Customs brokers not required to physically verify exporter addresses under CBLR 2018 Regulation 10(a)

The Bombay HC dismissed an appeal challenging CESTAT's order regarding revocation of customs broker license and forfeiture of security deposit. The case involved customs brokers who processed export papers for entities holding valid GSTIN and IEC certificates issued by competent authorities. The HC held that Regulation 10(a) of CBLR 2018 does not require customs brokers to physically verify exporter/importer addresses or personally meet proprietors. Following precedent from M/s Bright Clearing, the court ruled that customs brokers' responsibility ends with fulfilling regulatory obligations under CBLR 2018. The appeal was dismissed as it raised factual issues rather than substantial questions of law warranting HC intervention.

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Issues:
Appeal against CESTAT judgment on revocation of license and forfeiture of security deposit based on breach of customs broker obligations under Regulation 10 of CBLR, 2018.

Analysis:
The appeal questions the justification of CESTAT in partially allowing the appeal by setting aside the revocation of the license and forfeiture of the security deposit of the respondent customs broker. The appellant argues that despite admitting default on the respondent's part and maintaining a penalty of Rs. 50,000, the CESTAT ignored the definite findings of breach of various sub-clauses of Regulation 10 of CBLR. The appellant contends that the respondent failed to comply with obligations under Regulation 10, facilitating non-genuine exporters, M/s Swastik Enterprises and M/s Ganesh Exports. The CESTAT's interference with the Principal Commissioner's order raises substantial questions of law regarding the respondent's compliance with customs broker obligations.

The respondent, on the other hand, argues that the appeal involves factual issues. The CESTAT evaluated the factual material on record following the decision in 'Commissioner of Customs (Airport and General) New Delhi Vs. M/s Bright Clearing & Carrier Pvt. Limited.' The respondent submits that the CESTAT correctly applied the principles from 'M/s Bright Clearing (Supra)' and found no serious breach of obligations, maintaining the penalty but setting aside the revocation of license and forfeiture of the security deposit. The respondent's stance is that the CESTAT's decision aligns with the law laid down in 'M/s Bright Clearing (Supra)' and the Principal Commissioner's approach was contrary to it.

The Tribunal extensively referred to 'M/s Bright Clearing (Supra)' and emphasized that the customs broker's responsibility is limited to fulfilling obligations under Regulation 10 of CBLR, 2018. The CESTAT's examination of the material documents on record, in line with 'M/s Bright Clearing (Supra),' concluded that the respondent's actions did not constitute a failure in obligations under Regulation 10 (n). The findings of fact regarding verification of exporter details and compliance with specified documents support the CESTAT's decision to not revoke the license or forfeit the security deposit.

The CESTAT's application of the Doctrine of Proportionality led to maintaining the penalty but setting aside the harsher penalties of license revocation and security deposit forfeiture. The respondent's verification of documents, compliance with regulations, and approval from competent authorities regarding the exporters M/s Swastik Enterprises and M/s Ganesh Exports were crucial factors in the CESTAT's decision. The CESTAT's order was deemed appropriate within the limited jurisdiction of entertaining appeals only on substantial questions of law, ultimately leading to the dismissal of the appeal without costs.

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