2024 (5) TMI 1064 - AT - Customs

Revocation of Customs Broker license - non-existent - forfeiture of security deposit - levy of penalty - involvement in fraudulent IGST refunds, who were not traceable, along with the details Customs Brokers involved in the clearance of the alleged risky consignments - violation of Regulation 10(n) of CBLR, 2018 - HELD THAT - Following the decision of this Tribuanl in Mauli Worldwide Logistics 2022 (7) TMI 368 - CESTAT NEW DELHI , we are of the view that revocation of the customs broker licence is not justified. The appellant had verified the antecedents and correctness of IEC, KYC documents, GST and other documents of their clients from the Government s official website (DGFT, GST and Income Tax Department) before the clearance of the goods. As noted by the Tribunal there cannot be more reliable data than the official government website. Consequently, there was no reason for the appellant to have suspected the genuineness of the documents when the contents thereof matched with the details available on the official government website. Therefore, we do not find any violation of the obligation in terms of Regulation 10(n) by the appellant. The impugned order revoking the Customs Brokers Licence, forfeiting the amount of security deposit and imposition of penalty needs to be set aside. The appeal is, accordingly, allowed.

Summary

Issues Involved:
1. Justification of revocation of Customs Broker (CB) licence.
2. Compliance with KYC guidelines under Regulation 10(n) of CBLR, 2018.
3. Verification of exporter's existence and functioning at the declared address.

Issue-wise Detailed Analysis:

1. Justification of Revocation of Customs Broker (CB) Licence:
The primary issue for consideration was whether the revocation of the CB licence was justified on the grounds that several exporters whose consignments were handled by the appellant were involved in IGST fraud and were found to be untraceable on physical verification. The Tribunal referred to previous decisions, including Mauli Worldwide Logistics, CRM Logistics Pvt. Ltd., M/s. Anax Air Services Pvt. Ltd., and M/s. Perfect Cargo and Logistics, to analyze the matter comprehensively.

The Tribunal noted that the GSTIN, PAN, IEC, and other documents obtained by the appellant as part of the KYC were genuine and issued by the concerned officers. The Tribunal emphasized that the appellant could not be faulted for trusting the GSTIN issued by the department or other government-issued documents. The Tribunal concluded that if the documents were issued by the officers to non-existent firms, it indicated either a lack of due diligence on the part of the officers or a flawed system of issuing GSTIN. The Customs Broker cannot be held responsible for the correctness of these documents.

2. Compliance with KYC Guidelines under Regulation 10(n) of CBLR, 2018:
Regulation 10(n) requires the Customs Broker to verify the correctness of the IEC number, GSTIN, identity of the client, and functioning of the client at the declared address using reliable, independent, authentic documents, data, or information. The Tribunal found that the appellant had verified the antecedents and correctness of IEC, KYC documents, GST, and other documents from the Government's official websites (DGFT, GST, and Income Tax Department) before the clearance of the goods. The Tribunal held that the appellant had fulfilled its obligation under Regulation 10(n) by relying on government-issued documents which are presumed to be valid.

3. Verification of Exporter's Existence and Functioning at the Declared Address:
The Tribunal observed that the responsibility of the Customs Broker under Regulation 10(n) does not extend to physically verifying the existence of each exporter at their premises. The Customs Broker can rely on authentic, independent, and reliable documents, data, or information to verify the functioning of the client at the declared address. The Tribunal noted that documents such as GSTIN and IEC issued by the concerned authorities are sufficient to fulfill this obligation. The Tribunal emphasized that the Customs Broker cannot be expected to physically visit the premises of each client, especially when the documents issued by government officers indicate the client's address.

The Tribunal concluded that there was no violation of the obligation under Regulation 10(n) by the appellant. The revocation of the Customs Broker's licence, forfeiture of the security deposit, and imposition of a penalty were not justified.

Conclusion:
Following the observations and analysis, the Tribunal set aside the impugned order revoking the Customs Broker's licence, forfeiting the security deposit, and imposing a penalty. The appeal was allowed, and the order was pronounced in open court on 18th April, 2024.