9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2025 (4) TMI 1604 - AT - CustomsRevocation of customs broker licence - forfeiture of entire amount of security deposit - levy of penalty - misuse of the export promotion schemes and other fraudulent activities - 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 Regulation in fact gives to the Customs Broker the option of verifying using documents data or information. If there are authentic independent and reliable documents or data or information to show that the client is functioning at the declared address this part of the obligation of the Customs Broker is fulfilled - 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 IEC issued by the DGFT also shows 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 we have 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 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) of CBLR 2018. The impugned order is not correct in concluding that the Customs Broker has violated Regulation 10(n) of CBLR 2018 because the exporter was found to not exist during subsequent verification by the officers. The impugned order dated 05.04.2021 cannot be sustained and therefore is set aside - Appeal allowed.
The core legal questions considered in this case are:
1. Whether the Customs Broker violated Regulation 10(n) of the Customs Broker Licensing Regulations, 2018 (CBLR 2018) by failing to verify the correctness of Importer Exporter Code (IEC), Goods and Services Tax Identification Number (GSTIN), identity of the client, and the functioning of the client at the declared address using reliable, independent, authentic documents, data, or information. 2. The extent of the Customs Broker's obligation under Regulation 10(n) regarding verification of government-issued documents and the physical existence or functioning of the client. 3. Whether the Customs Broker can be held liable for fraudulent activities or non-existence of exporters identified after the exports were processed, despite having submitted valid documents at the time of export. 4. The appropriateness of the revocation of the Customs Broker licence, forfeiture of the security deposit, and imposition of penalty based on the alleged violation. Detailed analysis of these issues is as follows: Issue 1: Whether the Customs Broker violated Regulation 10(n) of CBLR 2018 by failing to verify correctness of IEC, GSTIN, identity, and functioning of clients. Regulation 10(n) mandates that a Customs Broker must verify the correctness of the IEC number, GSTIN, identity of the client, and the functioning of the client at the declared address by using reliable, independent, authentic documents, data, or information. The Court analyzed the nature of this obligation by breaking it down into four components:
The Court held that verification of IEC and GSTIN involves confirming that these documents were indeed issued by the relevant government authorities (Director General of Foreign Trade and GST officers respectively). The Customs Broker is not required to investigate or ensure the correctness of the issuance by government officers but only to verify the authenticity of the documents provided. This interpretation aligns with Section 79 of the Indian Evidence Act, 1872, which creates a presumption of genuineness for certificates or registrations issued by government officers. Therefore, the Customs Broker's obligation is satisfied by verifying the documents through means such as online verification or comparison with originals. The appellant had verified the GSTIN on the GST portal and submitted all relevant documents during adjudication, fulfilling this aspect of the obligation. Regarding verification of client identity, the Court recognized that the Customs Broker may fulfill this obligation by obtaining any reliable, independent, authentic documents, data, or information. Documents such as GSTIN, IEC, PAN card, Aadhaar, rent agreements, bank account details, electricity bills, and partnership deeds were considered sufficient. The appellant had submitted such documents for the exporters in question. For verifying the functioning of the client at the declared address, the Court emphasized that physical verification by the Customs Broker is not mandated by Regulation 10(n). Given the geographical spread of exporters and limited Customs formations, the regulation permits verification through documents, data, or information that are reliable, independent, and authentic. Government-issued documents showing the client's address, such as GSTIN and IEC, are sufficient to satisfy this obligation. The Court noted that the Customs Broker is not responsible for continuous surveillance or monitoring changes in the client's operations or address after initial verification. If a client moves or ceases operations without updating authorities, the Customs Broker cannot be held liable. Issue 2: Liability of the Customs Broker for fraudulent exporters identified post-export processing. The Directorate General of Analytics and Risk Management (DGARM) identified 38 exporters handled by the appellant as risky and potentially involved in IGST refund frauds. Physical verification by GST officers found four exporters to be non-existent or fraudulent. The SCN alleged violation of Regulation 10(n) based on these findings. The Court observed that mere non-traceability or subsequent determination of non-existence of exporters does not establish that the Customs Broker failed in its verification obligations. The Customs Broker had verified the exporters' documents as required and had no reason to doubt their authenticity at the time of export processing. The Court emphasized that the Customs Broker cannot be held responsible for fraudulent acts of clients or for government officers' failure to detect fraud at the time of document issuance. The Customs Broker's duty is limited to verifying the authenticity of documents and information available at the time of export processing. Therefore, the allegation that the appellant violated Regulation 10(n) because exporters were later found to be non-existent was rejected. Issue 3: Appropriateness of revocation of licence, forfeiture of security deposit, and penalty. The Commissioner revoked the Customs Broker licence, forfeited the security deposit, and imposed a penalty of Rs. 50,000 based on the alleged violation. The Court found that since the appellant had complied with the obligations under Regulation 10(n), the impugned order was not sustainable. The inquiry officer had recommended leniency, and the appellant had submitted detailed representations demonstrating compliance with Regulation 10(n). Given the absence of any violation, the Court held that the punitive measures were unwarranted. Competing arguments were carefully considered. The Revenue relied on the critical role of Customs Brokers in preventing misuse of export promotion schemes and cited precedent emphasizing their responsibility. However, the Court distinguished this case on the facts, noting that the appellant had fulfilled the verification requirements and that the responsibility does not extend to policing government-issued documents or monitoring clients post-verification. The appellant's argument that verification of government-issued documents and submission of authentic documents satisfied the regulatory requirements was accepted. Significant holdings and principles established: "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." "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 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." "Nothing in this clause requires the Customs Broker to physically go to the premises of the client to ensure that they are functioning at the premises." "Mere non-traceability, as alleged, of the exporter is no basis to assume that the exports were fraudulent and exporter was ineligible for IGST refund." "The Customs Broker cannot sit in judgment over the certificate or registration issued by a Government officer so long as it is valid." Final determinations:
|
