TaxTMI 
TaxTMI 
2026 (4) TMI 445
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....CBLR and the findings of the Inquiry Officer in his report dated 6.12.2024 confirming the allegations. 3. We have heard Ms. Nikita Jaju, learned counsel for the appellant and Shri Mukesh Kumar Shukla, learned authorized representative for the Revenue and perused the records. 4. The facts which led to the issue of the impugned order are that the Directorate General of Analysis and Risk Management [DGARM] of the Central Board of Indirect Taxes and Customs analysed the data of exporters and identified 10 exporters who, DGARM suspected, did not exist at all but had exported goods and claimed export incentives and potential IGST refunds on exports of readymade garments. DGARM got the premises of such exporters physically verified by the jurisdictional officers and found that they did not exist. 5. DGARM also identified the Customs Brokers, including the appellant, who had handled exports made by these firms. The appellant had filed shipping bills for exports by one of the ten suspected exporters, viz., Utkarsh International, NOIDA who had been issued Import Exporter Code [IEC] BJYPA5742H by the Directorate General of Foreign Trade [DGFT] and GSTIN 09BJYPA5742H2ZR by the GST off....
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....nt had filed four shipping bills as above for Utkarsh International. What needs to be examined is whether, based on the RUD-1 and RUD-2- the contents of which were reproduced in the SCN-it can be said that the appellant had violated these three regulations. 10. Nothing in the entire report of DGARM (RUD-2) said to have been forwarded by Chief Commissioner's office (RUD-1) even remotely explains as to how the appellant had violated Regulations 10(d), (e) and (n). Thus, there is nothing in the SCN to show that the appellant had violated any of these Regulations. 11. In the impugned order, however, the Commissioner found that the appellant had violated Regulations 10(d), (e) and (n) and his findings are as below. Regulation 10(d) 12. The findings of the Commissioner in the impugned order insofar as this regulation is concerned are reproduced below: "8.10.1 Regulation 10 (d) requires that the Customs Broker to advise his client to comply with the provisions of the Act, other allied Acts and the rules and regulations thereof, and in case of non-compliance, shall bring the matter to the notice of the Deputy Commissioner of Customs or Assistant Commissioner of Customs....
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.... Falcon Air Cargo & Travels Pvt. Ltd. claimed that advice can be verbal. It indicates that M/s Falcon Air Cargo & Travels Pvt. Ltd. has not provide even 'verbal' advice to the exporter to rules and regulations related to declaration of the consignment as the RMG found to be mis-declared (quantity of goods, girls viscose p/1 frock, was declared as 526 but it was found only 480) during investigation. 8.10.3 I observe that the intended purpose of introducing Regulations is supposed to be not fulfilled, if each CB started to claim that it filed the Shipping Bills/Bills of Entry solely based on the information provided by the exporters/importers and why such regulations were established for the CBs in the first place. The very purpose of the F category examination, which is required to be cleared by the CB, would have no meaning if the CBs are merely relying on the exporters/importers' information without proper scrutiny and the regulations' objective would seem weakened. It implies that it was not an unintentional lapse rather deliberate act which has caused loss to government exchequer. 8.10.4 In view of the facts and circumstances narrated above, it is clear tha....
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....client to clearance of cargo. Nowhere written in writing or what information. So, where is the proof that CB has not given correct information for clearance of cargo. No such points were recorded nor any evidence/proof examined and relied upon. 8.11.3 I, again, disagree with the submission of M/s Falcon Air Cargo & Travels Pvt. Ltd. The issue is not whether the CB provided incorrect information to the exporter, but rather the issue is that the CB imparted correct and accurate information to the exporter or not. The answer is clear; the CB did not exercise due diligence, especially considering that RMG industry is a sensitive industry and exporter of the same is risky. Instances have come to my notice where goods were purchased from M/s Stag Expo by Exporter, M/s Utkarsh International. However, M/s Stag Expo was registered under HSN 7419 for dealing in aluminium plates, sheets and strips, yet it sup-plied ready-made garments (RMG) to Utkarsh International. This discrepancy indicates that the supply chain for this export was fictitious. Had the Customs Broker exercised due diligence and remained vigilant, the mis-declaration could have been detected in time. 8.11.4 ....
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....s Broker (CB) conducted verifications regarding the Importer Exporter Code (IEC), Goods and Services Tax Identification Number (GSTIN), and the identity of the client. 8.12.4 However, I find that the NCTC-DGARM, Mumbai report confirmed that the Exporter, M/s Utkarsh International firm was non-existent at the time of physical verification. This raised a critical question: how can it be said that the Customs Broker (CB) properly verified the functioning of its client at the declared address? I also observe that the signature put by the exporter namely Shri Mehfooz Alam on the statement dated 20.01.2023 recorded during investigation by SIIB, ACC, Export and PAN Card differs significantly from the one on the authorization with no date, indicating possible fabrication. 8.12.5 Additionally, I find that no date has been mentioned on the authorization received from the Exporter, M/s Utkarsh International and submitted by the CB before me. These facts collectively indicate fraudulent activity in the facilitation of the shipping bill and an attempt to take undue benefits from the government exchequer in collusion with the exporter. 8.12.6 I, also, observe that the ....
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....e details of the advice given by the appellant. 20. Thus, according to the impugned order, the exporter did not exist at all and therefore, the appellant had violated Regulation 10(n). Despite being non-existent, according to the impugned order, the exporter received from the appellant incorrect or inaccurate information and therefore, the appellant violated Regulation 10(e). 21. We now proceed to examine the scope of the obligation of the customs broker under Regulation 10(n). It requires the customs broker to verify the 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. 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 22. Of ....
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.... in the State of Jammu and Kashmir who is duly authorized thereto by the Central Government. Provided that such document is substantially in the form and purports to be executed in the manner directed by law in that behalf. The Court shall also presume that any officer by whom any such document purports to be signed or certified, held, when he signed it, the official character which he claims in such paper." 24. The onus on the Customs Broker cannot, therefore, extend to verifying that the officers have correctly issued the certificate or registration. Of course, if the Customs Broker comes to know that its client has obtained these certificates through fraud or misrepresentation, nothing prevents it from bringing such details to the notice of Customs officers for their consideration and action as they deem fit. However, the Customs Broker cannot sit in judgment over the certificate or registration issued by a Government officer so long as it is valid. In this case, there is no doubt or evidence that the IEC and the GSTIN were issued by the officers. So, there is no violation as far as the documents are concerned. 25. The third obligation under Regulation 10....
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....he Customs Broker to physically go to the premises of the client to ensure that they are functioning at the premises. Customs formations are only in a few places while exporters or importers could be from any part of the country and they hire the services of the Customs Brokers. Besides the fact that no such obligation is in Regulation 10(n), it will be extremely difficult, if not, totally impossible, for the Customs Broker to physically visit the premises of each of its clients for verification. The Regulation, in fact, gives the option of verifying using documents, data or information. If there are authentic, independent and reliable documents or data or information to show that the client is functioning at the declared address, this part of the obligation of the Customs Broker is fulfilled. If there are documents issued by the Government Officers which show that the client is functioning at the address, it would be reasonable for the Customs Broker to presume that the officer is not wrong and that the client is indeed, functioning at that address. In this case, we find that the GSTIN was even according to the SCN, issued by the officers at the address of the client on 7.2.2022 a....