TaxTMI 
TaxTMI 
2023 (8) TMI 1056
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.... 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 the licence on the undermentioned ground: ....
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....tion 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 Exporter Code (IEC) number, Goods and Services Tax Identification Number (GSTIN), identity of his client and functioning ....
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....oker 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 obligation of Custom Broker under Rule 10 of CBLR, 2018 shows that Customs Broker is created as link between Customs authorities and the exporters/im....
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...., 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 amounts to violation of Regulation 10(n) of CBLR, 2018 read with provisions of Board Circular No. 09/2010- Cus dated 08.04.2010 (P. no. 502/5/2008-Cus VI). 9.2 Referring t....
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....ified 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 Perfect Cargo & Logistics, C.C.(Airport & General), New Delhi reported in 2021 (376 E.L.T. 649 (Tri-Del.) to the effect that basic requirement of Regulation 10(n) ibid was that the Customs Broker was required to verify ....
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....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 export shipping bills in the EDI system as regards. (a) IEC number: the same is uploaded digitally by DGFT on their website which also includes address, branch details if any, concerned person name etc. and can be viewed by all on DGFT portal/website. (b) GSTN registration....
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....rader 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 5E1Z7 Saburi International DNBPB7385E GSTIN, IEC, PAN No., Asdhar Card, ITR-V 2018-19, Bank Account letter From Punjab & Sindh Bank, Authorization Letter 6. 24EDUPS225 2H1Z5 Sai Impex EDUPS2252H GSTIN, IEC, Bank Account letter From Bank of Baroda, Authorization Letter 7. 24EZFPD806 5N1ZY Rameshwar Fashion ....
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....lly, 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 by them before handling the impugned export consignments. The Customs Broker is created as link between Customs authorities and the exporters/importers with an object of facilitating the clearances at Customs. Therefore, they are supposed to safeguard the interests of both the Customs as well as the importers/exporters. Had the CB been diligent in their actions, which is expected out of them, the department would not have suffered the loss of revenue which it did. f. I also find that quantum of punishment has to be proportionate with the gravity of the proved acts of misconduct or infraction. In the i....
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....enue 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 reliable independent authentic documents, data or information. Obviously, this responsibility does not extend to physically going to verify the premises of each of the exporters to ensure that they are functioning at the premises. When a Government Officer issues the certificate bearing registration number with an address, it is not for the Customs Broker to sit in judgement over such a certificate. The Customs Broker cannot be faulted for trusting the certificates issued by the various government bodies/department. It is a different matter, if the documents are not authentic and are forged by the Customs Broker or th....
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....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 by the 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 te 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 o....
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.... 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 exporter and verify the existence of each exporter at all locations, let alone, keeping a track of the exporter in case they move address. To a query from the Bench as to how the appellant Customs Broker can be faulted when they relied on the IEC, GST Registration and other documents, all issued by the Government and if the exporters did not exist at all of the premises how were the said documents issued by several Government officers, there were no clear answers emanating. If the officers are not mandated to ensure that the exporter(s) exist and are functioning from the known premises the Customs Broker cannot be so mandated, in the least. The scope of ....