Customs broker verification duty under Regulation 10(n) does not require physical inspection or review of government-issued registrations.

Regulation 10(n) of the Customs Brokers Licensing Regulations, 2018 requires a Customs Broker to verify the IEC, GSTIN, client identity and the client's functioning at the declared address using reliable, independent and authentic material. It does not require the broker to sit in judgment over registrations issued by competent government authorities, undertake continuous surveillance, or physically inspect every client premises. On the facts, the verification reports were vague and inconclusive and did not show that the exporters never existed or that the brokers failed their statutory duty at the time of processing the exports. The revocation of licences, forfeiture of security deposits and penalties were therefore unsustainable.

---

---

Issues: Whether a Customs Broker is required under Regulation 10(n) of the Customs Brokers Licensing Regulations, 2018 to physically verify the business premises of the client and to ensure the correctness of governmental registrations issued by other authorities, and whether the revocation of the licences, forfeiture of security deposits and imposition of penalty were sustainable on the facts of the two appeals.

Analysis: Regulation 10(n) obliges a Customs Broker to verify the correctness of the IEC and GSTIN, the identity of the client and the functioning of the client at the declared address by using reliable, independent and authentic documents, data or information. The obligation was held to be satisfied if the broker verifies that the IEC and GSTIN were issued by the competent authorities and obtains reliable independent material to establish identity and functioning at the declared address. The provision was not read as requiring the Customs Broker to sit in judgment over the correctness of registrations issued by governmental officers, nor as imposing a duty of continuous surveillance or compulsory physical inspection of each client's premises. The verification reports relied upon by the Revenue were found to be vague and inconclusive, and they did not establish that the exporters never existed or that the appellants had failed to discharge the statutory obligation at the time the exports were processed.

Conclusion: The appellants were not shown to have violated Regulation 10(n), and the orders revoking the licences, forfeiting the security deposits and imposing penalty were not sustainable.

---