2022 (7) TMI 317 - AT - Customs

Revocation of the Custom Broker License - forfeiture of security deposit - imposition of penalty - failure to advise client to comply with the provisions of the Act, other allied Acts and the rules and regulations thereof - requirement of bringing the matter to the notice of the Deputy Commissioner of Customs or Assistant Commissioner of Customs - Regulation 10(d) of the CBLR, 2018 - HELD THAT - It is apparent that a custom broker does not actually physically see the goods before the same are received in custom area. The Custom Broker operates on the basis of document supplied to him and in that context it can hardly be held that the shipping Bill filed by the Custom Broker on the strength of documents supplied by the exporter is wrong. While repeatedly it has been asserted that the appellant had assisted the exporter in the mis-declaration no specific manner in which such assistance was extended has been mentioned. The impugned order solely relied on the inquiry report without giving his own findings. In this circumstances there are no merit in confirmation of charge under Regulation 10(d) of the CBLR 2018. The same is dropped. Violation Regulation 10(e) of CBLR, 2018 - failure to exercise due diligence to ascertain the correctness of any information which he imparts to a client with reference to any work related to clearance of cargo or baggage - HELD THAT - It is apparent that the case of over valuation and misclassification has been booked on the basis of examination of cargo. The custom broker could not have in possibly detected the same from documents supplied by the exporter to the appellant without examination of goods. In this circumstances we do not find any merit in the argument that the appellant had fail to follow Regulation 10(e) of the CBLR, 2018. Violation of Regulation 10(n) of the CBLR, 2018 - verification of 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 - HELD THAT - There is no requirement for custom broker to physically meet the exporter or physical go and verify the address of the exporters. The responsibility of custom broker is limited to verification on the basis of documents obtained by him. In this case it is seen that they obtained the Bank sign authorization. It is found that customs broker does not have unlimited authority to inquire and check the contents of the official documents. The only reason given in the order is that the appellant did not have direct contact with the exporters and therefore, the charge has been upheld - appeal allowed - decided in favor of appellant.

Summary

Issues:
Revocation of Custom Broker License, Forfeiture of Security Deposit, Imposition of Penalty

Analysis:
1. The appellant, a Custom Broker, filed an appeal against the revocation of their license, forfeiture of security deposit, and imposition of a penalty. Charges under various regulations were invoked against the appellant, including violations of Regulation 10(d), 10(e), and 10(g).

2. The impugned order dropped charges under Regulation 10(a), 10(k), and 10(p) as the appellant had obtained necessary authorizations and maintained required records. However, charges under Regulation 10(d) were confirmed, alleging the appellant failed to advise clients on compliance, leading to mis-declaration of goods. The Tribunal found the charges unsubstantiated as the appellant operated based on documents provided by exporters without physical verification of goods.

3. Another charge upheld was the violation of Regulation 10(e), requiring due diligence in providing correct information to clients. The Tribunal reasoned that the appellant could not have detected misdeclaration without physical examination of goods, thus dismissing the charge.

4. The charge under Regulation 10(n) was also confirmed, alleging failure to verify client details like IEC, GSTIN, and identity. The Tribunal disagreed, stating that the appellant's responsibility was limited to verifying documents obtained, not physically meeting exporters. Referring to a previous case, the Tribunal highlighted that the Customs Broker's obligation under Regulation 10(n) was fulfilled by verifying documents issued by relevant authorities.

5. Ultimately, the Tribunal found no merit in the impugned order, setting it aside, and allowing the appeal. The judgment was pronounced on 5th July 2022.