Customs broker verification duty under Regulation 10(n) does not require physical inspection of exporters' premises

A customs broker meets the Regulation 10(n) verification duty by checking the client's IEC, GSTIN, PAN and other KYC documents through reliable official sources, and is not required to physically inspect each exporter's premises or verify how government registrations were issued. Where the broker relies on genuine government-issued records and there is no evidence that the documents were forged, fake or suspect, later non-traceability of the exporter does not by itself establish non-compliance. On those facts, CESTAT held that revocation of the customs broker licence, forfeiture of the security deposit and penalty were not justified and set aside the impugned action.

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Issues: Whether revocation of the customs broker licence, forfeiture of security deposit and penalty were justified for alleged non-compliance with Regulation 10(n) of the Customs Brokers Licensing Regulations, 2018 on the ground that several exporters handled by the customs broker were later found non-traceable.

Analysis: Regulation 10(n) requires verification of the correctness of the IEC and GSTIN, the identity of the client, and the functioning of the client at the declared address by using reliable, independent and authentic documents, data or information. The obligation does not extend to physically visiting the premises of each exporter or to overseeing whether government officers correctly issued registrations or certificates. Where the customs broker relies on genuine IEC, GSTIN, PAN and other KYC documents issued by public authorities and verifies them through official government sources, the broker is entitled to presume their genuineness unless there is material showing that the documents were fake, forged or otherwise suspect. In the facts found, the appellant had verified the antecedents and correctness of the documents from official government sources and there was no evidence of forged documents or of failure to undertake the prescribed verification.

Conclusion: The revocation of the customs broker licence, forfeiture of security deposit and penalty were not justified and were set aside.

Final Conclusion: The appeal succeeded and the impugned order was annulled in full.

Ratio Decidendi: A customs broker satisfies the verification obligation under Regulation 10(n) by checking genuine government-issued documents and reliable official data, and cannot be penalised merely because the client is later found non-traceable unless there is proof of fake or forged credentials or a failure of the prescribed verification process.

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