COMMISSIONER OF CUSTOMS (IMPORT) MUMBAI versus M/S. JAGDISH CANCER AND RESEARCH CENTRE

Citation: [2001] SUPP. 1 S.C.R. 245 · Decided: 02-08-2001 · Supreme Court of India · Bench: S.P. BHARUCHA · Disposal: Appeal(s) allowed

Judgment (excerpt)

.. 
COMMISSIONER OF CUSTOMS (IMPORT) MUMBAI 
A 
v. 
MIS. JAGDISH CANCER AND RESEARCH CENTRE 
AUGUST 2, 2001 
[S.P. BHARUCHA, Y.K. SABHARWAL AND BRIJESH KUMAR, JJ.] 
B 
Customs Act, 1962: Sections 25(1), 28(1), l ll{o), 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)- C 
Section 28(1) is not attracted in such a case. 
Customs duty-Notification No. 64188-Cus. Dated 1.3.1988-Hospital 
equipments-Import of-Exemption from duty-Conditions necessary for 
exemption-Free treatment to at/east 40% of all outdoor patients-No period D 
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. 
E 
A hospital equipment Imported by the respondent-Centre was given 
duty free clearance in terms of Notification No. 64188-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 F 
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. (I) to provide free treatment to at least 40% of the out door patients and G 
(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 I I l(o) 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. 
245 
I-I 
246 
SUPREME COURT REPORTS [2001] SUPP. I S.C.R. 
A 
On appeal, the Customs, Excise and Gold (Control) Appellate Tribunal 
held that Secti~n 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 
B in Para 3 of notice. Accordingly CEGA Tallowed 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. 
c 
Allowing the appeal, the Court 
HELD : 1. The objection raised by the respondent-Centre that Section 
28 of the Customs Act would be attracted is not sustainable. A reading of 
Sub-sections (1) and (2) of Section 125 together makes it clear that liability 
to pay duty arises under Sub-section (2) in addition to the fine under Sub-
section (1). Therefore, where an order is passed for payment of customs duty 
D along with an order of imposition of fine in lieu of confiscation of goods, it 
· shall only be referable to Sub-section (2) of Section 125 of the Customs Act. 
It would not attract Section 28(1) of the Customs Act which covers the cases 
of duty not levied, short levied or erroneously refunded etc. The order for 
payment of duty under Section 125(2) would be an integral part of proceedings 
relating to confiscation and consequential orders thereon, on the ground as 
E in this case, that the importer had violated the conditions of notification subject 
to which exemption of goods was granted, without attracting the provisions 
of Section 28(1) of the Customs Act (252-G, D, El 
2. A perusal of para 7 of the notice would indicate that confiscation of 
the subject goods was intended for violation of various conditions of 
F Notification No. 64/88 dated 1.3.1988. Various conditions which were violated 
are indicated in paragraphs 3 and 5 of the notice. Para 3 contained only one 
condition and not various conditions. Therefore, reading the notice parawise 
and confining it watertight within each paragraph, would not be a correct 
way of construing a notice. It is to be read as a whole to f

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