Ashok Bhan, J.

1. This appeal is filed by the unsuccessful petitioner aggrieved by the order of the learned Single Judge dated 25-6-1999 in W.P. No. 8244 of 1999.

2. Facts: The appellant is running a hospital and is catering to the medical requirements of patients belonging to all sections of society. The appellant imported various medical equipments during the years 1988 to 1996 by availing the exemption from payment of duty in terms of the notification dated 1-3-1988 bearing No. 64 of 1988. The Director General of Health Services issued a certificate certifying that the items mentioned are exempt from payment of customs duty in terms of the Ministry of Finance Notification dated 1-3-1988. The appellant, after import, is using the equipments in terms of the notification.

3. Respondent 2-the Appraiser of Customs visited the hospital on 4-3-1999 and seized the equipments being used by the appellant. The only reason given in the mahazar drawn on the date of seizure is that the appellant failed to fulfill the conditions in terms of the notification dated 1-3-1988. In the mahazar, the respondent 2 stated that the investigation conducted by the Customs Department as per the directions of the Rosha Committee, New Delhi, the hospital has failed to fulfill the conditions stipulated in the said notification and therefore the medical equipments imported by the hospital are liable for confiscation as per the provisions of Customs Act, 1962. The seizure was challenged before this Court in W.P. No. 8244 of 1999. Notice was ordered and after hearing, this Court dismissed the said petition on the ground that a continuing obligation is cast on the appellant and the appellant having failed to comply with the continuing obligation, cannot have the benefit of the exemption of customs duty. This Court also ruled that the contentions of the petitioner that the exemption certificate, unless cancelled, will continue to hold the field, has no substance. In conclusion, this Court dismissed the petition. It is this order dated 25-6-1999 that is challenged before us.

4. Notice was ordered in the appeal and the respondents have entered appearance. They have also filed an I.A. on 15-11-1999 along with various documents.

5. The matter was posted for admission and with the consent of the learned Counsel on both sides, the matter was finally heard and after hearing we pass the following order.

6. Sri B.L. Acharya, learned Counsel essentially raised two contentions. The first contention is that without taking any steps of cancelling the exemption already granted to the appellant, the Customs Authority cannot confiscate the equipments. It is his contention that the confiscation is the consequential act on account of cancellation of the certificate granted in favour of his client. He stated that during the subsistence of the certificate, without cancellation, no coercive steps could be taken. He contended that the learned Judge, in the circumstances, committed an error. Secondly he argued that in identical circumstances, the very respondents in W.P. No. 20392 of 1998 has accepted the proposition that without withdrawing the certificate already issued, no steps could be taken by the respondents. It is his contention that the respondents cannot take different stands in two identical cases in identical circum- stances. In conclusion he wanted the Appellate Court to set aside the order in the light of these two submissions.

7. Per contra, Sri Veerendra Shah, learned Counsel appearing for the Department essentially contended that the appellant having committed certain violations, cannot be permitted to have a conditional exemption granted to the appellant. The violation of the condition of the certificate entitles the Department to take action. He relied on Rosha Committee in support of his contention. He further relies on the judgment of the Supreme Court to contend that the confiscation is proper and legal. He wants us to confirm the order of the learned Judge.

8. After hearing both the Counsel we are of the view that there is substance in the argument of Sri B.L. Acharya, learned Senior Counsel for the appellant.

9. A valid certificate has been issued and the said certificate, even as on date, has not been withdrawn or cancelled for any alleged violation of the condition by the appellant. Unless the said certificate is cancelled, the Customs Authorities cannot impose customs duty. The seizure of the equipment is only a consequential act that would follow the cancellation of the certificate issued in favour of the appellant. So long as the certificate is not cancelled, the respondents could not, in our opinion, have initiated seizure proceedings in the case on hand. Petitioner-appellant was sent only a questionnaire and the said questionnaire has been answered by the appellant herein. No further action has been taken by the respondents. The Director General of Health Services has also not issued any cancellation of certificate as on date. In these circumstances, we are clearly of the view that without withdrawing or cancelling the certificate already issued, the present seizure cannot stand. Therefore we hold that the seizure effected by the respondents is not in accordance with law. The impugned order of the learned Single Judge, in these circumstances, requires to be set aside and accordingly the same is set aside.

9-A. Sri Veerendra Shah, learned Counsel for the Department however invited our attention to the recommendations of the Rosha Committee to contend that the respondents were justified in their action. We have gone through the document No. 2, dated 15-7-1998 issued by the Member-Secretary, Central Excise and Customs, Bangalore. The said communication categorically provide for institution of enquiries under the Customs Act as to whether the institutions were entitled to such exemption and has fulfilled two conditions subject to which such exemption was granted. In order to facilitate the enquiry, copies of CDECs Bills of Entry/Invoices obtained directly from the institution by the Committee are to be forwarded. After completing the enquiry, the Department is to forward a copy of the inquiry report to the Commission within two months to enable the Committee to complete their scrutiny in accordance with the terms of reference given to them. To our repeated question to the Counsel, he is unable to show as to whether an inquiry in terms of Clauses 4 and 5 has either been conducted or completed and further as to whether there are any report sent to the Commission. In the absence of any inquiry in terms of Clauses 4 and 5, the respondents cannot derive any support from the said communication. This contention is therefore rejected.

10. Sri Veerendra Shah, learned Counsel also relied upon the judgment of the Supreme Court in Mediwell Hospital and Health Care (Private) Limited v Union of India and Others. Even in the said judgment, the Supreme Court, after noticing has ruled as under:--

"While, therefore, we accept the contentions of Mr. Jaitley, learned Senior Counsel appearing for the appellant that the appellant was entitled to get the certificate from respondent 2 which would enable the appellant to import the equipment without payment of customs duty but at the same time we would like to observe that the very notification granting exemption must be construed to cast continuing obligation on the part of all those who obtained the certificate from the appropriate authority and on the basis of that to have imported equipments without payment of customs duty to give free treatment at least to 40% of the outdoor patients as well as would 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 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 person 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 subject 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. The 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".

(emphasis supplied)

In this para the Supreme Court has ruled the Competent Authority should continue to be vigilant and check whether the undertaking given are duly complied with after getting the benefit of the exemption notification and importing 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 person to avail of the benefit of exemption to pay the duty payable in respect of the equipment which have been imported without payment of customs duty. A careful reading of the said judgment shows that in the event of the violation of the continuing obligation, the authority who had issued the certificate, has the right to demand the payment of customs duty. Unfortunately, in the case on hand, the said authority has neither issued any notice of violation nor has administered the customs duty for violation of the exemption conditions. In these circumstances, we are of the view that the respondents have committed an error in seizing the equipments without demanding the customs duty for violation and rather without cancelling the exemption certificate granted to the appellant. The learned Judge, in our opinion, in the circumstances, has committed an error in dismissing the petition. Moreover, in identical circumstances the very respondent has taken a stand that without withdrawing the certificate already issued no steps can be taken as seen in the judgment in W.P. No. 20392 of 1998. That being the case, we are of the view that the Department having taken a definite stand in that case, cannot take different stand under any changed circumstances.

11. In the result, we pass the following order:--

(1) Writ appeal is allowed.

(2) The order of the learned Single Judge is set aside.

The seizures effected by the respondents stand quashed and the machines are to be released in favour of the petitioner.

is clarified that this order does not come in the way of respondents initiating any proceedings against the appellant in the matter of cancellation for violation of the conditions or in demanding the customs duty after following the procedure prescribed in law. No costs.