2023 (7) TMI 67 - AT - Customs

Revocation of Customs Brokers License - forfeiture of security deposit - levy of penalty - appellant submitted that the Commissioner while passing the order went beyond the inquiry report inasmuch as the charges in the inquiry report were that the appellant had not tried to tally/match the address given on IEC and GSTIN and that the appellant had not conducted verification of the place of business of the principal exporter - HELD THAT - The inquiry officer had submitted the report dated 20.05.2022 and the appellant was required to file a reply to this inquiry report. The inquiry report mentions that the appellant had not made an attempt to match the addresses given on IEC and GSTIN and in fact IEC of the exporter had a different address then the one mentioned in the show cause notice or GSTIN - The Commissioner should have, therefore, confined himself to these two issues in the impugned order, but it transpires that there is no discussion on these issues and the impugned order has been passed by the Commissioner on an entirely different ground namely, that the appellant had furnished only one document as against the requirement of two documents in terms of Regulation 10(n) of 2018 Regulations and the Circular dated 08.04.2010. The order passed by the Commissioner, therefore, can be set aside on this ground alone. A bare perusal of Regulation 10(n) would show that the Customs Broker is not required to physically verify the place of business of the exporter and this is what was also held by the Tribunal in COMMISSIONER OF CUSTOMS, NEW DELHI (AIRPORT AND GENERAL) COMMISSIONERATE VERSUS M/S CRM LOGISTICS PRIVATE LIMITED (VICE-VERSA) 2021 (12) TMI 253 - CESTAT NEW DELHI . The Division Bench examined the responsibility of a Customs Broker under Regulation 10(n) of the 2018 Regulations and in this context held that it is not the responsibility of a Customs Broker to physically go to the premises of each of the exporters to find out whether they are functioning at the premises and Customs Broker has to rely upon the documents that have been issued by the Government. Thus, even the two reasons assigned in the inquiry report could not have been made the basis for revoking the Customs Broker License of the appellant in terms of Regulation 10(n) of the 2018 Regulations. It is, therefore, not possible to sustain the order passed by the Commissioner - Appeal allowed.

Summary

Issues Involved:
1. Revocation of Customs Broker License.
2. Compliance with Regulation 10(n) of CBLR, 2018.
3. Requirement of physical verification of the principal place of business.
4. Validity of the inquiry report and the Commissioner's order.

Summary:

Issue 1: Revocation of Customs Broker License
The appellant, Maj Shipping Pvt. Ltd., appealed against the order dated 16.08.2022 by the Commissioner of Customs (Airport & General), which revoked their Customs Broker License, forfeited the security deposit, and imposed a penalty of Rs. 50,000/-. The license was valid until 14.10.2025. The revocation was based on the alleged submission of fraudulent shipping bills by M/s Krishna International to claim IGST refund and drawback benefits.

Issue 2: Compliance with Regulation 10(n) of CBLR, 2018
A show cause notice dated 21.02.2022 alleged that the appellant failed to verify the address given on IEC and GSTIN, violating Regulation 10(n) of CBLR, 2018, resulting in a loss to government revenue. The inquiry report dated 20.05.2022 concluded that the Customs Broker had not matched the addresses and had not physically verified the principal place of business of the exporter.

Issue 3: Requirement of Physical Verification of Principal Place of Business
The appellant contended that there is no requirement under CBLR 2018 for physical verification of the business place of the exporter, supported by previous judgments. The Tribunal affirmed that Regulation 10(n) does not mandate physical verification, and the Customs Broker is only required to verify the correctness of documents using reliable sources.

Issue 4: Validity of the Inquiry Report and the Commissioner's Order
The Commissioner's order was based on the appellant providing only one document out of the two required as per the Circular dated 08.04.2010, which was not the issue raised in the inquiry report. The Tribunal found that the Commissioner should have confined himself to the issues in the inquiry report, which were about address verification and physical verification of the business place. The Tribunal also noted that the appellant had submitted both PAN and Aadhar cards, which should suffice for verification purposes.

Judgment:
The Tribunal held that the Commissioner's order went beyond the scope of the inquiry report and was based on an incorrect ground. The Tribunal also found that the appellant had complied with the verification requirements under Regulation 10(n) and that physical verification was not mandated. Consequently, the order dated 16.08.2022 was set aside, and the appeal was allowed.