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2022 (7) TMI 368 - AT - CustomsRevocation of Customs Broker Licence - forfeiture of security deposit - levy of penalty - it is alleged that when verified, the officers found that the exporters were non-existent and therefore the shipping bills were filed on their behalf by the appellant without the requisite verification as per Regulation 10(n) - HELD THAT - The Customs Broker is not Omniscient and Omnipotent. The responsibility of the Customs Broker under Regulation 10(n) does not extend to ensuring that all the documents issued by various officers of various departments are issued correctly. The Customs Broker is not an overseeing authority to ensure that all these documents were correctly issued by various authorities. If they were wrongly issued, the fault lies at the doorstep of the officer and not the Customs Broker. It is possible that all the authorities who issued the documents had issued them correctly and thereafter, by the time of verification, situation may have changed. If so, it is a ground for starting a thorough investigation by the officer and is not a ground to suspend/cancel the licence of the Customs Broker who processed the exports. It is not the responsibility of the Customs Broker to physically go to and verify the existence of each exporter in every location, let alone, keeping track if the exporter has moved from that address. In this case, there is no clarity whether the exporters were not available at the registered premises on the dates of export or if they ceased to operate after the export. Even if the exporters have changed their addresses and failed to intimate, it cannot be held against the Customs Broker. Scope of the obligations of the Customs Broker under Regulation 10(n) - HELD THAT - It 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 - 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 onus on the Customs Broker cannot, therefore, extend to verifying that the officers have 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. If there are documents issued by the Government Officers which show that the client is functioning at the address, it would be reasonable for the Customs Broker to presume that the officer is not wrong and that the client is indeed, functioning at that address. In the factual matrix of this case, we find that 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 - 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 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, as discussed in the above paragraph, 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. Thus, the Customs Broker has not failed in discharging his responsibilities under Regulation 10(n). The impugned order is not correct in concluding that the Customs Broker has violated Regulation 10(n) because the exporters were found to not exist during subsequent verification by the officers - appeal allowed - decided in favor of appellant.
Issues Involved:
1. Whether the appellant Customs Broker violated Regulation 10(n) of CBLR, 2018. 2. Whether the revocation of the appellant's Customs Broker license is justified. 3. Whether the forfeiture of the security deposit is correct. 4. Whether the imposition of a penalty of Rs. 50,000 on the appellant is justified. Issue-wise Detailed Analysis: 1. Violation of Regulation 10(n) of CBLR, 2018: The core issue is whether the appellant violated Regulation 10(n) of CBLR, 2018, which mandates Customs Brokers to verify the correctness of the Importer Exporter Code (IEC), Goods and Services Tax Identification Number (GSTIN), the identity of the client, and the functioning of the client at the declared address using reliable, independent, authentic documents, data, or information. The Commissioner concluded that the appellant failed to exercise due diligence as many exporters were found to be untraceable. However, the Tribunal found that the appellant had obtained and submitted genuine documents such as GSTIN, IEC, PAN cards, etc., issued by respective government authorities. The Tribunal emphasized that the Customs Broker cannot be faulted for relying on these documents, as it is reasonable to presume their validity. The Tribunal also noted that the Customs Broker's responsibility does not extend to physically verifying the client's premises. Therefore, the Tribunal concluded that the appellant had not violated Regulation 10(n). 2. Revocation of License: Given the Tribunal's conclusion that the appellant did not violate Regulation 10(n), the revocation of the Customs Broker license under Regulation 14 & 18 read with Regulation 17(7) of CBLR, 2018, was deemed unsustainable. The Tribunal highlighted that the Commissioner's inference that the appellant failed to fulfill its obligations under Regulation 10(n) was incorrect, as the appellant had carried out the necessary due diligence by obtaining and verifying the required documents. 3. Forfeiture of Security Deposit: The Tribunal found that the forfeiture of the security deposit of Rs. 75,000 was not justified. Since the appellant had not violated Regulation 10(n), the basis for forfeiting the security deposit was invalid. The Tribunal underscored that the appellant had complied with the KYC guidelines by obtaining and verifying the necessary documents from the exporters. 4. Imposition of Penalty: The imposition of a penalty of Rs. 50,000 on the appellant was also found to be unjustified. The Tribunal reiterated that the appellant had fulfilled its obligations under Regulation 10(n) by obtaining genuine documents from government authorities. The penalty was based on the incorrect conclusion that the appellant had failed to exercise due diligence, which the Tribunal found to be erroneous. Conclusion: The Tribunal concluded that the Commissioner was not correct in holding that the appellant violated Regulation 10(n) of CBLR, 2018. Consequently, the revocation of the license, forfeiture of the security deposit, and imposition of the penalty were all deemed unsustainable. The impugned order was set aside, and the appeal was allowed with consequential relief.
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