TMI Blog2022 (12) TMI 483X X X X Extracts X X X X X X X X Extracts X X X X ..... r to get a confirmation from any officer that the exporter is bonafide. Even when the reports say Nonexistent , they do not clarify if the exporter never functioned from that premises and GSTIN has been wrongly issued or the exporter ceased to function at that address after the exports. Therefore we do not find any evidence to prove that the Customs broker violated Regulation 10 (n). The impugned order, therefore, cannot be sustained. Cancellation of Customs Broker Licence - entire amount of security deposit was forfeited and the penalty of Rs. 50,000/- was imposed upon the appellant - HELD THAT:- The 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 (n). The impugned order cannot, therefore, be sustained. Revocation of Customs Broker licence - forfeiture of security deposit - levy of penalty - non-existence exporters - H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ms 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 is discussed below :- Scope of Regulation 10 (n) 5. Regulation 10(n) requires the Customs Broker 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. 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 6. Of the above, (a) and (b) r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate 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 Broker cannot, therefore, extend to verifying that the officers have correctly issued the certificate or registration. It has been held by the High Court of Delhi in the case of 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng 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 address using reliable, independent, authentic documents, data or information. This responsibility, again, can be fulfilled using documents or data or information so long as they are reliable, independent and authentic. Nothing in this clause requires the Customs Broker to physically right the premises of the client to ensure that they are functioning at the premises. Customs formations are located only in a few places while exporters or importers could be from any part of the country and they hire services of the Customs Brokers. Besides the fact that there is no such obligation in Regulation 10(n), it will be extremely difficult, if not, impossible, for the Customs Broker to physically visit the premises of each of its clients for verificat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 find that there were other documents procured by the appellant issued by various other authorities which have not been alleged to be, let alone, proven to be fake or forged by the Revenue. Evidently, they also must have been issued by concerned officers like the GST Registration issued by the jurisdictional officers. 13. Unless all these officers of various organisations (including the jurisdictional GST officer who issued the registration in December 2018) either acted fraudulently or carelessly, the above could not have been issued. 14. It is possible that all the authorities who issued the above documents had issued them correctly and thereafter, with efflux of time, when the GST officers went for verification, situation ch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le 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 probability of any fraudster successfully exporting the goods (or even empty containers) and claiming export incentives and profiting from it. 18. However, the burden of this very liberal, open, scheme and its potential misuse cannot be put at the doorstep of a Customs Broker. Just as the officer s responsibility ends with doing his part of the job (which may be issuing a registration without physical verification or allowing exports without assessing the documents or examining the goods), the Customs Broker s responsibility ends with fulfilling his responsibilities under Regulation 10 of the CBLR, 2018. In dispute in these appeals is CBLR 10(n) which, as we have discussed above, does not require any physical veri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 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, Passport No./Mobile No. etc. Therefore, it is not surprising that the existence of the business could not be confirmed from the GSTIN. The operative part of this report is as follows :- Recommendation about the bonafides of the entity verified: Non Existent Entity NOC Denied Recommendation about the bonafides of the entity verified: [ Non existent exporter ] Verification of M/s T.R. Trading (RUD 4) : The operative part of the report is as follows :- 22. During physical verification, the exporter assessee found non-existent. The assessee did not respond to the letters sent to him through email for submission of details/documents in pursuance of CBIC Circular ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 . In case of M/s T.R. Trading it is reported that the exporter was not bonafide. There is nothing in Regulation 10 (n) which requires the Customs broker to check if the exporter was risky in the opinion of any officer or obtain any NOC from any officer or to get a confirmation from any officer that the exporter is bonafide. Even when the reports say Nonexistent , they do not clarify if the exporter never functioned from that premises and GSTIN has been wrongly issued or the exporter ceased to function at that address after the exports. Therefore we do not find any evidence to prove that the Customs broker violated Regulation 10 (n). The impugned order, there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 (n). The impugned order cannot, therefore, be sustained. Customs Appeal No. 51654 of 2021 M/s Rajinder P. Kapur 28. This appeal is filed by M/s Rajinder P. Kapur assailing order-in-original dated 18.06.2021, whereby his Customs Broker licence was revoked, the security deposit of Rs. 50,000/- was forfeited and the penalty of Rs. 50,000/- was imposed; 31 exporters whose exports the appellant had processed are alleged to be non-existent. However, verification reports were enclo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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