TaxTMI 
TaxTMI 
2023 (5) TMI 614
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....hair by M/S S.S. Impex, Hyderabad. The export consignment was detained by SIB (AirPort) for undervaluation. On verification, it was found that M/s. S. S. Impex, Hyderabad was not available at the address declared in the IE Code and GSTIN Certificate. On the basis of the investigation report of SIB, proceedings under Regulation 17 of CBLR, 2018 was initiated against the Appellant and a Notice was issued for violation of Regulations 1 (4), 10(d), 10(m), 10(n) and 13(12) of the Customer Broker Licensing Regulation 2018, in connection with the past exports of M/s. S. S. Impex, Hyderabad during the period of June 2019 to December, 2020. The Principal Commissioner of Customs (Airport & ACC) adjudicated the Notice and ordered for revocation of the CB license of the Appellant and ordered for forfeiture of security deposit under regulation 14 of CBLR 2018 and imposed penalty of Rs 50,000 under Regulation 18 of CBLR 2018. The Appellant is before us against the above said Order dated 23/11/2021 (hereinafter referred as the Impugned Order) passed by the Principal Commissioner of Customs. 3. From the Impugned Order it is observed that the Appellant has cleared 81 Shipping Bills of Raw Human ....
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....onnection with the export of Human Hair, for the exports made during the period June 2019 to December 2020. (b) All the 81 Shipping Bills were allowed for export by the proper officer under Section 51 0f the Customs Act, 1962 and no irregularities were noticed while processing the documents submitted for export of the said consignments. (c) There is no involvement of the Appellant in the alleged undervaluation of human hair, as the export of the said goods were allowed by the Customs Department without any objection. (d) Mr. Arup Ghosh, owner of Just Logistic-1, only acted as an Intermediary to procure export jobs. Transfer of money from the Account of L G Enterprises to the Appellant, for attending the Customs Clearance work of S.S. Enterprises, was only a mutual agreement between them. This arrangement cannot be considered as transfer of License by the Appellant to Mr. Arup Ghosh. Hence, there is no violation of Regulation 1 (4) of CBLR 2018. (e) The Shipping Bill No 7926810 dt 15/01/2021, for export of Human Hair by the Exporter S S Impex, Hyderabad, was filed by Just Logistic-1 and they are only responsible for undervaluation or any other vio....
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....he exporter for the goods exported. They have obtained all the KYC documents required as mentioned in the Board Circular 9/2010 dated 08/04/2010 and hence fulfilled all responsibilities entrusted to them in the capacity of a CHA. Accordingly, they requested to set aside the Impugned Order and restore their license. 7. Heard both sides and perused all the documents submitted by both sides. The questions which need to be answered here are: (a) Given the factual matrix of the case and the evidence available on record, whether the Ld Principal Commissioner was correct in holding that the appellant Customs Broker has violated Regulation 1(4),10(d),10(m),10(n) and 13(12) of CBLR 2018? (b) If the answer to (a) above is affirmative, can the revocation of licence of the appellant customs broker be sustained? (c) If the answer to (a) above is affirmative, then whether the forfeiture of security deposit is correct? (d) If the answer to (a) above is affirmative, is the imposition of penalty of Rs.50,000/- upon the appellant Customs broker correct? 8. The Impugned Order alleges that the Appellant has violated the Regulations 1(4),10(d),10(m),10(n) and 1....
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....sh. Receipt of payment by the Appellant from L G Enterprises cannot be a ground to conclude that the Appellant has transferred their license to Mr. Arup Ghosh. It is an internal arrangement between them. Thus, we hold that there is no merit in the allegation of violation of Regulation 1 (4) by the Appellant. 10. Regarding the allegations of violation of Regulations 10 (d) of CBLR 2018, we find that this Regulation obliges a Customs Broker to advise his clients to comply with the provisions of Customs Act, 1962. In case of failure by his clients, it is the responsibility of a Customs Broker to immediately bring this non-compliance to the notice of DC or AC of Customs. Shri Arup Ghosh, G-card Holder of the Appellant has been advising them for clearance of export of human hair for more than a year. 81 shipping bills have been cleared during the period June 2019 to December 2020. No objection was raised by the Department about these clearances. In fact, the present shipping bill in question was filed by Just Logistic-1 and not by the Appellant. For any violation in this shipping bill, only Arup Ghosh and the CB Just Logistic-1 need to answer and not the Appellant. We find that there....
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....d Principal Commissioner has concluded that the CB has not verified the above said documents as prescribed in the Annexure to the Circular 9/2010 dated 08/04/2010. . We find that the CB has taken the documents such as IEC, GSTIN etc. These documents were issued by Government Agencies, which substantiate the existence of the exporters at the relevant time of issue of these documents. 14. We find that paragraph 6 of the Circular 9/2010-Cus dated 8.4.2010 requires the client to furnish to the CHA, a photograph of himself / herself, in the case of an individual and those of the authorized signatory in respect of other forms of organization such as company/trusts, etc. and any two of the listed documents in the annexure to the said Circular. Thus, it is evident that even as per the Circular, obtaining a photograph and any two of the documents listed in the Annexure to the circular is sufficient compliance of Regulation 10(n) of CBLR, 2018. The most important documents in these cases are the IEC and the GSTIN - one issued by the same department and the other by the DGFT. The IEC issued by the DGFT has not been disputed at all without which the goods could not have been exported . The ....
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.... 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 the officers have correctly issued these documents. In our considered view, obligations under Regulation 10(n) of CBLR cannot be read to mean the latter as it would amount to treating the Customs Broker as one who is responsible to oversee and ensure the correctness of the actions by the Government officers who issued these documents. It would also mean that the Regulations under the Customs Act will prevail over the actions under the Foreign Trade (Development and Regulation) Act, 1992 under which the IEC is issued by DGFT and the Central Goods and Services Tax Act (or state GST Act) under which the GSTIN is issued by the GST officers which is not a correct construction of the legal provisions. Therefore, the verification of certificates part of the obligation under Regulat....
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....o 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. 26. 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. If a document is issued by any other person not interested in the relationship of the client and the Customs Broker, it can be called independent. But it should also be reliable and authentic and not one issued by any Tom, Dick and Harry. Documents such as PAN card issued by the Income Tax, driving licence issued by the RTO, Election voter card issued by the Election Commission, the passport issued by the Passport Officer, etc., certainly qualify as such documents as none of these departments have any interest in the relationship between the client and the Customs Broker and these documents are presumed to be authentic and relia....
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....s nothing on record to show that either of these documents were fake or forged. Therefore, they are authentic and reliable and we have 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. In two of the cases, the GST officers have also received some GST returns from the clients. 28. 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. Of course, if the Customs Broker was aware that the client has moved and continues to file documents with the wrong address, it is a different matter. 29 When a Government officer issues a certificate or registration with an address to an exporter, it is not for the Customs Broke....
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....risdictional GST officer who issued the registration) either acted fraudulently or carelessly, the above could not have been issued. 32. The Customs Broker is not omniscient and omnipotent. The responsibility of the Customs Broker under Regulation 10(n) does not extend to ensuring that all the documents issued by various officers of various departments are issued correctly. The Customs Broker is not an overseeing authority to ensure that all these documents were correctly issued by various authorities. If they were wrongly issued, the fault does not lie at the doorstep of the Customs Broker and it is not up to the Customs Broker to doubt the documents issued by the authorities and he cannot be faulted for believing them to be correct. 33. It is possible that by efflux of time, when the GST officers went for verification, situation changed. If so, it is a ground for starting a thorough investigation by the officer and is not a ground to suspend/cancel the license of the Customs Broker who processed the exports. We also find that there is nothing in the SCN to prove that the exporters did not exist or operate from the addresses when the Shipping Bills were filed. ....
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....ent of liberalization or tightening may also vary greatly from one system to another and that is also a matter of public policy. If one wants to obtain a passport, for example, which gives one nothing more than the right to leave the country and to return to it, the passport is issued either after or subject to police verification so that the passports are not issued incorrectly or misused. Similarly, if a poor hut-dweller wants a Ration Card which entitles him and his family to subsidized or free food from the State worth a few thousand rupees, such a card is issued only after verifying his address, the number of his family members, etc. so that the scheme may not be misused by those who are not entitled to the benefits. 40. On the other hand, anybody, even the very hut-dweller living below the poverty line wants to export goods and claim export incentives, neither his means nor his capability can be either checked or held against him. The Shipping Bills are processed by the Customs solely based on the fact that an IEC is issued to the exporter by the DGFT. Nothing in the Customs Act empowers the Customs officers to stop an export or import based on who the importer or ex....
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....ficer and physical examination of the goods being exported both of which are done only in selected cases and other cases are 'facilitated' i.e., the export is allowed without any officer either assessing the shipping bill or examining what was actually being exported to ensure that it matches with the shipping Bill. The customs Risk Management System (RMS) decides which shipping bill should be assessed and/or which export consignment must be subjected to physical 25 examination. The National Time Release Study12 by the CBIC reports as follows: "7. Exports - procedure, methodology and scope 7.1 Export procedure requires filing of electronic self-declaration (shipping bill) by exporter before the goods move from exporter's premises. The RMS allows the lowest risk category to be cleared as facilitated without subjecting the cargo to assessment or examination. In this study, facilitation level for shipping bills at seaports/ICDs was seen to be 80%, and at air cargo complexes at 95%. Thus, there is a 80 to 95% probability of a fraudulent export not being detected by the Customs. Even if an exporter is caught and is being investigated for such an export, the Cu....
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.... the officers work within their mandate which may not include physical verification of the premises of the exporters. Nevertheless, the burden of this very liberal, open, scheme and its potential misuse cannot be put at the doorstep of a Customs Broker. Just as the officer's responsibility ends with doing his part of the job (which may be issuing a registration without physical verification or allowing exports without assessing the documents or examining the goods), the Customs Broker's responsibility ends with fulfilling his responsibilities under Regulation 10 of the CBLR, 2018. In dispute in this case is CBLR 10(n) which, as we have discussed above, does not require any physical verification of the address of the exporter/importer and the appellant has fully met his obligations under Regulation 10(n). 47. To sum up, the only allegation against the appellant in the impugned order is that it violated Regulation 10 (n) which we find is not true. 48. In view of the above, we proceed to answer the questions framed by us in paragraph 4 above. The answer to question (a) is that in the factual matrix of the case and evidence available on record, the Commissioner was no....