2025 (3) TMI 442 - AT - Customs

Revocation of customs broker licence - forefeiture of entire amount of security deposit - levy of penalty - violation of Regulation 10(n) of CBLR 2018 - misuse of the export promotion schemes - Does the Customs Broker have to satisfy himself that the documents or their copies given by the client were indeed issued by the concerned government officers or does the Customs Broker have to ensure that the officers had correctly issued the documents? - HELD THAT - Regulation 10(n) does not place an obligation on the Customs Broker to oversee and ensure the correctness of the actions by Government officers. Therefore the verification of documents part of the obligation under Regulation 10(n) on the Customs Broker is fully satisfied as long as the Customs Broker satisfies itself that the IEC and the GSTIN were indeed issued by the concerned officers. This can be done through online verification comparing with the original documents etc. and does not require an investigation into the documents by the Customs Broker. Therefore the appellant was correct in verifying the GSTIN issued by the department on the GST portal. The presumption is that a certificate or registration issued by an officer or purported to be issued by an officer is correctly issued. Section 79 of the Evidence Act 1872 requires even Courts to presume that every certificate which is purported to be issued by the Government officer to be genuine. The onus on the Customs Broker cannot therefore extend to verifying that the officers had correctly issued the certificate or registration. Of course if the Customs Broker comes to know that its client has obtained these certificates through fraud or misrepresentation nothing prevents it from bringing such details to the notice of Customs officers for their consideration and action as they deem fit. However the Customs Broker cannot sit in judgment over the certificate or registration issued by a Government officer so long as it is valid. In this case there is no doubt or evidence that the IEC the GSTIN and other documents were issued by the officers. So there is no violation as far as the documents are concerned. The responsibility of the Customs Broker under Regulation 10(n) does not include keeping a continuous surveillance on the client to ensure that he continues to operate from that address and has not changed his operations. Therefore once verification of the address is complete if the client moves to a new premises and does not inform the authorities or does not get his documents amended such act or omission of the client cannot be held against the Customs Broker. Conclusion - The appellant Customs Broker did not fail in discharging its responsibilities under Regulation 10(n). The impugned order is not correct in concluding that the Customs Broker has violated Regulation 10(n) because the exporter was found to not exist during subsequent verification by the officers. The impugned order cannot be sustained - Appeal allowed.

Summary

ISSUES PRESENTED and CONSIDERED

The core legal question considered in this judgment is whether the appellant, a Customs Broker, violated Regulation 10(n) of the Customs Broker Licensing Regulations, 2018 (CBLR 2018) by failing to verify the identity and functioning of its clients, the exporters, at their declared addresses using reliable, independent, authentic documents, data, or information.

ISSUE-WISE DETAILED ANALYSIS

Relevant legal framework and precedents:

Regulation 10(n) of CBLR 2018 mandates that a Customs Broker must verify the correctness of the Importer Exporter Code (IEC) number, Goods and Services Tax Identification Number (GSTIN), the identity of its client, and the functioning of its client at the declared address using reliable, independent, authentic documents, data, or information.

Court's interpretation and reasoning:

The Tribunal interpreted Regulation 10(n) as requiring verification through documents, data, or information that are reliable, independent, and authentic. It emphasized that the Customs Broker is not required to verify the correctness of actions by government officers who issue the IEC and GSTIN. The Tribunal also highlighted that the Customs Broker's obligation does not extend to continuous surveillance of the client's operations.

Key evidence and findings:

The Tribunal noted that the appellant had verified the GSTIN and IEC numbers through official portals and had obtained necessary documents such as PAN and bank details. The Tribunal found that these documents were sufficient to fulfill the obligations under Regulation 10(n).

Application of law to facts:

The Tribunal applied Regulation 10(n) to the facts and determined that the appellant had fulfilled its obligations by verifying the GSTIN and IEC numbers and obtaining relevant documents. The Tribunal found no evidence of fraud or misrepresentation by the appellant.

Treatment of competing arguments:

The appellant argued that it had verified the identity and functioning of its clients using government-issued documents. The Revenue contended that the appellant failed to prevent misuse of export schemes. The Tribunal sided with the appellant, finding that the obligations under Regulation 10(n) were met through the verification of documents.

Conclusions:

The Tribunal concluded that the appellant did not violate Regulation 10(n) as it had verified the necessary documents and there was no requirement for physical verification of the client's premises.

SIGNIFICANT HOLDINGS

Preserve verbatim quotes of crucial legal reasoning:

The Tribunal stated, "The onus on the Customs Broker cannot, therefore, extend to verifying that the officers had correctly issued the certificate or registration."

Core principles established:

The Tribunal established that the Customs Broker's responsibility under Regulation 10(n) is limited to verifying documents issued by government authorities and does not extend to overseeing the correctness of government actions or continuous monitoring of the client's operations.

Final determinations on each issue:

The Tribunal set aside the impugned order, concluding that the appellant had not violated Regulation 10(n) and was entitled to consequential relief. The appeal was allowed, and the revocation of the customs broker license, forfeiture of the security deposit, and penalty were overturned.