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TMI Blog2022 (12) TMI 483X X X X Extracts X X X X X X X X Extracts X X X X ..... were registered including to the respondent in these appeals. 3. Following upon the e-mail, verification was conducted by the jurisdictional officers who found that the exporters did not operate from the registered premises. It was, therefore, concluded that the exporters did not exist at all. Secondly, it was felt that the customs brokers who processed exports made in the name of these exporters had not fulfilled their obligations under Regulation 10 (n) of the Customs Brokers Licensing Regulations, 2018 [Regulations]. The Respondent issued show cause notices to the appellants herein and appointed enquiry officers which culminated in the issue of the impugned orders. The issues which arise in these three appeals are :- (i) What is the scope of the obligation of the Customs Broker under Regulation 10 (n)? (ii) What is the evidence adduced in each of the show cause notices to allege that the Customs Broker had not fulfilled its obligation under Regulation 10 (n)? (iii) Based on the evidence adduced in the show cause notices and the submissions in defence by the appellant, can the impugned orders be sustained? 4. The first of these questions is common to all the appeals and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... estigation 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 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. 7. The onus on the Customs Broke ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 these cases, we are fully satisfied that the appellants fulfilled this part of the obligation under Regulation 10(n). 10. The fourth and the last obligation under Regulation 10(n) requires the Customs Broker to verify the functioning of the client at the declared addre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 12. In these appeals, negative reports were issued by the jurisdictional GST officers who, or whose predecessors or colleagues, must have issued the GST registration. Thereafter, if it is found that the exporter is not operating from that address at all and the GST registration was wrongly issued, the responsibility rests on the officer who issued the GST Registration and not the Customs Broker. This wisdom in hindsight of the officer that the GSTIN was wrongly issued at that address cannot be used against the Customs Broker. The appellants relied upon the GST Registration Certificates and if relying on them is an offence, issuing them when the firms didn't even exist must, logically be a much graver offence and the officers who issued them must be more serious offenders. There is nothing in the reports of the jurisdictional officers which were the Relied Upon Documents in the SCN to indicate as to why and how the GST registration was issued when the exporters did not exist at all. We also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ors 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 on due diligence which enhances trade facilitation but also makes it vulnerable to misuse by fraudsters. The IEC is issued by DGFT based only on an online application and a few easy to obtain documents. Similarly, as per the submission of the learned authorized representatives for the Revenue, GSTIN is also issued without any verification at all and through an automated process. So, one cannot rule out the possibility of an IEC and/or GSTIN being issued without the person even operating its business from the address. The IEC forms the foundation for the entire system of controls and, in turn, is the basis for issue of various licences and scrips by the DGFT and is also the basis for Customs allowing exports. As Risk Management System [RMS] permits majority of the exports without either assessing the documents or examining the records, there is a very high ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /- in GSTR3B. The short payment is Rs. 20,31,787/-. 2. Difference in ITC claimed in GSTR-3B and that shown in GSTR-2A: The Assessee has availed ITC in GSTR-3B for Rs. 91,32,961/- and shown only Rs. 29,39,521/- in GSTR2A. The excess availed ITC is Rs. 61,93,440/-. 3. ITC involved on inward supplies and outward supplies as per E way bill and comments thereon: Inward supplies ITC value is Rs. 91,32,961/- and outward supplies ITC value is Rs. 6,21,720/- 4. Comments on realization of export proceeds as per BRC : The assessee has not submitted any documents. On the basis of above verification, because of being non-existent on physical verification and having huge gap of ITC (between availed in GSTR3B and GSTR2A), the exporter seems risky". Verification of M/s Suryavanshi Impex (RUD - 3): 21. This verification report does not even indicate the name of the exporter being verified. Only the GSTIN is mentioned. It appears that the officers have gone to that address to enquire if a business with a particular GST number existed at that place and were not able to get a confirmation. Businesses and persons are known by their names and not by their GSTIN numbers, PAN No., Voter ID Card, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nexure needs to be obtained by CB. On perusal of the list of documents obtained by CB which was provided by CB, it is clear that CB has not taken the documents as prescribed in the Annexure to said Circular. Further, CB has quoted Circular No. 02/2018-Customs dated 12.01.2018 that in case of individuals, a single identity document having proof of identity as well as proof of residence would suffice e.g., Aadhar Card. On plain reading of the above mentioned circular that this circular has referred Circular No. 07/2015- Customs dated 12.02.2015 and Circular No. 13/2006- Customs dated 26.04.2016. Both these circulars pertain to relaxed KYC norms, which authorized courier companies were required to fulfill. From this, it's very clear that the revised norms pertain to courier companies only". 25. We find that in this case, investigations were conducted only in respect of three exporters. Of these the report in respect of A to Z International is that the exporter seems risky. In case of Suryavanshi Impex, the Report does not indicate even the name of the exporter. Enquiries appear to have been conducted based on GSTIN number only. The report says "NOC denied" and "Non-existent entity". ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... perusal of GST database, it has been observed that the unit/firm has shown zero rated sale in the months of August-2017 & Feb-2018 only. But on perusal of BRC status on DGFT portal, it has been observed that no BRC has been issued/realized for the Shipping Bills related to the months from August-2017 to till date. Conclusions: On perusal of above financial verification. It appears that there is difference of Rs. 2,811/- between the GSTR-2A and 3B and the outward E-way bill is NIL and the amount claimed in Inward E-way bill is short of Rs. 4,14,259/- in comparison to GSTR-2A and is short of Rs. 4,17,070/- in comparison to GSTR-3B. Also, as per DGFT portal. No BRC has been received from August 2017 till date. Therefore, further verification is required/ recommended". 27. This sole verification report shows that during physical verification, the exporter was found to be non-existent. However, the report further clarifies that several GST Returns have been filed by the exporter and tax was also paid. Nothing in this report supports the view that the exporter never operated from that premises let alone prove that the Customs broker has not verified the exporter as per Regulation 10 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 131/1/2020-GST dated 23.01.2020 is nonbonafide". Report in respect of M/s Imperial Enterprises is as follows :- Recommendation about the bonafides of the entity verified: The party has been found non-existent. The registration of the party has been initiated for cancellation. The party filed GSTR 3B upto August 2019. ITC availed in the ITC ledger of M/s Imperial Enterprises amounting to Rs. 71 lakh has also been blocked as per rule 86A of CGST Rules 2017. The ITC availed by M/s Imperial Enterprises seems be not genuine and therefore is inadmissible. Further investigations are underway. Hence NOT recommended". 30. None of the three reports establish that the exporters never operated from those premises. Nor do they support the view that the Customs broker had not verified as per Regulation 10 (n). The Customs broker is not required obtain any "Recommendation" or a certificate form any officer that the exporter is "bonafide". The impugned order, therefore, cannot be sustained. 31. We, therefore, find that in each of these cases, the evidence produced in the show cause notices does not support the allegations made therein that the appellants had violated Regulation ..... X X X X Extracts X X X X X X X X Extracts X X X X
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