TaxTMI 
TaxTMI 
2023 (8) TMI 1056
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....1 they have filed several Bills of Entry and Shipping Bills for its customers numbering approximately 2000. They contend that before taking up the job and/or assignment under the Custom Brokers Licensing Regulations, 2018 [The Regulations], they verify the antecedents and functioning of their clients at the declared address by reliable, independent, authentic document, data or information. In usual course they verify the importer exporter code number, GST number and identity of the clients by taking bank verified documents etc and conduct physical verification by visits, and only after being satisfied and bonafides of the client being established, the assignment of the work is accepted by them. 3. Briefly stated the aforesaid license of the appellant was suspended vide order number CB Order No.08/2021 dated 30.07.2021 by the Principal Commissioner of Customs (A & A), Custom House, Kolkata under Regulation 16(1) of Customs Brokers Licensing Regulations 2018, (CBLR). The said suspension was challenged by them on the ground that it was based on erroneous and untenable facts in law. Subsequently, a Show Cause Notice was issued under Regulation 17(1) of CBLR for the revocation of ....
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....ubject any further, it would be appropriate to reproduce Regulation 10(n) of the CBLR. Regulation 10-Obligations of Customs Broker. - A Customs Broker shall : (a) .............................................. (b) ................................................ (c) ................................................ (d) ................................................ (e) .............................................. (n) Verify correctness of Importer Exporter Code (IEC) number, Goods and Services 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; 7.1. The show cause notice inter alia charged as under : "7. On the basis of aforesaid Offence Report dated 09.07.2021, vide email dated 09.07.2021 from Addl. Director General, Directorate General of Analytics and Risk Management (DGARM), New Delhi, it appears that the Customs Broker has violated Regulation 10(n) of CBLR, 2018 which is as under : Regulation 10(n) of CBLR, 2018: A Customs Broker shall verify correctness of Importer....
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....8- (a) Customs Broker has violated the Regulation 10(n) of CBLR, 2018 Findings:- As per Regulation 10(n) of CBLR, 2018, a Customs Broker shall verify correctness of Importer Exporter Code (IEC), Goods and Service 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. I find that Regulation 10(n) of C.B.L.R., 2018 puts strict liabilities on the C.B. to verify correctness of Importer Exporter Code (IEC) number, Goods and Services 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. Though, Mr. Praveen Kumar stated in his written submission as well as oral submission during PH that they had physically visited the premises of the exporters, he has no documentary evidence in this regard. It is admitted that physical verification of addresses of the exporters is not expected by the CB but there is no evidence to suggest that he verified the existence of the exporters over phone or mail. The plain reading of the....
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....ument for identification of partner as well as telephone bill in the name of firm/partners. However, subsequently, as per Board Circular no. 2/2018 dated 12.01.2018, the Board decided that in line with KYC norms stipulated by the Reserve Ban k of India, only two documents - one for proof of identity and other for proof of address are required for KYC verification. The aforesaid KYC norms are basically intended to verify the correctness of IEC, GSTIN and address of the customer which has been incorporated under Rule 10(n) of CBLR, 2018. In their defence, the notice has simply said that they have followed the KYC norms but no evidence to this effect has been adduced in this regard. Their claim is negated by the investigation conducted by Addl. Director General, Directorate General of Analytics and Risk Management (DGARM), New Delhi which found the exporters non-existent (untraceable) at the given addresses and therefore, could not be verified physically. Thus, the CB failed in discharging his obligations stipulated under Rule 10(n) of CBLR, 2018. The Customs Broker had failed in observing due diligence about verifying the antecedents as well as KYC of the exporters which amo....
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....pulates that Board had decided that two documents, one for proof of identity and other for proof of address are required for KYC verification and the features and documents obtained from clients to be verified by the Customs Broker. The department failed and/or neglected to follow the norms laid down in the circulars issued in this regard. (d) It is admitted fact that KYC documents were submitted by the Customs Broker but the same has not been discussed in the enquiry report. (e) The show cause notice has not been issued within the time limit stipulated under Regulation 17(1) of CBLR, 2018 and the explanation given for the delay does not appear to be satisfactory. Hence the entire proceeding is liable to be set aside on this ground alone." 10.1 At the outset the appellant denied and disputed that they had handled consignments for multiple untraceable exporters. It was their claim that only after obtaining KYC documents from the said exporters, they processed the consignments for export. These KYC documents were produced by them before the departmental authorities and that the enquiry officer failed to appreciate the legal proposition laid down in the case of Pe....
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....sideration facilitated by the exporters, without verifying the KYC, caused huge loss to the Department. We are afraid that the said finding of the learned Commissioner is purely conjectural and without shred of evidence in support of his claim. We observe, and as submitted by the appellants repeatedly during the course of enquiry proceedings that they had complied with all norms of KYC prescribed under the CBLR and had also submitted to the authorities the requisite KYC documents at the time of shipment as also during enquiry proceedings ordered against them. Thus, there is sufficient force in their contentions. It is on record that the appellant submitted in each case, towards discharge of the KYC requirements, at least the following: a) IEC number b) GSTIN number c) PAN number d) A D Code number. e) Address Further, all the mandatory compliance field for processing of export shipping bills as required in the EDI system were duly filled by them. 13. It be noted that the order of the adjudicating authority records as under: "17.2 As per procedure all above from 'a' to 'e' are mandatory compliance fields for processing of e....
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....iance of the KYC requirements. The following table lists out exporter wise documents submitted by the appellant Customs Broker towards discharge of their KYC Obligation under Regulation 10(n), as also recorded in Para 17.4 of the impugned order. Table of Documents Submitted: SI. No. Exporter's GSTIN Trader Name (as per GSTIN records) Exporter's IEC KYC Docs list as submitted by CB 1. 24ARMPC 136 1K1ZX Maheshwari Enterprise ARMPC1361K GSTIN, IEC, PAN No., Aadhar Card, ITR-V 2018-19, Bank Account letter From Punjab & Sindh Bank, Authorization Letter 2. 24AWYPP793 5P1Z8 Unity Creation AWYPP7935P GSTIN, IEC, PAN No., Aadhar Card, Bank Account letter From Canara Bank, Authorization Letter 3. 24BBXPD428 2N1Z1 Sai Fashion BBXPD4282N GSTIN, IEC, PAN No., ITR-V 2017-18, Authorization Letter 4. 24DIIPM5825 C1ZE Mahadev Export DIIPM5825C GSTAIN, IEC, PAN No., ITR-V 2018-19, Authorization Letter 5. 24DNBPB738 ....
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....the Customs Broker with the charge of failure of their duties, and responsibilities. In Para 17.4 the Adjudicating Authority records as under : "17.4(d) As per the Inquiry Report of the Inquiry Officer, I also find that the CB has failed to provide any evidence to suggest that they verified the existence of the exporters over phone and got the authorization for filing of Shipping Bills over phone or mail, let alone undertaking physical verification as claimed by the CB before handling the impugned consignments. Since all of the subject 15 exporters have been found to be untraceable eventually, the claim of the CB regarding their verification prior to handling of consignments cannot be accepted or refuted conclusively. e. In view of above, I find that although the CB is in possession of the requisite KYC documents and Authorization letters of the subject 15 exporters, as mandated under CBLR, 2018, read with CBIC Circulars No. 02/2018-Cus dated 12.01.2018 & Circular No. 09/2010-Cus dated 08.04.2010, the CB has not been able to provide any evidence regarding the verification, viz. Identity of their client and functioning of their client at the declared address, done ....
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....the issue is no more res integra and has been dwelt extensively by this Tribunal in the case of (i) Perfect Cargo and Logistics vs. Commissioner of Customs, New Delhi (Final Order No. 50347/2022. (ii) Mauli Worldwide Logistics v. Commissioner, Customs (Airport & General), New Delhi, Final Order No.50561/2022, the fact remains that the Ld. Commissioner has observed at more than one place in the impugned order that the Customs Broker had in his possession, the requisite KYC documents and also tendered the same to the authorities at the time of hearing of the case and during the course of enquiry. 20. As far as revenue loss on account of IGST, is concerned, nothing in the CBLR, even remotely suggests that it is the responsibility of the Customs Broker to ensure its realisation. The Customs Broker has no real role to play in availment or payment of IGST. To pass on this burden as a responsibility on the Customs Broker is simply hypothetical wishful and beyond the parameters of law. 21. Regulation 10(n) merely requires the Customs Broker to verify the correctness of Importer Exporter Code, (IEC) number, Goods and Service Tax Identification number at the declared address by using r....
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....rganisations were issued correctly. If they were issued wrongly, the fault lies with the authorities issuing such certificate, and registrations, and not with the Custom Broker. It is not for the Custom Broker to needlessly doubt the government issued IDs and registration numbers. The broker cannot be faulted for believing in them. 23. The Customer Broker in terms of regulation 10(n) of the CBLR, is obligated to verify the correctness of the IEC number, GSTIN, identity of his client and functioning of his client at the declared address by using reliable independent authentic documents, data or information. It merely cannot be pleaded that the IEC code which is issued by the DGFT, the GST number, the PAN which is issued by the Department of Revenue, CBIC & CBDT respectively, have all been done with collusion and for enabling the exports. The fault for any wrong doing revenue loss thus does not befall upon the Customs Broker. 24. In the case of Mauli Worldwide, Logistics vs. Commissioner, Customs New Delhi (Airport & General), F. No. 50561/2022 dated 04.07.2022 in the Tribunal held as under : "17 It is undisputed that the GSTIN, PAN, IEC, and other documents obtained b....
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....y the Income Tax Department. It is a different matter if the Customs Broker files export documents in the name of 'A' when the goods are actually being exported by 'B' or produces forged documents. Such is not the such as GSTIN, IEC, PAN card, etc. were issued by the concerned authorities which were obtained by the appellant as a part of KYC. 20. Despite the appellant obtaining and producing various documents issued by various Government authorities as a part of KYC and producing additional documents before the Commissioner during the proceedings, since a large number of exporters were found to be non-existent at the addresses, the Commissioner inferred and held that the appellant had not fulfilled its obligations under Regulation 10(n) of CBLR, 2018." 25. It may also be likely, that all the authorities who issued the above documents had issued them correctly and thereafter, by the time of verification, situation may have changed. If so, it may be a ground for starting a fresh investigation but certainly not a ground to suspend/cancel the licence of the Customs Broker who processed the exports. It is not the responsibility of the Customs Broker to physically visit each ....