TMI Blog2023 (2) TMI 145X X X X Extracts X X X X X X X X Extracts X X X X ..... The presumption is that a certificate or registration issued by an officer or purported to have been issued by an officer was 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. Any of the three methods can be employed by the Customs Broker to verify the identity of its client. It is not necessary that it has to only conduct a physical verification or launch an investigation. So long as it can find some documents which are independent, reliable and authentic to establish the identity of his client, this obligation is fulfilled. If a document is issued by any other person not interested in the relationship of the client and the Customs Broker, it would be independent. But it should also be reliable and authentic and not one issued by any Tom, Dick and Harry - While obtaining documents is probably the easiest way of fulfilling this obligation, the Customs broker can also, as an alternative, fulfil this obligation by obtaining data or information. If there are documents issued by the Government officers which show that the client is functioning at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of verification or that IGST refund may be denied which is irrelevant to the present proceedings. None of the reports establish that the appellant had violated Regulation 10(n). The impugned order revoking the Customs Brokers licence of the appellant, forfeiting their security deposit and further imposing penalty on the appellants cannot be sustained and needs to be set aside. Appeal allowed. - CUSTOMS APPEAL NO. 51029 OF 2021 - FINAL ORDER NO. 50102/2023 - Dated:- 3-2-2023 - MR. DILIP GUPTA, PRESIDENT AND MR. P. V. SUBBA RAO, MEMBER (TECHNICAL) Shri L B Yadav, Consultant - for the Appellant Shri Vishwajeet Saharan, Authorized Representative for the Department ORDER We have heard Shri L.B. Yadav, learned Consultant for the appellant and Shri Vishwajeet Saharan, learned authorized representative for the Revenue and perused the records. 2. The appellant is a Customs Broker [CB] whose licence was revoked by the impugned order under Regulation 14 readwith Regulations 17 and 18 of Customs Brokers Licensing Regulations [ CBLR ], 2018 and the security deposit made by it was forfeited. Penalty was also imposed on it on the ground that it had violated Re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Customs broker to merely obtain two KYC documents. The Regulation also requires the Customs Broker to verify identity of his client and functioning of his client at the declared address. If the Customs Broker does not fulfil this responsibility, it will invite action under the CBLR, 2018. He relies on the following decisions: a) Commissioner of Customs versus K M Ganatra Co [ 2016(332) ELT 15(SC) ] b) Baraskar Brothers versus Commissioner of Customs (General) Mumbai [ 2009(244) ELT 562(Tri-Mumbai) ] c) Sky Sea Services versus Commissioner of Customs (General) Mumbai [ 2022(5) TMI 1050- CESTAT Mumbai ] d) Jasjeet Singh Marwah versus Union Of India and others [ 2009(2)TMI 57-Delhi High Court ] 6. We have considered the submissions on both sides. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y 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. 8. The onus on the Customs Broker cannot, therefore, extend to verifying that the officers have issued the certificate or registration correctly. It has been held by the High Court of Delhi in Kunal Travels 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 on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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, fulfil this obligation by obtaining data or information. 11. 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 go to the premises of the client to ensure that they are functioning at the premises. By their nature, Customs formations are located 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), i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... raphs, if the client moves to a new premises and does not inform the authorities or does not get his documents amended, such act or omission of the client cannot be held against the Customs Broker. Of course, if the Customs Broker was aware that the client has moved and continued to file documents with the wrong address, it is a different matter. 13. In this appeal, the 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 was not operating from that address at all and the GST registration was wrongly issued, the responsibility rests on the officers who issued the GST Registration and not on the Customs Broker. This wisdom in hindsight of the officers that the GSTIN was wrongly issued at that address cannot be held against the Customs Broker. 14. The appellant relied on 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 jurisdiction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o [2017 (346) ELT 471 (Tri- Del)] by this Tribunal which decision was upheld by the High Court of Delhi. The ratio of this order should apply to this case. 19. We have examined the order in the case of Millenium Express Cargo and find that, that was a case where the cigarettes were smuggled concealed in a consignment of induction cookers and the Bill of Entry was filed by the CHA whose licence was then revoked for violation of Regulations 13(e) and 13(o) of CHA licensing Regulations, 2004. Of these, 13(o) is pari materia with CBLR 10(n) under consideration in this case. In the case of Millenium express cargo, the CHA has not even ever claimed that it had verified the existence of the importer at the given address. Paragraph 5 of this order is reproduced below: 5. We have considered the contentions of both sides. It is an admitted fact that the appellant had dealt with the importer M/s. Nikhaar Associates. It is also a fact that the importer was found to be non-existent. CHA Regulation 13(e) state that a CHA shall exercise due diligence to ascertain the correctness of any information which he imparts to a client with reference to any work related to clearance of cargo or b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Millenium express Cargo does not support the case of the Revenue since there is nothing on record to show that the exporters did not exist at the premises at the time of export or that the appellants were aware about the non-existence of the exporters when they filed the Shipping Bills. In fact, there is not even an assertion by the Revenue that on the day the Shipping Bills were filed the exporters did not exist at the premises. 21. As far as the documents issued by various Government officers are concerned the submission of the learned departmental representatives 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. In other words, the submission is that the system designed by the Government for issue of these certificates itself is such that they can be issued even to persons who do not exist at all at the declared premises. We proceed to examine this proposition and if it supports case of the Revenue in these appeals. 22. It is common knowledge that in designing schemes for issuing registrations, certificates or providing inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s that there is an obligation on the Customs Broker to conduct a physical verification. Firstly, there is nothing in the Regulation 10(n) about physical verification. It requires verification that the person is operating from that address and this verification can be done through independent, reliable, authentic, documents, data or information. Secondly, this decision of the coordinate bench in Baraskar brothers is contrary to the decision of the jurisdictional Delhi High Court in Kunal Travels which is binding on us. 25. We now proceed to examine the evidence based on which the SCN is issued and the evidence produced by the appellant in defence to see if the charge of violation of Regulation 10(n) by the appellant and consequent decisions in the impugned order can be sustained. The SCN alleged that the appellant processed exports in respect of 30 non-existent exporters but verification was done only in respect of the following 3 exporters which form the basis of the entire case: DGARM Reference No. 21P Commissionerate Code : ZK GSTIN 07AAACX3158K123 A. Physical Verification of Principal and additional place (s) of business 1. Address of principal place of b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... business. The firm is registered at Faiz Road, 945 T/F, Naiwala No. 21N, Galli No. 3-4, Karol Bagh, Near Red Light Faiz Road, Delhi 110 005. No such firm was found existing at the said premises. There is no inward E Way Bill supplies are being reflecting in E way Bill Portal. Therefore, it is recommended that the IGST Refund Claims made by the exporter are bogus and may be rejected. Signature of Deputy/Assistant Commissioner . Name : .. Official Stamp __________________________________________________________________ Recommendation about the bonafides of the entity verified : Not recommended for reasons stated above. Signature of Pr. Commissioner/Commissioner Name : . 26. Inquiry Report dated 18.03.2021 concluded that the appellant has violated provisions of Regulation 10(n) of CBLR. The Conclusion in this report is as follows: 29. In view of the above, I find that the Noticee M/s Sai Ch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also be obligatory for the client/customer to furnish to the CHA, a photograph of himself/herself in the case of an individual and those of the authorized signatory in respect of other forms of organizations such as company/trust etc., and any two of the listed documents in the annexure . Annexure Client/Customer Identification Procedure Features to be verified and documents to be obtained from clients/customers Sr. 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 provide client /customer information to the satisfaction of the CHA will suffice. 2. Company (i) Name of the company (ii) principal place ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (n) of CBLR, 2018 nor Board s Circular dated 08.04.2010 mandate physical verification of the exporter s place of business through personal visit by the Customs Broker; that even otherwise Circular No. 09/2010-Cus dated 08.04.2010 mandate physical verification of the exporter s place of business through personal visit by the Customs Broker; that even otherwise Circular No. 09/2010Cus dated 08.04.2010 is not relevant to the instant case as the same was introduced for implementation of Customs House Agent Licencing Regulations (CHALR), 2004 which has since been rescinded and superseded by CBLR, 2018 however the said circular has not been made applicable to CBLR, 2018; that the said Circular itself prescribes PAN as a document to be obtained from the exporter and Regulation 10 (n) of CBLR, 2018 prescribes that Importer Exporter Code, GSTIN and identity of the client and his functioning at the declared address is to be verified to which end documents such as IEC, PAN, Aadhar, Electricity Bill, Rent Agreement, AD code letter from Bank, GST registration, KYC form etc. serve the purpose. Therefore, the instant Show Cause Notice has been issued without proper application of mind to the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exure . However, on going through the documents submitted it was also observed that in many of the cases, the CB has failed to collect photograph of the authorized signatory. 24.5 Further, it was found that in most of the cases, the CB has procured some other documents viz. KYC form, IEC, GST Registration, Aadhar, Electricity Bill, Rent Agreement, AD code letter from bank, etc. Which are not prescribed under the Circular 09/2010-Cutoms dated 08.04.2010 to establish address identity proof and in my view CB has failed to fulfil his obligation cast upon him in terms of provisions laid down under Regulation 10 (n) o CBLR, 2018 read with the said Circular. 24.6 I also note that an examination of the documents in respect of some of the exporters submitted by the CB along with their submissions dated 15.03.2021, it is further noticed by the Inquiry Officer that : (i) In case of M/s Vindhyawasini Enterprise, declared address on IEC and GST Registration Certificate is 2nd Floor, 209, R.G. Trade Tower, Netaji Subhash Place, Pitampura, West Delhi, Delhi 110 037. However, the Aadhar Card is having Address as G-92, Ground Floor, Pushkar Enclave, Paschim Vihar, West Delhi, Delhi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the judgments relied upon by the CB are distinguished on the facts and circumstances of each case. Rather reliance is placed on the decision of Division Bench of Hon ble Supreme Court of India who in its judgement dated 14.01.2016 in Commissioner of Customs versus K.M. Gantra Co. In Civil Appeal No. 2940 of 2008 inter alia observed that The CHA occupies a very important position in the Customs House. The Customs procedures are complicated. The importers have to deal with a multiplicity of agencies viz. Carriers, custodians like BPT as well as the Customs. The importer would find it impossible to clear his goods through agencies without wasting valuable energy and time. The CHA is supposed to safeguard the interests of both the importers and the Customs. A lot of trust is kept in CHA by the importers/exporters as well as by the Government Agencies. To ensure appropriate discharge of such trust, the relevant regulations are framed. Regulation 14 of the CHA Licensing Regulations lists out obligations of the CHA. Any contravention of such obligations even without intent would be sufficient to invite upon the CHA the punishment listed in the Regulations. 26. The Hon ble CESTA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me to the support the finding in the impugned order that the appellant had not conducted the verification as required under Regulation 10(n). 32. Thus, none of these three RUDs make out any case to show that the Customs Broker had not fulfilled its obligation under Regulation 10(n) of CBLR 2018. 33. Even if it is presumed that the officers had conducted the enquiries properly indicating the names of the exporters and found that the exporters had not existed on the day of verification, it is not clear if the exporter never operated from that premises and the GSTIN and the IEC were wrongly issued by the officers without verification or it had shifted or closed after the GSTIN or IEC were issued. If so, it is not clear if the exporter had existed or not on the day the appellant obtained the KYC documents and processed the exports. 34. In view of the above, we find that: a) The evidence available on record in the form of verification reports relied upon in the SCN are vague and in some cases, even the name of the exporter who they were enquiring about is not indicated in them. b) The reports state either NOC denied which is not required by any Customs Broker or exporter ..... X X X X Extracts X X X X X X X X Extracts X X X X
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