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2025 (1) TMI 1381 - AT - CustomsRevocation of Customs Broker License - omission and commission in regard to facilitating exports by non-existent entities - contravention to Regulation 10(n) of the Customs Broker Licensing Regulation 2018 - HELD THAT - The basic requirement of regulation 10(n) is that the customs broker should verify the identity of the client and functioning of the client at the declared address by using reliable independent authentic documents data or information. For this purpose a detailed guideline on the list of documents to be verified and obtained from the client is has been mentioned. In the context of the present case we note that the CB has the required KYC documents such as PAN Aadhar IEC and none of these have been found to be fake. It is noted that the CB had carried out due diligence at the time of filing of the documents and there is no requirement for actual physical verification to verify the correctness of the document submitted. It is not the case of the department that the documents had been obtained for forged documents as noted above. The appellant had submitted the KYC documents and it is also on record that the importer/exporter had duly appeared for statement as in when summoned by the department. In the instant case it is noted that the Department has not led any evidence to show that the appellant had in any manner facilitated exports by non-existent exporter for availing export incentives. From the above it is evident that the importer/exporter was available at the time of import as is evident from the fact that his statement was recorded on 10.02.2022 and 24.02.2022. It has been submitted by the department that the appellant did not verify the GSTIN as the same was cancelled. It has been submitted before us that the software linked to ICEGATE had automatically taken the Aadhar number of the importer instead of the GSTIN. This has not been controverted by the Department in their submissions. It is not the case of the Department that the said Aadhar number is fake or fraudulent - it is evident from the fact that this was not a case of an exporter who was non-existent or had taken undue monetary export benefits. Conclusion - There was no violation of Regulation 10(n) or the KYC guidelines and the Department did not provide sufficient evidence to justify the revocation and penalties imposed. Appeal allowed.
ISSUES PRESENTED and CONSIDERED
The core legal issues considered in this judgment are:
ISSUE-WISE DETAILED ANALYSIS Relevant legal framework and precedents: The case centers around Regulation 10(n) of the CBLR, 2018, which requires customs brokers to verify the correctness of Importer Exporter Code (IEC) numbers, Goods and Services Tax Identification Numbers (GSTIN), and the identity and functioning of clients at the declared address using reliable, independent, authentic documents, data, or information. The "Know Your Customer" guidelines, as outlined in Circular No. 09/2010-Customs, also play a crucial role in determining compliance. Court's interpretation and reasoning: The Tribunal examined whether the appellant had complied with Regulation 10(n) and the KYC guidelines. It noted that the appellant had obtained necessary KYC documents, such as PAN, Aadhar, IEC, and Rent Agreement, which were not found to be fake. The Tribunal emphasized that the regulation does not mandate physical verification of the documents submitted, nor does it specify timelines for obtaining IEC or GSTIN. Key evidence and findings: The Tribunal found that the appellant had submitted all required KYC documents, and there was no evidence of forged documents. The appellant had handled the customs clearance for M/s Darix Enterprises, which was allowed to re-export goods after adjudication and payment of fines. The Tribunal also noted that the appellant had relied on previous decisions where similar revocations were set aside due to lack of conclusive evidence. Application of law to facts: The Tribunal applied Regulation 10(n) to the facts and concluded that the appellant had not violated the regulation. The evidence did not demonstrate that the appellant facilitated exports by non-existent entities or that the documents submitted were fraudulent. The Tribunal also considered the impact of the revocation on the appellant's livelihood and that of his employees. Treatment of competing arguments: The Tribunal considered the Department's argument that the appellant failed to verify the genuineness of the GSTN and IEC and was not in touch with the actual IEC holder. However, it found these arguments unconvincing, as the appellant had provided all necessary documents and there was no evidence of fraud. The Tribunal also noted that the Department did not provide evidence to support its claims of non-existent exporters. Conclusions: The Tribunal concluded that the revocation of the Customs Broker License was not justified, as there was no violation of Regulation 10(n) or the KYC guidelines. The appellant had complied with the necessary legal requirements, and the Department failed to provide conclusive evidence of wrongdoing. SIGNIFICANT HOLDINGS Preserve verbatim quotes of crucial legal reasoning: The Tribunal cited its previous decision in Perfect Cargo: "The entire case, therefore, is not built on conclusive evidence. We are surprised that the Commissioner found it proper to deprive the appellant and its employees of their livelihood in such a casual and callous manner. The impugned order cannot be sustained and needs to be set aside." Core principles established: The Tribunal reinforced the principle that revocation of a Customs Broker License requires conclusive evidence of violation of regulatory provisions. It emphasized the need for due diligence in exercising powers that affect livelihoods. Final determinations on each issue: The Tribunal set aside the impugned order, allowing the appeal and restoring the Customs Broker License of the appellant. It concluded that there was no violation of Regulation 10(n) or the KYC guidelines, and the Department did not provide sufficient evidence to justify the revocation and penalties imposed.
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