2025 (3) TMI 747 - AT - Customs

Customs broker license revocation overturned as verification obligation limited to document authenticity not correctness

M/s PRAHALAD SINGH Versus COMMISSIONER, CUSTOMS-NEW DELHI

CESTAT New Delhi allowed the appeal and set aside the order revoking the customs broker license. The tribunal held that Regulation 10(n) of the Customs ... Revocation of Customs Broker License - forfeiture of security deposit - levy of penalty - violation of Regulation 10(n) of the Customs Broker Licensing Regulations, 2018 - Does the Customs Broker have to satisfy himself that these documents or their copies given by the client were indeed, issued by the concerned government officers or does the Customs Broker have to ensure that the officers had correctly issued these documents? - HELD THAT:- Regulation 10(n) does not place an obligation on the Customs Broker to oversee and ensure the correctness of the actions by Government officers. Therefore, the verification of documents part of the obligation under Regulation 10(n) on the Customs Broker is fully satisfied as long as the Customs Broker satisfies itself that the IEC and the GSTIN were, indeed issued by the concerned officers. This can be done through online verification, comparing with the original documents, etc. and does not require an investigation into the documents by the Customs Broker. Therefore, the appellant was correct in verifying the GSTIN issued by the department on the GST portal. The presumption is that a certificate or registration issued by an officer or purported to be issued by an officer is correctly issued. Section 79 of the Evidence Act, 1872 requires even Courts to presume that every certificate which is purported to be issued by the Government officer to be genuine. The onus on the Customs Broker cannot, therefore, extend to verifying that the officers had correctly issued the certificate or registration. Of course, if the Customs Broker comes to know that its client has obtained these certificates through fraud or misrepresentation, nothing prevents it from bringing such details to the notice of Customs officers for their consideration and action as they deem fit. However, the Customs Broker cannot sit in judgment over the certificate or registration issued by a Government officer so long as it is valid. In this case, there is no doubt or evidence that the IEC, the GSTIN and other documents were issued by the officers. So, there is no violation as far as the documents are concerned. There is nothing on record to show that either of these documents were fake or forged. Therefore, they are authentic and reliable and there are no reason to believe that the officers who issued them were not independent and neither has the Customs Broker any reason to believe that they were not independent. The responsibility of the Customs Broker under Regulation 10(n) does not include keeping a continuous surveillance on the client to ensure that he continues to operate from that address and has not changed his operations. Therefore, once verification of the address is complete as discussed in the above paragraph, if the client moves to a new premises and does not inform the authorities or does not get his documents amended, such act or omission of the client cannot be held against the Customs Broker. Conclusion - The appellant Customs Broker did not fail in discharging its responsibilities under Regulation 10(n). The impugned order is not correct in concluding that the Customs Broker has violated Regulation 10(n) because the exporter was found to not exist during subsequent verification by the officers. The impugned order, therefore, cannot be sustained and is set aside - appeal allowed. 1. ISSUES PRESENTED and CONSIDEREDThe core legal issues considered in this judgment are:Whether the appellant, a Customs Broker, violated Regulation 10(n) of the Customs Broker Licensing Regulations, 2018 (CBLR 2018) by failing to verify the correctness of the Importer Exporter Code (IEC), Goods and Services Tax Identification Number (GSTIN), identity, and functioning of the client at the declared address using reliable, independent, authentic documents, data, or information.Whether the revocation of the Customs Broker license, forfeiture of the security deposit, and imposition of a penalty on the appellant were justified based on the alleged violations.2. ISSUE-WISE DETAILED ANALYSISRelevant Legal Framework and Precedents:Regulation 10(n) of CBLR 2018 mandates that a Customs Broker must verify the correctness of the IEC, GSTIN, identity, and functioning of the client at the declared address using reliable, independent, authentic documents, data, or information. The regulation aims to ensure that Customs Brokers perform due diligence to prevent fraudulent activities.Court's Interpretation and Reasoning:The Tribunal analyzed the obligations under Regulation 10(n) and determined that the regulation requires verification through documents, data, or information that are reliable, independent, and authentic. The Tribunal emphasized that the Customs Broker is not required to physically verify the client's premises but can rely on official documents issued by government authorities.Key Evidence and Findings:The Tribunal noted that the appellant had verified the GSTIN and IEC through official documents and portals, which were presumed genuine under Section 79 of the Evidence Act, 1872. The Tribunal found no evidence that these documents were fake or forged.Application of Law to Facts:The Tribunal concluded that the appellant had fulfilled its obligations under Regulation 10(n) by verifying the GSTIN and IEC through official channels. The Tribunal found that the appellant's reliance on government-issued documents was reasonable and satisfied the requirement to verify the client's identity and functioning at the declared address.Treatment of Competing Arguments:The Tribunal considered the department's argument that the Customs Broker's role is critical in preventing misuse of export schemes. However, it found that the appellant had complied with the regulatory requirements by verifying the necessary documents. The Tribunal rejected the notion that the Customs Broker should verify the correctness of government-issued documents beyond their authenticity.Conclusions:The Tribunal concluded that the appellant did not violate Regulation 10(n) as alleged. The Tribunal found that the revocation of the license, forfeiture of the security deposit, and imposition of a penalty were not justified based on the evidence presented.3. SIGNIFICANT HOLDINGSCore Principles Established:The Tribunal established that a Customs Broker fulfills its obligations under Regulation 10(n) by verifying the authenticity of government-issued documents and does not need to conduct physical verifications of the client's premises. The Tribunal emphasized that the responsibility does not extend to verifying the correctness of the issuance of such documents by government authorities.Final Determinations on Each Issue:The Tribunal set aside the impugned order, finding that the appellant did not fail in discharging its responsibilities under Regulation 10(n). The Tribunal allowed the appeal, granting consequential relief to the appellant.