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of <h1>Tribunal Overturns Customs Broker Suspension; Affirms No Duty to Physically Verify Exporters' Premises.</h1> <h3>M/s. Baid International Services Ltd. Versus Commr. of Customs (Airport & Air Cargo Complex, Commissionerate), Kolkata.</h3> M/s. Baid International Services Ltd. Versus Commr. of Customs (Airport & Air Cargo Complex, Commissionerate), Kolkata. - 2023 (386) E.L.T. 567 (Tri. - ... Issues Involved:1. Suspension of Customs Broker License2. Alleged Violation of Regulation 10(n) of CBLR, 20183. Verification of Exporters' Identity and Functioning4. KYC Compliance by Customs Broker5. Responsibility for IGST Refund FraudSummary:1. Suspension of Customs Broker License:The appellants, Baid International Services, a licensed Customs Broker, challenged the suspension of their license by the Principal Commissioner of Customs (A & A), Kolkata, under Regulation 16(1) of the Customs Brokers Licensing Regulations (CBLR), 2018. The suspension was based on an offence report alleging involvement in export-related frauds by 15 exporters, facilitated by the appellants.2. Alleged Violation of Regulation 10(n) of CBLR, 2018:A Show Cause Notice was issued under Regulation 17(1) of CBLR for the revocation of the license, alleging that the appellants violated Regulation 10(n) by not verifying the correctness of the Importer Exporter Code (IEC) number, GST Identification Number (GSTIN), and the identity and functioning of their clients at the declared address using reliable, independent, authentic documents, data, or information.3. Verification of Exporters' Identity and Functioning:The appellants contended that they verified the antecedents of their clients by taking bank-verified documents and conducting physical verification visits. However, the enquiry officer found that the appellants failed to provide documentary evidence of such verifications and concluded that the appellants violated Regulation 10(n) of CBLR, 2018.4. KYC Compliance by Customs Broker:The appellants submitted KYC documents, including IEC numbers, GSTIN numbers, PAN numbers, AD Code numbers, and addresses, for the 15 exporters. The adjudicating authority acknowledged that the appellants possessed the requisite KYC documents but held that they failed to verify the existence of the exporters over the phone or mail, and thus concluded that the appellants violated their duties under Regulation 10(n).5. Responsibility for IGST Refund Fraud:The adjudicating authority held the appellants responsible for the loss of Rs. 8.04 crore due to fraudulent IGST refunds, asserting that the appellants facilitated the exporters without verifying KYC, causing a huge loss to the Department. However, the Tribunal observed that the Customs Broker is not responsible for ensuring the realization of IGST and that the burden of verifying the existence of exporters lies with the government authorities issuing the certificates.Conclusion:The Tribunal found that the Customs Broker had complied with the KYC requirements by submitting the necessary documents issued by government authorities. The Tribunal held that the Customs Broker is not responsible for physically verifying the premises of exporters and that the responsibility for any wrongdoing lies with the authorities issuing the certificates. Consequently, the Tribunal set aside the order of the lower authority, dismissed the charges against the Customs Broker, and allowed the appeal with consequential relief/benefits.
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