Reasonable verification under Customs Brokers rules does not require physical inspection or rechecking official IEC and GSTIN issuance.

Regulation 10(n) of the Customs Brokers Licensing Regulations, 2018 requires a Customs Broker to make reasonable verification of the client's identity, IEC, GSTIN and functioning through reliable, independent and authentic material, but it does not require physical inspection of premises or second-guessing the correctness of official issuance of those documents. Verification that IEC and GSTIN were issued by the competent authorities, supported by other reliable identification material, was treated as sufficient. The record also did not establish a proven breach of that duty, as the reports were vague and did not show forged documents, non-existence of the exporters, or knowledge of falsity. On that basis, revocation, forfeiture and penalty were held unsustainable.

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Issues: (i) Whether Regulation 10(n) of the Customs Brokers Licensing Regulations, 2018 requires a Customs Broker to physically verify the client's premises and independently ascertain the correctness of government-issued IEC and GSTIN beyond verifying that such documents were in fact issued; (ii) whether the record established a violation of Regulation 10(n) so as to justify revocation of the Customs Broker's licence, forfeiture of security deposit and penalty.

Issue (i): Whether Regulation 10(n) of the Customs Brokers Licensing Regulations, 2018 requires a Customs Broker to physically verify the client's premises and independently ascertain the correctness of government-issued IEC and GSTIN beyond verifying that such documents were in fact issued.

Analysis: Regulation 10(n) obliges the Customs Broker to verify the correctness of IEC, GSTIN, the identity of the client and the client's functioning at the declared address by using reliable, independent and authentic documents, data or information. That obligation was held to be satisfied when the Customs Broker verifies that the IEC and GSTIN were issued by the competent authorities and obtains other reliable identification material. The provision was not construed as requiring the Customs Broker to sit in judgment over the correctness of the official act of issuance. Physical visit to the premises was also held unnecessary, because the rule permits verification through documents, data or information and does not impose continuous surveillance or on-site inspection. The presumption of genuineness attached to official documents under Section 79 of the Indian Evidence Act, 1872 supported this construction.

Conclusion: The Customs Broker was not required to physically verify the premises or independently re-check the correctness of issuance of IEC and GSTIN by the authorities.

Issue (ii): Whether the record established a violation of Regulation 10(n) so as to justify revocation of the Customs Broker's licence, forfeiture of security deposit and penalty.

Analysis: The verification reports relied upon in the notice were found to be vague and, in several instances, did not even identify the exporter by name. The reports did not establish that the exporters were non-existent at the time the Customs Broker procured documents and handled exports, nor did they show that the appellant knew of any falsity or non-existence. The documents obtained by the appellant were not shown to be forged or unreliable. The material relied upon therefore did not prove contravention of Regulation 10(n), and the grounds for the extreme consequences of revocation, forfeiture and penalty were not made out.

Conclusion: No violation of Regulation 10(n) was proved, and the revocation, forfeiture and penalty could not be sustained.

Final Conclusion: The licence revocation and ancillary penalties were unsustainable because the Customs Broker had complied with the duty of reasonable verification and the evidence did not establish any actionable breach.

Ratio Decidendi: A Customs Broker's obligation under Regulation 10(n) is limited to reasonable verification through reliable, independent and authentic material and does not extend to physical inspection or to second-guessing the correctness of official issuance of IEC or GSTIN; punitive action cannot stand unless a clear breach of that duty is proved on cogent material.

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