2022 (12) TMI 483 - AT - Customs

Customs Brokers Not Liable for Exporter Verification

The appeals were allowed, and the impugned orders were set aside with consequential benefits. The Customs Brokers had fulfilled their obligations under ... Revocation of Customs Broker License - forfeiture of security deposit - levy of penalty - Scope of the obligation of the Customs Broker under Regulation 10 (n) - evidence adduced in each of the show cause notices to allege that the Customs Broker had not fulfilled its obligation under Regulation 10 (n) - presumption as to genuineness of certified copies - HELD THAT:- In this case, investigations were conducted only in respect of three exporters. Of these the report in respect of A to Z International is that the exporter seems risky. In case of Suryavanshi Impex, the Report does not indicate even the name of the exporter. Enquiries appear to have been conducted based on GSTIN number only. The report says “NOC denied” and “Non-existent entity”. In case of M/s T.R. Trading it is reported that the exporter was not bonafide. There is nothing in Regulation 10 (n) which requires the Customs broker to check if the exporter was risky in the opinion of any officer or obtain any NOC from any officer or to get a confirmation from any officer that the exporter is bonafide. Even when the reports say “Nonexistent”, they do not clarify if the exporter never functioned from that premises and GSTIN has been wrongly issued or the exporter ceased to function at that address after the exports. Therefore we do not find any evidence to prove that the Customs broker violated Regulation 10 (n). The impugned order, therefore, cannot be sustained. Cancellation of Customs Broker Licence - entire amount of security deposit was forfeited and the penalty of Rs. 50,000/- was imposed upon the appellant - HELD THAT:- The verification report shows that during physical verification, the exporter was found to be non-existent. However, the report further clarifies that several GST Returns have been filed by the exporter and tax was also paid. Nothing in this report supports the view that the exporter never operated from that premises let alone prove that the Customs broker has not verified the exporter as per Regulation 10 (n). The impugned order cannot, therefore, be sustained. Revocation of Customs Broker licence - forfeiture of security deposit - levy of penalty - non-existence exporters - HELD THAT:- None of the three reports establish that the exporters never operated from those premises. Nor do they support the view that the Customs broker had not verified as per Regulation 10 (n). The Customs broker is not required obtain any “Recommendation” or a certificate form any officer that the exporter is “bonafide”. The impugned order, therefore, cannot be sustained. The evidence produced in the show cause notices does not support the allegations made therein that the appellants had violated Regulation 10 (n) of CBLR - the impugned orders cannot be sustained and need to be set aside. Appeal allowed. Issues Involved:1. Scope of the obligation of the Customs Broker under Regulation 10 (n).2. Evidence adduced in each of the show cause notices to allege that the Customs Broker had not fulfilled its obligation under Regulation 10 (n).3. Sustainability of the impugned orders based on the evidence and submissions in defense by the appellant.Issue-wise Detailed Analysis:1. Scope of Regulation 10 (n):Regulation 10(n) requires the Customs Broker to verify the correctness of the Importer Exporter Code (IEC) number, Goods and Services Tax Identification Number (GSTIN), identity of his client, and functioning of his client at the declared address using reliable, independent, authentic documents, data, or information. The obligations can be broken down as follows:- Verify the correctness of IEC number and GSTIN (documents issued by government departments).- Verify the identity of the client using reliable, independent, authentic documents, data, or information.- Verify the functioning of the client at the declared address using reliable, independent, authentic documents, data, or information.The Customs Broker is not required to ensure that the government officers have correctly issued these documents. The verification of certificates part of the obligation is fully satisfied as long as the Customs Broker satisfies itself that the IEC and GSTIN were indeed issued by the concerned officers, which can be done through online verification, comparing with the original documents, etc. The onus on the Customs Broker does not extend to verifying that the officers have correctly issued the certificate or registration. The Customs Broker cannot sit in judgment over the certificate or registration issued by a Government officer so long as it is valid.2. Evidence Adduced in Show Cause Notices:Customs Appeal No. 50789 of 2021 - M/s Surya Jyoti Global Logistics:The show cause notice alleged that the appellant had processed exports for 13 exporters who did not exist. The evidence included:- RUD 1: A single-page e-mail from DGARM to the Commissioner stating that 2,710 risk exporters were identified, but no specific customs broker was mentioned.- RUD 2, 3 & 4: Verification reports indicating that the exporters (M/s A to Z International, M/s Suryavanshi Impex, and M/s T.R. Trading) were non-existent or not bonafide.The appellant had collected various documents from its clients, including IEC, PAN card, Aadhar card, GST registration, bank account details, and AD code details. The Commissioner held that these documents were not as per Board Circular 9/10-CUS. However, the reports did not clarify if the exporters never functioned from the premises or ceased to function after the exports.Customs Appeal No. 50790 of 2021 - M/s Hari Mohan Dwivedi:The show cause notice referred to 17 exporters indicated by DGARM as being not verified or traceable, but physical verification was conducted only for M/s Vintage Overseas. The sole verification report showed that the exporter was non-existent, but also clarified that several GST Returns had been filed and tax was paid. There was no evidence to support the view that the exporter never operated from that premises or that the Customs Broker had not verified the exporter as per Regulation 10 (n).Customs Appeal No. 51654 of 2021 - M/s Rajinder P. Kapur:The show cause notice alleged that 31 exporters were non-existent, but verification reports were enclosed only for three exporters (M/s ZAPP Incorporation, M/s G.R. Traders, and M/s Imperial Enterprises). The reports indicated that the exporters were non-existent or not bonafide, but did not establish that the exporters never operated from those premises or that the Customs Broker had not verified as per Regulation 10 (n).3. Sustainability of the Impugned Orders:In each of these cases, the evidence produced in the show cause notices did not support the allegations that the appellants had violated Regulation 10 (n) of CBLR. The Customs Broker is not required to obtain any 'Recommendation' or a certificate from any officer that the exporter is 'bonafide.' The impugned orders cannot be sustained based on the evidence provided.Conclusion:The appeals are allowed, and the impugned orders are set aside with consequential benefits. The Customs Brokers had fulfilled their obligations under Regulation 10 (n) and cannot be held responsible for the non-existence or non-bonafide status of the exporters as alleged. The burden of verifying the existence and functioning of the exporters lies with the government officers who issued the relevant documents.