TaxTMI 
TaxTMI 
2022 (7) TMI 368
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....From all the facts and circumstances narrated above, I find that the CB has violated the Regulation 10(n) of CBLR, 2018 and hence, I pass the following order: ORDER In exercise of the powers conferred in terms of Regulation 14 & 18 read with Regulation 17(7) of CBLR, 2018 (erstwhile Regulation 18 &22 read with Regulation 20(7) of CBLR 2013), (i) I hereby revoke the license No. R-11,/DEL/CUS/2011 (PAN: AKCPK 2519G) valid upto 20.02.2021 of M/s. Mauli Worldwide Logistics; (ii) I order for forfeiture of the amount of security deposit of Rs. 75,000/- (Rupees seventy five thousand only) furnished by them; (iii) I impose penalty of Rs. 50,000/- on M/s Mauli Worldwide Logistics 33. This order is being issued without prejudice to any other action that may be taken against the CB or any other persons(s)/firm(s) etc. under the provisions of the Customs Act, 1962 and Rules/Regulations framed there under or any other law for the time being in force for the present or any other past violations committed by them." (emphasis supplied) 3. The factual matrix which led to the issue of this order is that the Directorate General of Analytics and Ri....
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....ant Customs Broker correct? 6. Although both the show cause notice and the impugned order listed several suspected exporters whose exports the appellant had handled and who are said to be untraceable, the reports in respect of only three exporters were narrated in paragraph 6 of the show cause notice but the Relied Upon Documents enclosed with the show cause notice included reports of officers in respect of eleven exporters. Evidence and documentation, if any, in respect of the remaining exporters who were said to be untraceable is not part of the show cause notice or proceedings. The relevant extracts of these eleven reports are as follows: RUD Exporter Remarks of the officer 1 Mirza Export Ms/ Mirza exports was found non-existent at their registered address. M/s. Mirza exports got GST registration on September 2019. Therefore, the ITC availed by M/s. Mirza Exports is not genuine and thus, is not admissible. Signed by Deputy/ Assistant Commissioner on 2/06/2020 2 Sunrise sales Corporation Non-existent exporter. NOC denied. Signed by Deputy/ Assistant Commissioner on 21/05/2020 3 Tirupati Enterprises Non-existent exporter. NOC denied. ....
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....eputy Commissioner on 02/06/2020 11 Sai Enterprises On physical verification, the assessee was found non-existent. Further, letter dated 11.02.2020 written to the assessee to submit Annexure A as per the Circular No. 131/1/020-GST dated 23.01.2020 returned undelivered with remarks "pooch taach karne per pata nahin chala atah Vaapas" ...... In view of the above, the exporter-assessee does not appear to be bonafide. 7. The allegation in the show cause notice is that when verified, the officers found that the exporters were non-existent and therefore the shipping bills were filed on their behalf by the appellant without the requisite verification as per Regulation 10(n). Therefore, the appellant is liable for action. 8. The findings recorded in paragraphs 25, 26 and 27 of the impugned order are as follows: "25. I further noted that Board vide Circular No. 09/2010-Customs dated 08.04.2010 has specifically prescribed "Know Your Customer (KYC)" guidelines to the CBs/CHAs so that indulging in fraudulent activities and with a view to control offences involving various modus-operandi such as misuse of export promotion schemes, fraudulent availment of export inc....
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.... Card Yes No IEC, GST Registration Certificate, PAN Card, Aadhar Card 27. Thus, I find that CB has not shown due diligence while obtaining the documents as per KYC norms. Since such a large number of the exporters are untraceable, it appears that the CB has failed to comply with the obligations cast upon them under the provisions of the Regulation 10 (n) of the CBLR, 2018. The CB failed to exercise due diligence and grossly violated the KYC guidelines of the said Circular No. 09/2010-Customs dated 08.04.2018 read with the provisions of the CBLR, 2018 as a number of exporters have been found to be untraceable. As per the mandate of the Regulation 10 (n) of the CBLR, 2018 read with the Circular No. 09/2010-Customs dated 08.04.2010, it was incumbent upon the CB to verify identity and functioning of his client at the declared address by using reliable, independent, authentic documents, data or information which apparently the CB have failed to do so. The Circular No. 09/2010-Customs clearly states that in case of an individual firm or organization out of the 6 documents mentioned in the Annexure, any two will suffice. Whereas, in case of....
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.... a) Final Order No. 52053-52054/2021 dated 3.12.2021 of CRM Logistics Pvt. Ltd. b) Final Order No. 500002/2022 dated 3.1.2022 of M/s. Anax Air Services Pvt. Ltd. c) Final Order No. 50347/2022 dated 29.04.2022 of M/s. Perfect Cargo & Logistics 10. Learned Departmental representative reiterates the above findings of the impugned order. 11. We have considered the submissions on both sides and perused the records. 12. The reports of the officers which were annexed as Relied Upon Documents to the show cause notice show that the GST Registrations were issued to the exporters by the Department. In fact, the analysis by the DGARM itself was based on the GST registrations issued by the department. It is also evident from the reports that the assessee exporters were also claiming input tax credit (ITC) under the GST. However, in all cases, on the day the officers went for verification, the exporters were not found operating at the business premises and the input tax credit (ITC) was reported to be inadmissible. This could mean either that these firms never existed at the premises at all and the GST Registrations were issued by the officers to non-existent fi....
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.... appellant as a part of the KYC were genuine documents and were issued by the officers concerned. In our considered view, if the GSTIN is issued by the officers to persons who did not exist at the time of verification it could mean that the officers have issued GSTIN to non-existent firms or that they had subsequently either stopped operating from that address or that they had moved from that place and have not changed the address. In any of these scenarios, if the GSTIN was issued by the departmental officers to such a large number of non-existent persons, it shows either the lack of any due diligence on the part of the officers or an inherently flawed system of issuing GSTIN. The appellant cannot be faulted for trusting the GSTIN issued by the department. 18. Similarly, if the importer-exporter code [IEC] issued by the Director General of Foreign Trade [DGFT] is wrongly issued to non-existent businesses and entities, the appellant cannot be blamed for trusting the IEC issued by the DGFT. Similar is the case with respect to other documents such as PAN card (issued by the Income Tax Department), Driving Licence (issued by the Transport Department), Voter ID (issued by the ....
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....ed address by using reliable, independent, authentic documents, data or information. This responsibility does not extend to physically going to the premises of each of the exporters to ensure that they are functioning at the premises. When a Government officer issues a certificate or registration with an address to an exporter, the Customs Broker cannot be faulted for trusting the certificates so issued. It has been held by the High Court of Delhi in the case of Kunal Travels [2017 (3) TMI 1494- Delhi High Court] that "the CHA is not an inspector to weigh the genuineness of the transaction. It is a processing agent of documents with respect of clearance of goods through customs house and in that process only such authorized personnel of the CHA can enter the customs house area........ It would be far too onerous to expect the CHA to inquire into and verify the genuineness of the IE code given to it by a client for each import/export transaction. When such code is mentioned, there is a presumption that an appropriate background check in this regard i.e., KYC, etc. would have been done by the customs authorities....." (emphasis supplied)." 22. The Customs Broker is not Omniscie....
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....ervices Tax Identification Number (GSTIN),identity of his client and functioning of his client at the declared address by using reliable, independent, authentic documents, data or information. This obligation can be broken down as follows: a) Verify the correctness of IEC number b) Verify the correctness of GSTIN c) Verify the identity of the client using reliable, independent, authentic documents, data or information d) Verify the functioning of the client at the declared address using reliable, independent, authentic documents, data or information 26. Of the above, (a) and (b) require verification of the documents which are issued by the Government departments. The IEC number is issued by the Director General of Foreign Trade and the GSTIN is issued by the GST officers under the Central Board of Indirect Taxes and Customs of the Government of India or under the Governments of State or Union territory. The question which arises is has the Customs Broker to satisfy himself that these documents or their copies given by the client were indeed issued by the concerned government officers or does it mean that the Customs Broker has to ensure that t....
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....IN and other documents were issued by the officers. So, there is no violation as far as the documents are concerned. 28. The third obligation under Regulation 10(n) requires the Customs Broker to verify the identity of the client using reliable, independent, authentic documents, data or information. In other words, he should know who the client is and the client cannot be some fictitious person. This identity can be established by independent, reliable, authentic: a) documents; b) data; or c) information 29. Any of the three methods can be employed by the Customs Broker to establish the identity of his client. It is not necessary that it has to only collect information or launch an investigation. So long as it can find some documents which are independent, reliable and authentic to establish the identity of his client, this obligation is fulfilled. Documents such as GSTIN, IEC and PAN card issued etc., certainly qualify as such documents. However, these are not the only documents the Customs Broker could obtain; documents issued by any other officer of the Government or even private parties (so long as they qualify as independent, reliable and authe....