2023 (4) TMI 513 - AT - Customs

Revocation of the Customs Broker license - forfeiture of the whole of the security deposit - levy of penalty - fraudulent of ineligible IGST refund - drawback and reward by using bogus GST registration issuing bogus GST invoices (where no GST duty has been paid to exchequer) - HELD THAT - The relevant Regulation of CBLR 2018 has already been reproduced above. As per Regulation 10(d), the Customs Broker is required to advice the client to comply with the provisions of the Act and bring to the notice of the department in case of non-compliance. Regulation 10(e) requires that the Customs Broker has to exercise due diligence to ascertain the correctness of information provided by the client to him. Regulation 10(n) casts an obligation on the Customs Broker to verify the correctness of IE Code, GST Registration etc., identify of the client and functioning of client at the declared address by using reliable independent authentic document, data or information. In the present case, it is brought out from evidence that the exporter had a valid IE Code, GST registration, PAN card and bank details. It is submitted by learned counsel for appellant that the Customs Broker had done the KYC verification of the exporter namely J. Tex India by checking the details of GSTIN, IE Code. The department issues GSTIN number only after background checking of the exporter. The address and business details of the person who has applied for the GST registration is verified by the department. When the said registration is still operative as per the website, the Customs Broker cannot be found fault if he has relied upon such data available on the Government website. There is no evidence brought out that there is any overt involvement of the Customs Broker in the fraud committed by the exporter. There is no basis to allege that the appellant has violated the relevant Regulations of CBLR, 2018. The department has failed to establish with cogent evidence that there are grounds for revoking the license of the appellant. The impugned order is therefore set aside - Appeal allowed.

Summary

Issues:
Revocation of Customs Broker license, forfeiture of security deposit, penalty imposition.

Summary:
The appeal was filed against the order revoking the Customs Broker license, forfeiting the security deposit, and imposing a penalty of Rs.50,000 by the Commissioner of Customs, Tuticorin. The appellant, holding a Customs Broker license, was accused of facilitating fraudulent activities by M/s. J. Tex India in availing ineligible IGST refund, drawback, and reward through bogus GST registration and invoices. The investigation by Nhava Sheva Preventive Unit revealed discrepancies in foreign remittances related to exports filed through seven Customs Brokers, including the appellant. Despite summons, the exporter and various Customs Brokers, including the appellant, were uncooperative. The appellant was alleged to have violated specific regulations of Customs Broker Licensing Regulations, 2018. The original authority upheld these violations, leading to the appeal before the Tribunal.

The appellant argued that the allegations were unfounded as there was no obligation to meet the client directly for KYC verification. The appellant challenged the findings of the inquiry report, highlighting the statutory documents possessed by the exporter. The appellant contended that all registration numbers were active and operational until the department canceled the GST registration post-initiation of the investigation. The appellant asserted that there was no evidence linking them to the fraud committed by the exporter, emphasizing due diligence in verification processes.

The department contended that the appellant failed to conduct genuine verification, leading to the revocation of the license. However, the Tribunal found that the appellant had fulfilled the obligations under the Customs Broker Licensing Regulations, 2018. The Tribunal observed that there was no evidence of the Customs Broker's involvement in the exporter's fraud. Consequently, the impugned order was set aside, and the appeal was allowed with any consequential relief deemed appropriate by law.