Customs Broker due diligence under Regulation 10(n) does not require physical verification where authentic KYC and registration documents are obtained.

A Customs Broker satisfies Regulation 10(n) by verifying clients through reliable, independent and authentic documents, data or information, and is not required to conduct physical inspection or police the correctness of IEC or GSTIN registrations issued by government authorities. Where the broker obtained KYC and supporting documents and there was no evidence of forged papers, fraud, or knowledge of misrepresentation, a violation of Regulation 10(n) is not established. On those facts, revocation of licence, forfeiture of the security deposit, and penalty could not be sustained, and the impugned order was set aside.

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Issues: Whether the Customs Broker violated Regulation 10(n) of the Customs Brokers Licensing Regulations, 2018 by failing to verify the correctness of the IEC, GSTIN, identity of its clients and their functioning at the declared address, and whether the consequential revocation of licence, forfeiture of security deposit and penalty could be sustained.

Analysis: The available verification reports showed that the exporters had GST registrations, and in some cases returns had also been filed, though they were not found operating at the premises on the dates of verification. The obligation under Regulation 10(n) was held to require verification through reliable, independent and authentic documents, data or information, not a physical inspection or a duty to police the correctness of registrations issued by government authorities. IEC and GSTIN were treated as official documents whose genuineness could reasonably be presumed, and the Customs Broker was not required to investigate whether the issuing officers had correctly granted those registrations. The record also showed that the broker had obtained KYC and other supporting documents, and there was no evidence that the documents relied upon were forged or that the broker knew of any fraud or misrepresentation.

Conclusion: The allegation of violation of Regulation 10(n) was not established, and the revocation of licence, forfeiture of security deposit and penalty could not be sustained.

Final Conclusion: The impugned order was set aside and the appeal succeeded with consequential relief.

Ratio Decidendi: A Customs Broker satisfies Regulation 10(n) by verifying its client through reliable, independent and authentic documents, data or information and is not required to conduct physical verification or to the correctness of registrations issued by government officers.

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