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TMI Blog2022 (7) TMI 368X X X X Extracts X X X X X X X X Extracts X X X X ..... ve, I find that the CB has violated the Regulation 10(n) of CBLR, 2018 and hence, I pass the following order: ORDER In exercise of the powers conferred in terms of Regulation 14 & 18 read with Regulation 17(7) of CBLR, 2018 (erstwhile Regulation 18 &22 read with Regulation 20(7) of CBLR 2013), (i) I hereby revoke the license No. R-11,/DEL/CUS/2011 (PAN: AKCPK 2519G) valid upto 20.02.2021 of M/s. Mauli Worldwide Logistics; (ii) I order for forfeiture of the amount of security deposit of Rs. 75,000/- (Rupees seventy five thousand only) furnished by them; (iii) I impose penalty of Rs. 50,000/- on M/s Mauli Worldwide Logistics 33. This order is being issued without prejudice to any other action that may be taken against the CB or any other persons(s)/firm(s) etc. under the provisions of the Customs Act, 1962 and Rules/Regulations framed there under or any other law for the time being in force for the present or any other past violations committed by them." (emphasis supplied) 3. The factual matrix which led to the issue of this order is that the Directorate General of Analytics and Risk Management [DGARM] of the Central Board of Indirect Taxes and Customs analysed the data ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exports the appellant had handled and who are said to be untraceable, the reports in respect of only three exporters were narrated in paragraph 6 of the show cause notice but the Relied Upon Documents enclosed with the show cause notice included reports of officers in respect of eleven exporters. Evidence and documentation, if any, in respect of the remaining exporters who were said to be untraceable is not part of the show cause notice or proceedings. The relevant extracts of these eleven reports are as follows: RUD Exporter Remarks of the officer 1 Mirza Export Ms/ Mirza exports was found non-existent at their registered address. M/s. Mirza exports got GST registration on September 2019. Therefore, the ITC availed by M/s. Mirza Exports is not genuine and thus, is not admissible. Signed by Deputy/ Assistant Commissioner on 2/06/2020 2 Sunrise sales Corporation Non-existent exporter. NOC denied. Signed by Deputy/ Assistant Commissioner on 21/05/2020 3 Tirupati Enterprises Non-existent exporter. NOC denied. Signed by Deputy/ Assistant Commissioner on 15/06/2020 4 S&S Deals M/s. S&S Deals was found non-existent at their registered address. M/s S&S deals g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e A as per the Circular No. 131/1/020-GST dated 23.01.2020 returned undelivered with remarks "pooch taach karne per pata nahin chala atah Vaapas" ...... In view of the above, the exporter-assessee does not appear to be bonafide. 7. The allegation in the show cause notice is 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). Therefore, the appellant is liable for action. 8. The findings recorded in paragraphs 25, 26 and 27 of the impugned order are as follows: "25. I further noted that Board vide Circular No. 09/2010-Customs dated 08.04.2010 has specifically prescribed "Know Your Customer (KYC)" guidelines to the CBs/CHAs so that indulging in fraudulent activities and with a view to control offences involving various modus-operandi such as misuse of export promotion schemes, fraudulent availment of export incentives and duty evasion by bogus IEC holders etc. In this regard, a detailed guideline on the list of documents to be verified and obtained from the client/customer was also provided. Here, it appears that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... igations cast upon them under the provisions of the Regulation 10 (n) of the CBLR, 2018. The CB failed to exercise due diligence and grossly violated the KYC guidelines of the said Circular No. 09/2010-Customs dated 08.04.2018 read with the provisions of the CBLR, 2018 as a number of exporters have been found to be untraceable. As per the mandate of the Regulation 10 (n) of the CBLR, 2018 read with the Circular No. 09/2010-Customs dated 08.04.2010, it was incumbent upon the CB to verify identity and functioning of his client at the declared address by using reliable, independent, authentic documents, data or information which apparently the CB have failed to do so. The Circular No. 09/2010-Customs clearly states that in case of an individual firm or organization out of the 6 documents mentioned in the Annexure, any two will suffice. Whereas, in case of other firms or organisation, all the documents listed respectively, in the annexure needs to be obtained by CB. On perusal of the list (provided by CB) of documents obtained by CB from various exporters, it is clear that CB has not taken the documents as prescribed in the said Circular from each and every exporter. Further, stating a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r. 11. We have considered the submissions on both sides and perused the records. 12. The reports of the officers which were annexed as Relied Upon Documents to the show cause notice show that the GST Registrations were issued to the exporters by the Department. In fact, the analysis by the DGARM itself was based on the GST registrations issued by the department. It is also evident from the reports that the assessee exporters were also claiming input tax credit (ITC) under the GST. However, in all cases, on the day the officers went for verification, the exporters were not found operating at the business premises and the input tax credit (ITC) was reported to be inadmissible. This could mean either that these firms never existed at the premises at all and the GST Registrations were issued by the officers to non-existent firms and the officers have also been receiving GST Returns filed by them or that the firms existed originally and later ceased to operate from the premises. 13. The show cause notice alleged that the Know Your Client [KYC] guidelines issued by CBIC Circular no. 9/2010-Customs dated 8.4.2010 were violated by the appellant because it failed to exercise due diligenc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd have not changed the address. In any of these scenarios, if the GSTIN was issued by the departmental officers to such a large number of non-existent persons, it shows either the lack of any due diligence on the part of the officers or an inherently flawed system of issuing GSTIN. The appellant cannot be faulted for trusting the GSTIN issued by the department. 18. Similarly, if the importer-exporter code [IEC] issued by the Director General of Foreign Trade [DGFT] is wrongly issued to non-existent businesses and entities, the appellant cannot be blamed for trusting the IEC issued by the DGFT. Similar is the case with respect to other documents such as PAN card (issued by the Income Tax Department), Driving Licence (issued by the Transport Department), Voter ID (issued by the Election Commission). When a document is issued by a Government authority, it is reasonable to presume it to be valid. It is not open to the appellant to question the issue of these documents and as a Customs Broker to sit in judgment over the decisions of these officers. If the verification reports are true and none of the exporters existed at their premises, the irresistible conclusion is that all th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has been held by the High Court of Delhi in the case of Kunal Travels [2017 (3) TMI 1494- Delhi High Court] that "the CHA is not an inspector to weigh the genuineness of the transaction. It is a processing agent of documents with respect of clearance of goods through customs house and in that process only such authorized personnel of the CHA can enter the customs house area........ It would be far too onerous to expect the CHA to inquire into and verify the genuineness of the IE code given to it by a client for each import/export transaction. When such code is mentioned, there is a presumption that an appropriate background check in this regard i.e., KYC, etc. would have been done by the customs authorities....." (emphasis supplied)." 22. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mation d) Verify the functioning of the client at the declared address using reliable, independent, authentic documents, data or information 26. Of the above, (a) and (b) require verification of the documents which are issued by the Government departments. The IEC number is issued by the Director General of Foreign Trade and the GSTIN is issued by the GST officers under the Central Board of Indirect Taxes and Customs of the Government of India or under the Governments of State or Union territory. The question which arises is has the Customs Broker to satisfy himself that these documents or their copies given by the client were indeed issued by the concerned government officers or does it mean that the Customs Broker has to ensure that the officers have correctly issued these documents. In our considered view, Regulation 10(n) does not place an obligation on the Customs Broker to oversee and ensure the correctness of the actions by the Government officers. Therefore, 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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... c: a) documents; b) data; or c) information 29. Any of the three methods can be employed by the Customs Broker to establish the identity of his client. It is not necessary that it has to only collect information or launch an investigation. So long as it can find some documents which are independent, reliable and authentic to establish the identity of his client, this obligation is fulfilled. Documents such as GSTIN, IEC and PAN card issued etc., certainly qualify as such documents. However, these are not the only documents the Customs Broker could obtain; documents issued by any other officer of the Government or even private parties (so long as they qualify as independent, reliable and authentic) could meet this requirement. While obtaining documents is probably the easiest way of fulfilling this obligation, the Customs Broker can also, as an alternative, fulfill this obligation by obtaining data or information. In the factual matrix of this case, we are fully satisfied that the appellant has fulfilled this part of the obligation under Regulation 10(n). 30. The fourth and the last obligation under Regulation 10(n) requires the Customs Broker to verify the functioning of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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