2025 (3) TMI 694 - AT - Customs

Revocation of Customs Broker license - forfeiture of its security deposit - imposition of penalty - violation of Regulations 10(a) 10(d) 10(n) and 10(q) of the CBLR. Violation of Regulation 10 (a) - HELD THAT - Regulation 10(a) requires the Customs Broker to obtain an authorisation and to produce it to the Assistant Commissioner or Deputy Commissioner when called for. It is not a task requiring any extraordinary effort since the Customs Broker is usually present on a daily basis or at least visits the custom house frequently because it is his place of work. The existence of the exporter or otherwise is not relevant to Regulation 10(a). The only thing relevant is if the authorisation had been obtained and produced when called for - If an enquiry is being conducted into any consignment and if the Customs Broker is called and if he had obtained an authorisation from the exporter before filing the Shipping Bill we find no reason for the Customs broker to not produce it. In this case as per the records the appellant had not even responded to several summons issued to it. It is only during the personal hearing while passing the impugned order the appellant stated that it had an authorisation and would be able to produce it. The Commissioner has correctly rejected this submission because Regulation 10(a) not only requires obtaining an authorisation but also producing it before the Assistant Commissioner or Deputy Commissioner when called for. Violation of Regulation 10 (d) - HELD THAT - The presumption is that DGFT has not issued benami IECs to non-existent exporters. If DGFT is issuing benami IECs and the Customs ICES system is allowing export on the basis of such benami IECs to exporters who do not exist at all or exist only on paper the problem is not of the appellant or any other Customs Broker but it is a deep rooted systemic problem where neither DGFT nor Customs checks the existence of the exporter/importer while allowing exports and giving out export benefits. Even a ration card which gives the poor families subsidised rations worth a few thousand rupees is not issued without verifying the existence of the persons and their family size. Likewise even a passport which gives one nothing but a right to leave the country and return to it is not issued without police verification- prior to or after the issue - the appellant had not violated Regulation 10(d). Violation of Regulation 10 (n) - HELD THAT - Regulation 10(n) requires the Customs Broker to verify correctness of Importer Exporter Code (IEC) number Goods and Services Tax Identification Number (GSTIN) identity of his client and functioning of his client at the declared address by using reliable independent authentic documents data or information. This responsibility does not extend to physically going to the premises of each of the exporters to ensure that they are functioning at the premises. When a Government officer issues a certificate or registration with an address to an exporter the Customs Broker cannot be faulted for trusting the certificates so issued. Regulation 10(n) does not place an obligation on the Customs Broker to oversee and ensure the correctness of the actions by the 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. 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 GSTIN issued by the officers of CBIC itself shows the address of the client and the authenticity of the GSTIN is not in doubt. In fact the entire verification report is based on the GSTIN. Further IECs issued by the DGFT also show the address. There is nothing on record to show that either of these documents were fake or forged. Therefore they are authentic and reliable and there are no reason to believe that the officers who issued them were not independent and neither has the Customs Broker any reason to believe that they were not independent - the appellant had not violated Regulation 10(n). Violation of Regulation 10(q) - HELD THAT - After carefully considering the sequence of events as narrated in the SCN and the impugned order there are no iota of doubt that the appellant had not cooperated at all with the investigation. The appellant s submission that it had not received the several summons issued by post and that it had received only one summon delivered by hand to Shri Ajay Dogra but the statement could not be recorded are nothing but lame excuses - the appellant had not cooperated with the investigation and thereby violated regulation 10(q) of CBLR 2018. Conclusion - The appellant violated Regulations 10(a) and 10(q) but had not violated Regulations 10(d) and 10(n). Applying the doctrine of proportionality the ends of justice will meet if the penalty of Rs. 50, 000/- imposed on the appellant is upheld and the revocation of its licence and forfeiture of security deposit are set aside. The appeal is partly allowed and the impugned order is modified to the extent that the revocation of licence and forfeiture of security deposit of the appellant are set aside but the penalty of Rs. 50, 000/- imposed on the appellant is upheld.

Summary

ISSUES PRESENTED and CONSIDERED

The core legal questions considered in this judgment were:

• Whether the appellant violated Regulations 10(a), 10(d), 10(n), and 10(q) of the Customs Brokers Licensing Regulations (CBLR) 2018.
• Whether the penalty of revocation of license, forfeiture of security deposit, and imposition of a penalty was proportionate to the violations.

ISSUE-WISE DETAILED ANALYSIS

Regulation 10(a)

Relevant legal framework and precedents:

Regulation 10(a) requires a Customs Broker to obtain an authorization from each client and produce it when required by the Deputy or Assistant Commissioner of Customs.

Court's interpretation and reasoning:

The Court found that the appellant failed to produce the authorization when called for, despite claiming to have obtained it. The requirement to produce the authorization is not extraordinary, as the Customs Broker frequently visits the customs house.

Key evidence and findings:

The appellant did not respond to several summonses and only claimed to have the authorization during a personal hearing.

Application of law to facts:

The Court concluded that the appellant violated Regulation 10(a) by failing to produce the authorization when required.

Regulation 10(d)

Relevant legal framework and precedents:

Regulation 10(d) requires a Customs Broker to advise clients to comply with relevant laws and report non-compliance to the customs authorities.

Court's interpretation and reasoning:

The Court found no evidence that the appellant failed to advise the exporter or knowingly ignored non-compliance.

Key evidence and findings:

The appellant submitted that it was unaware of any overvaluation or fraudulent activities by the exporter.

Application of law to facts:

The Court determined that the appellant did not violate Regulation 10(d) as there was no proof of non-compliance or failure to report.

Regulation 10(n)

Relevant legal framework and precedents:

Regulation 10(n) requires a Customs Broker to verify the correctness of the Importer Exporter Code (IEC), GSTIN, client identity, and client functioning at the declared address using reliable documents, data, or information.

Court's interpretation and reasoning:

The Court held that the Customs Broker is not required to physically verify client premises and can rely on documents issued by government officers.

Key evidence and findings:

The appellant provided KYC documents, IEC, and GSTIN, and verified them through official websites.

Application of law to facts:

The Court concluded that the appellant fulfilled its obligations under Regulation 10(n) by verifying documents and had not violated this regulation.

Regulation 10(q)

Relevant legal framework and precedents:

Regulation 10(q) requires a Customs Broker to cooperate with customs authorities and join investigations promptly.

Court's interpretation and reasoning:

The Court found that the appellant failed to cooperate with the investigation by not responding to multiple summonses.

Key evidence and findings:

The appellant claimed not to have received several summonses and provided excuses for non-appearance.

Application of law to facts:

The Court determined that the appellant violated Regulation 10(q) by not cooperating with the investigation.

SIGNIFICANT HOLDINGS

The Court found that the appellant violated Regulations 10(a) and 10(q) but did not violate Regulations 10(d) and 10(n). The penalty of Rs. 50,000/- was upheld, but the revocation of the license and forfeiture of the security deposit were set aside, applying the doctrine of proportionality. The Court concluded that the penalty imposed was sufficient to meet the ends of justice.