2024 (2) TMI 1262 - AT - Customs

Penalty on Customs Broker under Regulation 18 of CBLR, 2018 - violation of regulation 10(o) and Regulation 10(b) - not complied with the condition of KYC of the exporter Fraudulent export - correct value of the goods not verified - HELD THAT - Valuation of the goods is not the responsibility of the custom broker. The custom broker has limited responsibility of documentation on behalf of the exporter and of course the verification of KYC which is not disputed in present case. Therefore, both the allegations are not sustainable. There is no case of the department that the appellants have colluded with the exporter knowingly about fraudulent export of goods with intension to avail the refund of GST, therefore in absence of any such evidence merely because some fraud was committed by the exporter the custom broker cannot be implicated automatically even though he has no role in the offence of fraudulent export. Therefore, in my considered view there is no reason in the present case to penalise the appellant. Accordingly, the penalty is set aside. Appeal is allowed.

Summary

Issues involved:
The issues involved in the judgment are the imposition of a penalty under Regulation 18 of CBLR 2018 against a Customs Broker for alleged violations of Regulation 10(o) and Regulation 10(b) of CBLR 2018, related to KYC verification and valuation of goods for export.

Details of the Judgment:

Issue 1: Alleged non-compliance with KYC requirements
The Appellant challenged the penalty imposed for not obtaining KYC documents as mandated by circular no. 9/2010-Customs. The Appellant argued that due to the COVID-19 lockdown, physical visits to the exporter's premises were impossible, although not required by law for a Customs Broker. The Appellant contended that they had collected sufficient documents such as IEC, GST registration, PAN Card, and bank verification certificate, which were compliant with KYC verification under CBLR 2018. The Appellant's compliance with KYC requirements was supported by the existence of genuine documents for the exporter at the provided address in Mumbai. The Appellant acted as a Customs Broker in a normal course of business, filing shipping bills on behalf of the exporter. The Appellant maintained that they were not involved in the logistics aspect and did not charge additional fees. The Customs had examined previous shipping bills for the same exporter, and the export value was approved by Customs, indicating the Appellant's innocence. The Appellant argued that the penalty was unjustly imposed, citing various legal precedents in support.

Issue 2: Alleged failure to verify the correct value of exported goods
The Appellant was accused of not verifying the correct value of goods for export, leading to excess refund of GST. However, the Tribunal found that the responsibility of verifying goods' value did not lie with the Customs Broker, who primarily handled documentation and KYC verification. As the Appellant had fulfilled KYC requirements and had no role in determining goods' value, the allegations were deemed unsustainable. The Tribunal noted that there was no evidence of collusion between the Appellant and the exporter for fraudulent export activities. Legal precedents cited by the Appellant supported the argument that the Customs Broker could not be penalized for the exporter's fraudulent actions. Consequently, the penalty was set aside, and the appeal was allowed.

This judgment by the Appellate Tribunal CESTAT AHMEDABAD, delivered by HON'BLE MEMBER (JUDICIAL), MR. RAMESH NAIR, pertained to the imposition of a penalty on a Customs Broker under Regulation 18 of CBLR 2018. The Tribunal found in favor of the Appellant, ruling that the penalty was unjustified due to the Appellant's compliance with KYC requirements and lack of responsibility in verifying goods' value for export. The decision emphasized the limited role of a Customs Broker in documentation and KYC verification, absolving the Appellant of wrongdoing in the alleged fraudulent export activities.