2024 (11) TMI 486 - HC - Customs

Revocation of Customs Broker License - certain exports facilitated by the respondent which were made by the exporters, who are allegedly found to be non-existent at their principal place of business - HELD THAT - Admittedly, the DGFT had issued IEC to M/s Shree Enterprises. At the material time, the GST registration for the said entity was also valid. CESTAT referred to Section 79 of the Indian Evidence Act, 1872, which posits a presumption of genuineness of documents, that have been certified by an officer of the Central Government. The documents evidencing the issuance of IEC as well as the registration under the CGST Act /SGST Act (allocation of Goods and Service Tax Identification Number GSTIN) were undeniably documents, which emanated from the government authorities and therefore, the respondent cannot be faulted in relying upon the same. There is also no dispute that the documents such as the rent agreement and the electricity bill that were collected by the respondent from the entity in question and furnished to the CoC, are genuine documents. There are no allegations that the said documents are forged or fabricated. CoC had faulted the respondent for accepting such documents on the ground that the rent agreement had expired on 01.12.2020 and the goods were exported thereafter from February 2021 to May 2021. Similarly, the respondent was faulted for accepting the electricity bill furnished by the exporter in question (M/s Shree Enterprises) on the ground that it pertained to the month of June, 2020. CESTAT observed in our view rightly so that it was not necessary for the Custom Broker to keep a continuous surveillance at the physical address of an exporter. The KYC documents are required to be obtained at a time when a particular entity is onboarded as a client of the Custom Broker. It is also necessary for the Custom Broker to periodically verify the same. Plainy, the rent agreement and the electricity bill could not be considered to be stale or were required to be disbelieved. The impugned order setting aside the order-in-original dated 17.10.2023 cannot be faulted.

Summary

Issues:
Appeal against revocation of Customs Broker License and imposition of penalty.

Analysis:
The case involved an appeal by the Revenue against an order revoking a Customs Broker's license and imposing a penalty. The Customs Broker had facilitated exports by non-existent entities, leading to punitive action by the Commissioner of Customs (CoC). The Directorate General of Analytics and Risk Management (DGARM) identified suspicious entities under the CGST Act/SGST Act, and the Customs Broker was found to have facilitated exports from one such entity, M/s Shree Enterprises.

The CoC revoked the Customs Broker's license for non-compliance with Section 10(n) of the Customs Broker Licencing Regulation, 2018 (CBLR), which required verification of client identity and functioning at the declared address. The Customs Broker contended that it had diligently obtained KYC documents from M/s Shree Enterprises, but the CoC found otherwise, leading to the revocation of the license.

The Customs Broker had obtained various documents to verify M/s Shree Enterprises' existence, but the CoC faulted the Broker for not physically verifying the exporter's premises. However, the learned CESTAT found that the Broker had taken reasonable steps to verify the entity's existence and noted that the documents provided were genuine and not forged.

The CESTAT highlighted the presumption of genuineness for documents certified by government authorities, such as the IEC and GST registration documents. It was observed that the Customs Broker was justified in relying on these documents. The CESTAT also noted that periodic verification of KYC documents is necessary, and the documents provided by the Broker were not stale or unreliable.

In conclusion, the CESTAT set aside the order revoking the Customs Broker's license, finding no fault with the Broker's actions. The judgment stated that no substantial question of law arose in the appeal, leading to its dismissal and disposal of pending applications.