2023 (4) TMI 324 - AT - Customs

Revocation of customs Broker License - forfeiture of security deposit - levy of penalty - non-verification of various documents - allegation against the appellant is based on the reports of the jurisdictional officers in respect of the three RUDs attached to the DGARM Report - violation of Regulation 10(n) of CBLR 2018 - HELD THAT - It is found that physical verification of the business premises is not an obligation cast upon the CB under Rule 10(n) of CBLR 2018. Decision in the case of Tribunal is squarely applicable in this case - In the present case also the original Offence report was based on the DGARM Report as in the case of M/S ANAX AIR SERVICES PVT. LIMITED VERSUS COMMISSIONER OF CUSTOMS NEW DELHI (AIRPORT AND GENERAL) 2022 (1) TMI 115 - CESTAT NEW DELHI - In the present case also as per DGARM Report the 10 exporters facilitated by the appellant were later found to be non-existent during subsequent verification by the department. The appellant has verified all the documents such as IEC GSTIN Aadhar PAN etc. submitted by the exporters before processing their shipping bills. Later if they were not found to be existing in the said addresses the appellant cannot be held responsible for that as held by the principal bench in the case of Anax Air Services under similar facts and circumstances. The only allegation against the appellant in the impugned order is that it violated Regulation 10 (n) which is not true. The Ld. Principal Commissioner was not correct in holding that the appellant Customs Broker has violated Regulation 10(n) of CBLR 2018 - Appeal allowed - decided in favour of appellant.

Summary

Issues Involved:
1. Alleged violation of Regulation 10(n) of CBLR, 2018.
2. Revocation of CB Licence and forfeiture of security deposit.
3. Imposition of penalty on the appellant.
4. Compliance with procedural requirements under CBLR, 2018.

Summary:

1. Alleged Violation of Regulation 10(n) of CBLR, 2018:
The appellants were accused of violating Regulation 10(n) of CBLR, 2018, which mandates Customs Brokers to verify the correctness of IEC, GSTIN, identity, and functioning of their clients at the declared address using reliable, independent, authentic documents, data, or information. The appellants contended that they had verified all necessary documents such as IEC, GSTIN, PAN, Aadhar, and others from official government websites and nationalized banks, fulfilling their obligations under Regulation 10(n). The Tribunal noted that the verification of documents issued by government authorities (IEC, GSTIN) does not require the Customs Broker to ensure the correctness of the issuance but only to verify their authenticity.

2. Revocation of CB Licence and Forfeiture of Security Deposit:
The Principal Commissioner of Customs revoked the CB Licence and forfeited the security deposit, alleging that the Customs Broker had not conducted physical verification of the exporters' premises and had not informed the department about the untraceability of the exporters. The Tribunal found that physical verification is not an obligation under Regulation 10(n) and that the Customs Broker had fulfilled their duty by verifying the documents issued by various government authorities. The Tribunal referenced the case of M/S Anax Air Services Pvt Limited, emphasizing that Customs Brokers are not responsible for continuous surveillance of their clients.

3. Imposition of Penalty on the Appellant:
A penalty of Rs. 50,000 was imposed on the appellants under Regulation 18 of CBLR, 2018. The Tribunal concluded that since the appellants had not violated Regulation 10(n), the imposition of the penalty was not justified. The Tribunal reiterated that the Customs Broker's responsibility does not extend to verifying the correctness of the issuance of documents by government authorities.

4. Compliance with Procedural Requirements under CBLR, 2018:
The appellants argued that the Principal Commissioner failed to pass the final order within ninety days from the date of submission of the Inquiry Report, as required under Regulation 17(7) of CBLR, 2018. The Tribunal agreed, noting that the Principal Commissioner did not follow the procedural requirements, making the impugned order legally unsustainable.

Conclusion:
The Tribunal held that the Principal Commissioner was incorrect in holding that the appellants violated Regulation 10(n) of CBLR, 2018. Consequently, the revocation of the CB Licence, forfeiture of the security deposit, and imposition of the penalty were all set aside. The appeal was allowed with consequential relief.