TMI Blog2022 (1) TMI 115X X X X Extracts X X X X X X X X Extracts X X X X ..... oms 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. As far as the documents issued by various Government officers are concerned the submission of the learned departmental representative is interesting and needs a deeper examination. It is his submission that the documents were neither issued fraudulently nor issued carelessly but were issued within the mandate of the officers who issued them and this mandate does not include physical verification - It is common knowledge that in designing schemes for issuing registrations, certificates or providing incentives, two conflicting objectives of due diligence and facilitation are balanced. Too many checks can make life difficult for the exporter or the citizen and too much facilitation can open the doors for frauds. Determining the golden mean and where to draw the line is a matter of public policy. The extent of liberalization or tightening may also vary greatly from one system to another and that is also a matter of public policy. The entire system of exports is based heavily on trust and facilitation and very less emphasis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esentative for the Revenue and perused the records of the case. 2. The appellant is a Customs Broker [ CB ]whose licence was issued by the Respondent and it was originally valid up to 12.11.2027. It is aggrieved by the order in original [ Impugned order ] dated 15.6.2021 passed by the Respondent whereby its licence was revoked under of Customs Brokers Licensing Regulations [ CBLR ], 2018 and the security deposit of ₹ 50,000 made by the appellant was forfeited and a penalty of ₹ 50,000 was imposed on it. The operative part of the impugned order is as follows: 43. I have also gone through the case laws cited by the advocate and found that the facts of these cited cases are different from the present case. 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 (i) In exercise of 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 hereby revoke the CB License No. R-5/93 (PAN: AAACA1708J) valid upto 12.11.2027 issued to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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; 6. The issue in this case, therefore, falls in a narrow compass. The questions which need to be answered are: a) Given the factual matrix of the case and the evidence available on record, was the Commissioner correct in holding that the appellant Customs Broker has violated Regulation 10(n) 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, is the forfeiture of security deposit correct? d) If the answer to (a) above is affirmative, is the imposition of penalty of ₹ 50,000/- upon the appellant customs broker correct? 7. Although both the SCN and the impugned order listed several suspect exporters whose exports the appellant is said to have handled, the Relied Upon Documents [ RUD ] in the SCN were only in respect of three firms as follows: (i) M/s XIAEL Exports (P) Ltd. (07AAACX3158K1Z3)- RUD-2 (ii ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eference No. . (not filled) GSTIN 07BKNPV0720L1ZR Found to be existing (Yes/No)--- NO Signed by Dilbagh Singh (Insp) Ajay Kumar (Suptd) Yogesh Kumar (Suptd) Recommendations about the bonafides of the entity verified: Physical verification: The assessee was found to be non-existent at the Principal Place of Business during physical verification. Returns Analysis: The assessee has filed GSTR 1 and GSTR3B only for the months of February 2019 and March 2019. GSTR 2A is available only for the months of March 2019 and April 2019 Tax paid analysis GSTR-1 (Tax payable) ₹ 30,65,497 GSTR 3B (Tax paid through cash) ₹ 7 GSTR 3B (Tax paid through ITC) ₹ 30, 65, 490 GSTR 3B (Tax paid) ₹ 30, 65,497 Share of ITC in tax paid- 100% ITC analysis GSTR 2A (ITC availability) ₹ 30,78,423 GSTR 3B (ITC availed) ₹ 30,65,490 Remarks: The assessee is non-existent. The assessee is paying 100% of the liability through ITC. Has filed GSTR 1 and GSTR 3B only for the months of Feb and Mar 2019. The regi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he said Circular dated 8.4.2010 read with CBLR, 2018 as a number of exporters have been found to be untraceable. As per the mandate of Regulation 10(n) of the CBLR, 2018 read with the Circular no. 9/2010-Customs dated 8.4.2010, it was incumbent upon the CB to verify the 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. 15. The appellant s submissions before the Inquiry officer, the adjudicating authority as well as before us is that it had carried out the due diligence as required under Regulation 10(n) by obtaining the documents such as: (i) Authorisation letter from the exporter (ii) KYC letter (iii) GST Registration Copy (iv) IEC Registration Copy (v) Company PAN card of the exporter (vi) Electricity bill copy (vii) PAN Cards of the firms and the partners (viii) Canceled cheques (ix) Rent Agreement 16. The Commissioner observed in paragraph 18 of the impugned order Whereas as per Annexure to the CBIC Circular no. 9/2010- Customs dated 8.4.2010, it appears that CB has not taken the doc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ey were called earlier) play an important role in the Customs administration and have to fulfil their responsibilities and obligations under the law . The law in question in this case is Regulation 10(n) of CBLR, 2018. The allegation against the appellant is based on the reports of the jurisdictional officers in respect of the three RUDs. All of them show that the GSTIN were issued by the same department and in two of the cases, the GST Returns were also filed (the verification report is silent in the third case) and in one case even the details of the GST paid is also indicated. However, on physical verification, on the date of the verification, the exporters were not found to operate from the premises. 21. The reports also indicate that the exporters were not eligible for the input tax credit (ITC) under the GST. As far as the admissibility of ITC is concerned, nothing in the CBLR, 2018, even remotely suggests that it is the responsibility of the Customs Broker to ensure its admissibility or that if inadmissible ITC is taken and thereafter a refund of it is claimed, the Customs Broker is responsible. As per the CGST/IGST/SGST Act, the assessee takes ITC and the officers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cation of certificates part of the obligation under Regulation 10(n) on the Customs Broker is fully satisfied as long as it satisfies itself that the IEC and the GSTIN were, indeed issued by the concerned officers. This can be done through online verification, comparing with the original documents, etc. and does not require an investigation into the documents by the Customs Broker. The presumption is that a certificate or registration issued by an officer or purported to be issued by an officer is correctly issued. Section 79 of the Evidence Act, 1872 requires even Courts to presume that every certificate which is purported to be issued by the Government officer to be genuine. It reads as follows: 79. Presumption as to genuineness of certified copies. The Court shall presume to be genuine every document purporting to be a certificate, certified copy or other document, which is by Law declared to be admissible as evidence of any particular fact and which purports to be duly certified by any officer of the Central Government or of a State Government, or by any officer in the State of Jammu and Kashmir who is duly authorized thereto by the Central Government. Provided ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ese documents are presumed to be authentic and reliable having been issued by the Government officers. 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 authentic) could meet this requirement. While obtaining documents is probably the easiest way of fulfilling this obligation, the Customs broker can also, as an alternative, fulfill this obligation by obtaining data or information. In the factual matrix of this case, we are fully satisfied that the appellant has fulfilled this part of the obligation under Regulation 10(n). 27. The fourth and the last obligation under Regulation 10(n) requires the Customs Broker to verify the functioning of the client at the declared address using reliable, independent, authentic documents, data or information. This responsibility, again, can be fulfilled using documents or data or information so long as it is reliable, independent and authentic. Nothing in this clause requires the Customs Broker to physically go to the premises of the client to ensure that they are functioning at the pre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n address to an exporter, it is not for the Customs Broker to sit in judgment over such a certificate. The Customs Broker cannot be faulted for trusting the certificates issued by a government officer. It is a different matter if documents are not authentic and are either forged by the Customs Broker or the Customs Broker has reason to believe that the documents submitted to him were forged. It has been held by the High Court of Delhi in 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). 30. In this case, the negative reports were issued by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the SCN to prove that the exporters did not exist or operate from the addresses when the Shipping Bills were filed. 34. On a query from the bench as to how the Customs Broker can be faulted when he relied on the IEC, GST Registration and several documents issued by the Government and if the exporter did not exist at all at the premises how these documents were issued by several Government officers, learned Departmental Representative submitted that officers issue these documents as per their mandate which does not include physical verification of the business premises. He further clarified that in almost all these cases, the Registrations are issued by the officers based on online applications. They are not mandated to ensure that the exporter(s) exist and are functioning from these premises but the Customs Broker is so mandated by Regulation 10(n) of the CBLR, 2018 which obligation does not get obliterated or diluted by the fact that officers of various departments have issued the documents. 35. He further submits that the case of Kunal Travels [ 2017 (3) TMI 1494- Delhi High Court ] cannot come to the aid of the appellant as that was issued in the context ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . C. vide Customs Circular No. 9/2008, dated 8-2-2010 in order to avoid any ambiguity inter alia laid down the following requirements of verification and documents for the individual category to which the importer belonged being a proprietorship concern as claimed. S. No. Form of organisation Features to be verified Documents to be obtained 1. Individual (i) Legal name and any other names used (ii) Present and permanent address in full ,complete and correct (i) Passport (ii) PAN card (iii) Voter s identity card (iv) Driving licence (v) Bank account statement (vi) Ration card Note : Any two of the documents listed above, which provides client/ customer information to the satisfaction of the CHA will suffice. Thus the appellant was required to inter alia verify present and permanent address in full, complete and correct which the appellant did not do. Merely because the appellant obtained documents as per Column 4 of the above table does not ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 exporter is or what his antecedents are. Even if the person is convicted of a criminal offence under the Customs Act itself, the Act does not enable the officers to stop his imports or exports. Means of the person cannot be qu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as 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 examination. The National Time Release Study [https://www.cbic.gov.in/resources//htdocs-cbec/implmntin-trade-facilitation/National%20Time%20Release%20Study%202021.pdf para 7.1] 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 Customs officers cannot legally stop his future exports. 43. The third level of check is through the bank ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Estimated) 1 Advanced License Scheme 15,075 14,896 2 EOU/EHTP/STP/SEZ 5,734 6,022 3 EPCG 3,220 3,306 4 Duty Free Import Authorization Scheme 673 616 5 Duty Free Entitlement Credit Certificate 140 78 6 Service Export Incentive Scheme 3,756 7,008 7 Focus Market/Product Scheme 507 200 8 Merchandise Exports from India Scheme 36,615 40,934 9 Total 65,720 73,060 10 Revenue impact on export linked incentive schemes maintained at S. No. 5 to 8 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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