection revealed:

  • Hospital failed to provide required free treatment to economically weaker sections
  • Free treatment was limited to directors, doctors, employees and persons close to management
  • 25 beds earmarked for poor patients were occupied by paying patients
  • No proper records maintained for free treatment except for April-October 1998 period
  • Statistics showed 40% outpatient free treatment achieved only in 2 of 7 months (June and September 1998)
  • Only registration, consultation and testing fees were waived, not comprehensive treatment

Procedural History

  • Show cause notice issued on 24.07.2000
  • Multiple writ petitions filed by hospital challenging DGHS actions (WP Nos. 3898/2001, 16487/2011, 3603/2012)
  • DGHS withdrew CDECs on 30.01.2001, 04.04.2011 and 27.12.2011
  • Personal hearings granted in 2001, 2010, 2011, 2026
  • Case revived for adjudication in January 2025 after DGHS review meeting
  • Final personal hearing held on 26.09.2026 via virtual mode

Financial Impact

Confirmed financial impact quantified as:

  • Customs duty payable: Rs. 1,89,45,984/-
  • Redemption fine: Rs. 3,00,000/-
  • Penalty: Rs. 18,94,598/-
  • Interest payable under Section 125(2) of Customs Act, 1962

Capital Structure Impact

No direct impact on capital structure disclosed. The order relates to recovery of customs duty and penalties on historical imports.

Appeal Provisions

The order allows appeal within 60 days to Commissioner of Customs (Appeals), Chennai. Appeal requires payment of 7.5% of duty demanded as pre-deposit under Section 129E(1) of Customs Act, 1962.

Additional Information

  • Equipment imported included 17 medical devices under 20 Bills of Entry
  • Hospital claimed depreciation on imported medical equipment
  • DGHS categorised hospital under Sl.No.4(b) of Notification No. 64/88
  • Hospital argued that medical camp treatments should count toward 40% OPD requirement, but DGHS and Customs rejected this
  • Case pending for 26 years since show cause notice issuance