Customs Broker verification duties are limited to reasonable checks; unsupported breach allegations under licensing regulations fail.
Regulation 10(d) requires a Customs Broker to advise the client to comply with the Act, allied Acts, and the rules and regulations, and a breach must be supported by credible evidence; absent such evidence, the allegation fails. Regulation 10(e) requires due diligence on the correctness of information imparted to the client in relation to cargo clearance, but a violation cannot be sustained without identifying the specific incorrect information. Regulation 10(n) is limited to reasonable verification of IEC, GSTIN, client identity, and functioning at the declared address through reliable material; it does not require the broker to guarantee the correctness of government-issued registrations or maintain continuous surveillance.
Issues: (i) Whether the Customs Broker violated Regulation 10(d) of the Customs Brokers Licensing Regulations, 2018 by failing to advise the exporter to comply with the law; (ii) whether the Customs Broker violated Regulation 10(e) by failing to exercise due diligence as to the correctness of information imparted to the client; (iii) whether the Customs Broker violated Regulation 10(n) by failing to verify the correctness of IEC, GSTIN, identity of the client, and functioning at the declared address; and (iv) whether the revocation of licence, forfeiture of security deposit, and penalty could stand.
Issue (i): Whether the Customs Broker violated Regulation 10(d) of the Customs Brokers Licensing Regulations, 2018 by failing to advise the exporter to comply with the law.
Analysis: The obligation under Regulation 10(d) is to advise the client to comply with the Act, allied Acts, and the rules and regulations thereunder. The finding of breach required credible evidence that no such advice was given. The record disclosed no such evidence. On the contrary, the Customs Broker produced a letter from the exporter stating that advice had been given. The rejection of that letter on the ground that it did not specify the nature of due diligence or advice found no support in the regulation.
Conclusion: The alleged violation of Regulation 10(d) was not established and the finding was unsustainable.
Issue (ii): Whether the Customs Broker violated Regulation 10(e) by failing to exercise due diligence as to the correctness of information imparted to the client.
Analysis: Regulation 10(e) requires due diligence in ascertaining the correctness of information imparted to the client in relation to cargo clearance. Neither the show cause notice nor the order identified what incorrect or inaccurate information had been supplied by the Customs Broker. A conclusion of breach without specifying the offending information was unsupported and disclosed non-application of mind.
Conclusion: The alleged violation of Regulation 10(e) was not established and the finding was unsustainable.
Issue (iii): Whether the Customs Broker violated Regulation 10(n) by failing to verify the correctness of IEC, GSTIN, identity of the client, and functioning at the declared address.
Analysis: The obligation under Regulation 10(n) is limited to verifying that the IEC and GSTIN were issued, identifying the client through reliable, independent, and authentic documents, data, or information, and verifying functioning at the declared address through such material. It does not require the Customs Broker to sit in judgment over the correctness of official registrations issued by government officers, nor to conduct continuous surveillance after verification is complete. Once valid official documents are verified, the Customs Broker is entitled to rely on them unless there is evidence of forged documents, fraud known to the broker, or deliberate complicity. The department did not establish that the broker failed in these limited obligations.
Conclusion: The alleged violation of Regulation 10(n) was not established and the finding was unsustainable.
Issue (iv): Whether the revocation of licence, forfeiture of security deposit, and penalty could stand.
Analysis: The punitive consequences flowed entirely from the alleged regulatory breaches. Once the findings of breach under Regulations 10(d), 10(e), and 10(n) failed, the foundation for the consequential penalties disappeared.
Conclusion: The revocation, forfeiture, and penalty could not be sustained.
Final Conclusion: The impugned order was set aside and the Customs Broker was entitled to restoration of its licence.
Ratio Decidendi: A Customs Broker's duty under Regulation 10(n) is confined to reasonable verification of official registrations, identity, and functioning at the declared address by reliable material, and does not extend to guaranteeing the correctness of governmental issuance or maintaining continuous surveillance on the client; allegations of breach under Regulations 10(d) and 10(e) must also be supported by specific and credible evidence.