Coming down heavily on private hospitals, a Bench of Justices Tarun Chatterjee and H.S. Bedi said: "We are also conscious of the large-scale misuse of the medical equipment imported under the exemption notification... it is essential that the authorities regulatory monitor the use of the equipment."

These observations were made on a petition filed by Andromeda Foundation India Pvt Ltd, which challenged the Andhra Pradesh High Court's judgement that held the company was liable to pay customs duty on the imported equipment.

While upholding the high court ruling, the apex court said it was incumbent on Andromeda to follow the guidelines designed to ensure that the medical equipment imported at concession terms was being properly utilised.

The private hospital had imported equipment for the purpose of conducting diagnostic tests and treatment of patients with specific andrological problems in view of the Central government notification dated March 1, 1988, that exempted importers from customs duty on equipment imported for specified purposes.

However, the director, Medical Education of Andhra Pradesh, had inspected Andromeda and submitted in its report to secretary to the government, Health, Medical and Family Welfare Department, Andhra Pradesh, that the private hospital was not providing free services to poor patients in accordance with the terms of exemption in the notification. The government had slapped a notice for recovery of customs duty on the equipment imported by the hospital.