Customs broker's license revocation overturned after fulfilling verification duties under Regulation 10(n) with valid government documents

CESTAT Delhi allowed the appeal and set aside the penalty order revoking the customs broker's license. The tribunal held that the broker fulfilled obligations under Regulation 10(n) by obtaining authentic government documents including GSTIN, IEC, and PAN cards to verify client identity and address. The department's failure to provide documents to the appellant and denial of cross-examination opportunity violated natural justice principles. The tribunal ruled that customs brokers cannot be held liable for subsequently discovered non-existence of entities when they relied on valid government-issued certificates, as brokers cannot sit in judgment over official registrations.

---

---

Issues Involved:
1. Violation of Regulation 10(n) of the Customs Brokers Licensing Regulations, 2013.
2. Proportionality of revocation of Customs Broker's licence and imposition of penalty.

Summary:

Issue 1: Violation of Regulation 10(n) of the Customs Brokers Licensing Regulations, 2013

M/s. Shakti Cargo Movers [Importer] appealed against the order revoking their Customs Brokers' licence and imposing a penalty of Rs. 50,000/-. The Commissioner found the appellant in violation of Regulation 10(n), despite the inquiry officer's report suggesting no violations. The appellant argued that the principles of natural justice were violated as no disagreement note was provided, and the DGARM report was not enclosed with the SCN. The appellant contended that they had obtained all necessary documents, including GSTIN, IEC, Aadhar Card, PAN card, etc., to verify the authenticity of M/s. Shree Enterprises, which was alleged to be non-existent. The Tribunal found that the appellant had fulfilled their obligations under Regulation 10(n) by verifying the correctness of IEC and GSTIN, identity, and functioning of the client using reliable documents. The Tribunal emphasized that the Customs Broker is not required to oversee the correctness of actions by Government officers and is only required to verify that documents were indeed issued by the concerned officers.

Issue 2: Proportionality of Revocation and Penalty

The Tribunal noted that the revocation of the licence and the penalty were based on the findings that M/s. Shree Enterprises did not exist at the declared address. However, the Tribunal found that the Customs Broker had fulfilled their obligations under Regulation 10(n) by obtaining and providing authentic documents issued by various Government officers. The Tribunal concluded that the Customs Broker cannot be held responsible for subsequent non-existence of the client if the initial verification was done correctly. Therefore, the Tribunal set aside the impugned order, allowed the appeal, and provided consequential relief to the appellant.

Conclusion:

The appeal was allowed, and the impugned order was set aside with consequential relief to the appellant.

Order Pronounced:

(Order pronounced in open court on 29/04/2024.)

---