Customs broker due diligence under licensing regulations does not require physical verification of exporter premises.

A Customs Broker is not required to conduct physical verification of an exporter's premises or assume responsibility for later non-availability of the exporter where it relied on apparently authentic IEC, GSTIN and related documents. On the facts discussed, the alleged breaches of Regulations 1(4), 10(d), 10(m), 10(n) and 13(12) of the Customs Broker Licensing Regulations, 2018 were not proved because the broker had processed consignments on the basis of documents furnished by the exporter and no material showed failure to advise compliance, lack of efficiency, or unauthorised transfer of licence. As the regulatory breach was not established, revocation of licence, forfeiture of security deposit and penalty were held unsustainable.

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Issues: (i) Whether the Customs Broker violated Regulations 1(4), 10(d), 10(m), 10(n) and 13(12) of the Customs Broker Licensing Regulations, 2018; (ii) whether revocation of licence, forfeiture of security deposit and imposition of penalty were sustainable.

Issue (i): Whether the Customs Broker violated Regulations 1(4), 10(d), 10(m), 10(n) and 13(12) of the Customs Broker Licensing Regulations, 2018.

Analysis: The Customs Broker had processed the export consignments on the basis of IEC, GSTIN and other documents furnished by the exporter. The allegation that the licence was transferred to another person was rejected as the record showed that the person concerned acted as a G-card holder and the payment arrangement was treated as an internal arrangement. On Regulation 10(d), there was no material to show failure to advise the client to comply with customs law. On Regulation 10(m), there was no evidence of lack of efficiency or delay in discharge of work. On Regulation 13(12), the Customs Broker could not be held responsible for acts of another Customs Broker or for the subsequent non-availability of the exporter at the declared address. On Regulation 10(n), reliance was placed on government-issued IEC and GSTIN documents, and the obligation was held not to extend to physical verification of premises or to second-guess the correctness of documents issued by public authorities.

Conclusion: The alleged violations were not proved and the finding of breach of the regulations was unsustainable.

Issue (ii): Whether revocation of licence, forfeiture of security deposit and imposition of penalty were sustainable.

Analysis: Once the alleged regulatory breaches were found not proved, the foundation for revocation of licence, forfeiture of security deposit and penalty failed. The reasoning followed the view that a Customs Broker is not an overseer of the validity of government-issued registrations and cannot be penalised merely because the exporter was later found unavailable at the declared address.

Conclusion: Revocation of licence, forfeiture of security deposit and penalty were not sustainable.

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

Ratio Decidendi: A Customs Broker discharges the obligation under Regulation 10(n) by verifying authentic government-issued documents and is not required to conduct physical verification of the exporter's premises or assume responsibility for the subsequent non-existence or default of the exporter.

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