Rs. 1.57-Crore Customs Demand on Cancer Therapy Equipment Quashed Citing Time-Barred Notice: CESTAT

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Chennai has set aside a customs duty demand of Rs. 1.57 crore raised against a Hospital in connection with the import of a “TrueBeam” Linear Accelerator system used for cancer treatment. The bench of Ajayan T.V. (Judicial Member) and M. Ajit Kumar (Technical Member) held that the show cause notice issued by the Customs Department was barred by limitation and, on that ground alone, quashed the entire proceedings without entering into the merits of classification. Nagarjuna Hospital Ltd., Vijayawada, had imported the TrueBeam Linear Accelerator along with related accessories under two Bills of Entry dated 18 March 2016. The hospital claimed customs duty exemption under Notifications No. 12/2012-Cus. and 21/2012-Cus. by classifying the equipment under Customs Tariff Heading (CTH) 9022 90 30 as a radiation beam delivery unit. The goods were subjected to first-check examination by Customs authorities, catalogues and documents were scrutinised, and final assessment was completed. Duty was paid and the consignments were cleared in May 2016. Subsequently, the Customs Department initiated an investigation and issued a show cause notice on 26 September 2017 alleging that the importer had deliberately misclassified the equipment to avail ineligible duty exemption. The Department contended that the Linear Accelerator was a complete cancer therapy system classifiable under CTH 9022 14 90 and that the importer had split the system into multiple consignments to facilitate wrongful classification. On this basis, the Commissioner of Customs confirmed a differential duty demand of ₹1.57 crore under Section 28(4) of the Customs Act, along with interest and equal penalty, and ordered confiscation of the goods with an option of redemption on payment of fine. Before the Tribunal, the appellant argued that the entire demand was time-barred since the goods had been examined and finally assessed by Customs after first-check inspection, and the show cause notice was issued beyond one year from the date of clearance. It was contended that there was no suppression or misdeclaration and that the dispute, at best, related only to classification. The appellant relied on earlier Tribunal decisions involving similar Linear Accelerator imports where extended limitation was held to be inapplicable. The Revenue, on the other hand, alleged deliberate misdeclaration and suppression of facts, asserting that the importer, being a medical professional, was fully aware of the nature of the equipment. It was argued that the classification adopted by the importer was contrary to the supplier’s invoice and technical literature, and that the extended period under Section 28(4) had been rightly invoked. The Department also attempted to argue that proceedings under Sections 124 and 125 of the Customs Act were not constrained by strict limitation. After examining the record, the CESTAT held that the show cause notice was issued beyond the normal period of limitation and that the invocation of the extended period was not justified. The Tribunal observed that when goods are subjected to physical examination and detailed scrutiny by Customs officers before clearance, allegations of suppression or fraud cannot be sustained on mere assumptions or suspicion. The Bench emphasised that seeking first-check examination and classification scrutiny cannot be treated as a deceptive act on the part of the importer. The Tribunal further held that the Department could not improve or alter its case at the appellate stage by raising new legal arguments that were not part of the show cause notice. Since the notice itself was the foundation of the proceedings, any attempt to rely on alternative provisions of law without specific pleadings in the notice was impermissible. The Bench reiterated that once a demand is held to be time-barred, there is no necessity to examine the merits of classification. Relying on earlier decisions involving similar imports of Linear Accelerators, including those concerning Dr. Rai Memorial Cancer Institute and MIOT Hospitals Pvt. Ltd., the Tribunal concluded that the present case was also covered by the same legal principles. Accordingly, the impugned order was set aside in its entirety, the appeal was allowed, and Nagarjuna Hospital Ltd. was held entitled to consequential relief as per law. Case Details Case Title: Nagarjuna Hospital Ltd. Versus Commissioner of Customs (General) Case No.: Customs Appeal No. 40216 of 2019 Date: 02.02.2026 Counsel For Appellant: S. Murugappan, Advocate Counsel For Respondent: Sanjay Kakkar, Authorised Representative Click Here To Read Order Read More: Same-Day Reversal Equals No Availment: CESTAT Quashes Interest and Penalty in Cenvat Credit Case

Rs. 1.57-Crore Customs Demand on Cancer Therapy Equipment Quashed Citing Time-Barred Notice: CESTAT

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