A Public Interest Litigation No. 409/96 was filed in the Hon.ble Delhi High Court seeking quashing of illegal Custom Duty Exemption Certificates (CDEC) issued by DGHS under Notification Number 64/88 dated 1.3.88 in respect of medical equipments, alleged to have caused huge loss to the Public exchequer, The Hon'ble High Court directed an inquiry to be conducted by Sh. K. Chandramouli, the then Joint Secretary, Min. of Health & Family Welfare. Sh. Chandramouli submitted the report on 29.8.96 wherein 23 institutions were scrutinized as test cases.
On consideration of the above report Honb'le Delhi High Court vide its order dated 18.10.96 constituted another committee headed by Mr. Padma Rosha retired Director General (Security) J & K, omprising Officers from various concerned Ministry/Department of Government of India. The Committee was set-up to :
Enquire whether Customs Duty Exemption Certificates have been issued by the Ministry of Health & Family Welfare, Directorate General of Health Services, for individual importers/institutions in accordance with the terms and conditions laid down in the Notification No. 64/88-Cus., dated 1.3.1988 and any other prescribed parameters or policy guidelines;
Enquire whether any such certificates have been issued by the Ministry of Health & Family Welfare/Directorate General of Health Services to individual importers or institutions who were otherwise not entitled to receive them
Enquire whether the concerned institutions have fulfilled the conditions subject to which the exemption from duty was granted
Identify the persons in the Ministry of Health & Family Welfare/ Directorate General of Health Services/Department of Customs/ officials of the State Governments/Union Territory Administrations and others who wereinstrumental in issuing certificates to non- entitled importers/ institutions or for non-verification of the post importation conditions or clearance of such goods from the Ports in the absence of the said certificates without taking adequate precautions
Suggest action against individuals who have been instrumental in issuing or procuring customs duty exemption certificate unauthorisedly resulting in evasion of duty both for criminal liabilities and administrative lapses, if any.
The Committee completed scrutiny of 401 cases out of which it was found that 123 institutions (including diagnostic centers) were not entitled for exemption and 217 institutions failed to fulfill post importation conditions. In these cases recovery of duty is to be monitored. In 56 cases departmental action has been recommended against Customs officials.
The Department of Revenue was, therefore, required to take follow up action in the matter. The Hon'ble High Court further constituted a One-Man Committee , comprising of Member (Customs), in order to monitor the recovery of duties and file periodic progress reports so far 20 periodic reports have been filed. The 20th report giving the position as on 31.7.2002 giving the position of recovery of duty was filed in the court in November 2002.
After filing the 15th report the Board in their Circular No. 107/2000 (F.No. 460/119/96-Cus. V-Pt.) dated 26.12.2000 assigned the task of submission of periodic progress report of quantification and recovery on the basis of the reports of the commissioner to DGICCE.