2024 (2) TMI 739 - AT - Customs

Revocation of Customs Broker license - forfeiture of security deposit - levy of penalty - involvement in fraudulent IGST refunds, who were not traceable, along with the details Customs Brokers involved in the clearance of the alleged risky consignments - violation of Regulation 10(n) of CBLR, 2018 - HELD THAT - Regulation 10(n) requires the Customs Broker to verify the identity of the client using reliable, independent, authentic documents, data or information. In other words, he should know who the client is and the client cannot be some fictitious person. As per the Regulation, this identity can be established by independent, reliable, authentic a) documents; b) data; or c) information. Any of these methods can be employed by the Customs Broker to verify the identity of its client. It is not necessary that the CB appellant has to only conduct a physical verification or launch an investigation. So long as the CB can find documents which are independent, reliable and authentic to establish the identity of his client, this obligation is fulfilled. In addition, under Regulation 10(n) the Customs Broker is required to verify the functioning of the client at the declared address using reliable, independent, authentic documents, data or information - there is nothing on record to show that either of these documents were fake or forged. Therefore, once verification of the address is complete, the responsibility cast on the appellant under Regulation 10(n) stands fulfilled. The impugned order revoking the Customs Brokers license of the appellant, forfeiting their security deposit and further imposing penalty on the appellant cannot be sustained and are set aside - Appeal allowed.

Issues Involved:

1. Violation of Customs Brokers Licensing Regulations (CBLR), 2018.
2. Adherence to principles of natural justice.
3. Verification responsibilities under Regulation 10(n) of CBLR, 2018.
4. Applicability of Board's circular for document verification.
5. Presumption of genuineness of government-issued documents.

Summary:

1. Violation of Customs Brokers Licensing Regulations (CBLR), 2018:
The appellant's Customs Broker license was revoked, the security deposit forfeited, and a penalty imposed based on the allegation that the appellant violated Regulation 10(n) of CBLR, 2018 by not following KYC guidelines for 15 risky exporters involved in fraudulent IGST refunds.

2. Adherence to principles of natural justice:
The appellant argued that no relied-upon documents, such as the DGARM report, were shared, violating the principles of natural justice. The appellant contended that the physical verification reports of three exporters (M/s Samium Fabrication Private Limited, Grow Well Overseas, and Shyam Traders) were not substantiated or mentioned in the show cause notice, and there was no evidence connecting these exporters to the appellant.

3. Verification responsibilities under Regulation 10(n) of CBLR, 2018:
The appellant argued that Regulation 10(n) mandates verifying the identity of the client using reliable, independent, authentic documents, and that the appellant had fulfilled this obligation by obtaining necessary documents such as IEC and GSTIN. The Tribunal noted that the responsibility under Regulation 10(n) is satisfied if the Customs Broker verifies the correctness of the IEC and GSTIN issued by government departments. The Tribunal cited previous judgments, including M/s Bright Clearing & Carrier Pvt Ltd. vs Commissioner of Customs (A&G), affirming that the Customs Broker is not required to physically verify the client's premises but can rely on independent, reliable, and authentic documents.

4. Applicability of Board's circular for document verification:
The appellant contended that the Board's circular, which required additional documents for verification, was applicable to earlier regulations and not to CBLR, 2018. The Tribunal agreed, noting that Regulation 10(n) does not prescribe specific documents beyond IEC and GSTIN, and the Customs Broker can use any reliable, independent, authentic documents to verify the client's identity and functioning.

5. Presumption of genuineness of government-issued documents:
The Tribunal emphasized that government-issued documents such as IEC and GSTIN are presumed genuine under Section 79 of the Evidence Act, 1872. The Customs Broker is not required to ensure the correctness of these documents beyond verifying their issuance by the concerned authorities. The Tribunal cited the High Court of Delhi's judgment in Kunal Travels, which held that the Customs Broker is not an inspector and cannot be held liable for the non-traceability of exporters after the issuance of "Let Export Orders."

Conclusion:
The Tribunal set aside the impugned order revoking the Customs Broker's license, forfeiting the security deposit, and imposing a penalty, allowing the appeal with consequential relief. The judgment emphasized that the Customs Broker had fulfilled its obligations under Regulation 10(n) of CBLR, 2018 by verifying the client's identity and functioning using reliable, independent, authentic documents.

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