2021 (12) TMI 253 - AT - Customs

Customs Broker's License Revocation Overturned in Regulation 10(n) Case

The Tribunal found that the Customs Broker did not violate Regulation 10(n) of the Customs Brokers Licensing Regulations (CBLR), 2018. Therefore, the ... Revocation of Customs Broker License - forfeiture of security deposit - levy of penalty - allegation is that the appellant failed to apply due diligence in obtaining proper KYC documents of the said exporters - violation of Regulation 10(n) of CBLR, 2018. In the case of M/s. Duoflex Expo India –RUD 2: 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 does not lie at the doorstep of the Customs broker and it is not up to the Customs Broker to doubt the documents issued by the authorities and he cannot be faulted for believing them to be correct. It is possible that all the authorities who issued the above documents had issued them correctly and thereafter, by the time the jurisdictional GST officer who prepared the report (RUD-2) went for 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 - In this case, there is no clarity whether the exporter was not available at the registered premises on the date of export or if he ceased to operate after the export. Even if the exporter has changed his address and failed to change his address in various documents issued by various authorities immediately, it cannot be held against the Customs Broker. Thus, the Customs Broker has not failed in discharging his responsibilities under Regulation 10(n) as far as this case is exporter is concerned. In the case of Global CNI -RUD 3: HELD THAT:- There are no reason for the Revenue to have entertained the belief that the appellant Customs Broker had violated Regulation 10(n) in respect of this exporter when none of the documents obtained for KYC have even been alleged to be not genuine and no physical verification of the premises of the exporter was even done by the officers. We therefore, find that the Customs Broker has not violated Regulation 10(n) with regard to this exporter. In the case of Galaxy Impaxe: HELD THAT:- As far as RUD 2 is concerned, the officer reported that the GST Registration was issued in December 2018 and that the exporter was not found to be operating from the place. The SCN and the impugned order ignore several documents which were obtained by the appellant, which were issued by the various Government departments and authorities to the exporter with the same address. There are no reason to disbelieve all these officers of various government departments and believe only the verification report by the jurisdictional officer who submitted RUD2 - If the exporter ceased to operate from that premises subsequent to the issue of GST Registration, the report does not say whether the exporter ceased to operate prior to the date of export or after that date. Even if the exporter had ceased to operate from that premises and had not got amendments made in the official documents issued by various authorities, this cannot be held against the appellant Customs Broker to say that it violated Regulation 10(n) of the CBLR, 2018. For these reasons, RUD-2 also does not support the case of the Revenue. The impugned order cannot be sustained - Appeal dismissed - decided against Revenue. Issues Involved:1. Whether the Customs Broker violated Regulation 10(n) of the Customs Brokers Licensing Regulations (CBLR), 2018.2. Whether the revocation of the Customs Broker's license is sustainable.3. Whether the forfeiture of the security deposit is justified.4. Whether the imposition of a penalty of Rs. 50,000 on the Customs Broker is correct.Issue-wise Detailed Analysis:1. Violation of Regulation 10(n) of CBLR, 2018:The primary allegation against the Customs Broker was the failure to exercise due diligence as required under Regulation 10(n) of CBLR, 2018. This regulation mandates verifying the correctness of the Importer Exporter Code (IEC) number, Goods and Services Tax Identification Number (GSTIN), identity, and functioning of the client at the declared address using reliable, independent, authentic documents, data, or information.- M/s. Duoflex Expo India (RUD-2): The jurisdictional officer's report indicated that the exporter was non-existent at the registered address and had availed inadmissible ITC. The Customs Broker had obtained and verified various documents, including the GST Registration, IEC Registration, PAN cards, and Aadhar cards. The Tribunal found that the Customs Broker cannot be held responsible for the authenticity of documents issued by government authorities. The responsibility of verifying the existence of the exporter at the registered premises lies with the issuing authority, not the Customs Broker.- Global CNI (RUD-3): The officer's report did not conduct physical verification of the exporter and only questioned the admissibility of ITC based on suppliers' invoices. The Customs Broker had obtained necessary KYC documents, and there was no allegation of these documents being non-genuine. The Tribunal concluded that the Customs Broker had not violated Regulation 10(n).- Galaxy Impaxe (RUD-4): The officer confirmed the existence of the exporter but found some suppliers non-existent. The Tribunal held that the Customs Broker's obligation does not extend to verifying the existence of all suppliers of the exporter. The Customs Broker had obtained relevant KYC documents, and there was no evidence of violation of Regulation 10(n).2. Sustainability of License Revocation:Given that the Customs Broker had not violated Regulation 10(n) based on the evidence and the Tribunal's findings, the revocation of the license was deemed unsustainable.3. Justification of Security Deposit Forfeiture:The forfeiture of the security deposit was also found to be unjustified as it was contingent on the alleged violation of Regulation 10(n), which the Tribunal did not uphold.4. Imposition of Penalty:Similarly, the imposition of a Rs. 50,000 penalty on the Customs Broker was found to be incorrect, as it was based on the alleged violation of Regulation 10(n), which was not substantiated.Conclusion:The Tribunal concluded that the Customs Broker had not 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 set aside. The Customs Broker's appeal was allowed with consequential relief, and the Revenue's appeal and cross-objection were dismissed as infructuous.