TMI Blog2023 (4) TMI 324X X X X Extracts X X X X X X X X Extracts X X X X ..... rs before processing their shipping bills. Later if they were not found to be existing in the said addresses, the appellant cannot be held responsible for that as held by the principal bench in the case of Anax Air Services, under similar facts and circumstances. The only allegation against the appellant in the impugned order is that it violated Regulation 10 (n) which is not true. The Ld. Principal Commissioner was not correct in holding that the appellant Customs Broker has violated Regulation 10(n) of CBLR, 2018 - Appeal allowed - decided in favour of appellant. - Customs Appeal No. 75665 of 2022 - FINAL ORDER No. 75193/2023 - Dated:- 31-3-2023 - MR. P. K. CHOUDHURY, MEMBER (JUDICIAL) AND MR. K. ANPAZHAKAN MEMBER (TECHNICAL) Shri Arijit Chakraborty, Advocate for the Appellant Shri M. P. Toppo, Authorized Representative for the Respondent ORDER The facts of the case are that the appellants were issued with a Show Cause Notice No.05/2020 dated 16.10.2020, under Regulation 17(1) of CBLR, 2018 by the Ld. Principal Commissioner of Customs (Airport ACC), Customs House, Kolkata alleging, inter alia, that the appellants have violated Regulation 10(n) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under Regulation 18 of CBLR, 2018. 4. Being aggrieved by and dissatisfied with the impugned order dated 08.08.2022, the appellants preferred the present appeal before this Tribunal under Regulation 19 of CBLR, 2018 read with Section 129A of the Customs Act, 1962. To comply with the provisions of Section 129E of the Customs Act, 1962, the appellants have also pre-deposited an amount of Rs.5,000/- being 10% of the imposed penalty vide TR-6 challan dated 18.08.2022 under Customs receipt no. 50 dated 18.08.2022. 5. The Appellant contented that the Ld Principal Commissioner has arrived at the above decision on the basis of the premise that the CB has not done any physical verification of the premises of the 10 exporters; they had not persuaded the exporters to refund back the IGST to the department; and, they had not informed the department about the vanishing/ un-traceability of the exporters at any stage. On the basis of such findings, he had inferred that the CB has played a pivotal role in defrauding the Government Revenue. 6. The Appellant further contented that the Ld. Principal Commissioner of Customs has arrived at an adverse conclusion against the CB/appellants upon d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s issued by the Board and complied with all the verifications required and precautions required to be taken , as stipulated in the said circulars. For the purpose of easy reference, the Circular No. 9/2010- as dated 8.4.2010 is reproduced below: Government of India Ministry of Finance (Department of Revenue) Central Board of Excise Customs, New Delhi Circular 9/2010-Cus, dated 8.4.2010 Subject: Issue of Custom House Agent License - Reference from field formations - regarding. It has been brought to the notice of the Board by certain field formations that they are facing difficulties in issuance of Custom House Agents (CHA) License for eligible persons and in implementation of the Custom House Agents Licensing Regulations (CHALR), 2004. 2. These issues were examined by the Board in consultation with customs field formations and in the Board meeting. Further, a meeting was also held with the Chief Commissioners of Customs having jurisdiction over major Custom Houses. Accordingly the following decisions have been taken on the issues listed below:- (i) Minimum number of CHAs required in a Customs station: 3. Regulation 4 of the CHALR, 2004 pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould depend upon the workload and requirements of a CHA. However, under the regulation 19(3), any person employed by CHA is required to appear through an examination conducted by DC/AC designated or a Committee of officers to ascertain the adequacy of the knowledge of such persons about the provisions of the Customs Act, 1962 before they are granted 'G' Card. Hence, it is reiterated that it is only those persons who have qualified themselves in the examination conducted under regulation 19(3) and who have been authorized by CHA in terms of regulation 19(5) alone are allowed to sign the declarations filed before Customs for transacting the work at any Custom station. Those persons who have not qualified in the examination but who are still in employment with CHA are being given 'H' card for assisting the CHA in his work. However, the Commissioner of Customs in a Custom House / Station shall undertake an annual review of such 'H' Cardholders with each CHA to ensure that discredited individuals are not being allowed to work as 'H' Cardholders. The examination under Regulation 19(3) shall also be conducted by Commissionerate of Customs on annual basis. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... suitably amended to provide that certain obligations on the CHAs to verify the antecedent, correctness of Import Export Code (IEC) Number, identity of his client and the functioning of his client in the declared address by using reliable, independent, authentic documents, data or information. In this regard, a detailed guideline on the list of documents to be verified and obtained from the client/ customer is enclosed in the Annexure. It would 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 authorised signatory in respect of other forms of organizations such as company/ trusts etc., and any two of the listed documents in the annexure. (v) Time limit for completion of suspension proceedings against CHA licensee under regulation 22: 7.1. The present procedure prescribed for completion of regular suspension proceedings takes a long time since it involves inquiry proceedings, and there is no time limit prescribed for completion of such proceedings. Hence, it has been decided by the Board to prescribe an overall time limit of nine months from the date of receipt of offence report, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad held that with the introduction of CHALR, 2004, there was no generalized case for grant of CHA licence to such applicants having passed Regulation 9 examination under CHALR, 1984 as the requirements of educational qualification and also examination curriculum were different in the two regulations. Considering the hardships experienced by such persons and in order to remedy the situation by providing one time opportunity to qualify them for grant of CHA license, It has been decided by the Board to conduct written examination for these persons on the following additional subjects: (a) The Patents Act, 1970 and Indian Copy Right Act; 1957 (b) Central Excise Act, 1944 (c) export promotion schemes (d) Procedure on appeal and revision petition (e) Prevention of Corruption Act, 1988 and (f) online filing of electronic Customs declarations, (g) Narcotic Drugs and Psychotropic Substances Act, 1985 and (h) Foreign Exchange Management Act, 1999. The aforesaid examination would be conducted by the Directorate General of Inspection after giving due notice to these candidates. Accordingly, persons who qualify in the aforesaid examination shall be deemed to have passed under the Regulation 8 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (i) Certificate of incorporation (ii) Memorandum of Association (iii) Articles of Association (iv) Power of Attorney granted to its managers, officers or employees to transact business on its behalf (v) Copy of PAN allotment letter (vi) Copy of telephone bill 3 Partnership firm (i) Legal name (ii) Permanent address, in full, complete and correct. (iii) Name of all partners and their addresses, in full complete and correct. (iv) telephone, fax number, e-mail address of the firm and partners. (i) Registration certificate, if registered (ii) Partnership deed (iii) Power of Attorney granted to a partner or an employee of the firm to transact business on its behalf (iv) Any officially valid document identifying the partners and the person holding the Power of Attorney and their addresses (v) Telephone bill in the name of firm/ partners 4 Trusts, Foundations (i) Name of trustees, settlers, beneficiaries and signatories (ii) Name and address of the founder, the managers, Directors and the bene ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 12. Heard both the appellants and the Departmental Representative. We observe that the issue in this case 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, whether the Ld Principal Commissioner was 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 Rs.50,000/- upon the appellant Customs broker correct? 13. The appellant s submissions before the Inquiry Officer, the adjudicating authority as well as before us is that they had carried out the due diligence as required under Regulation 10(n) by obtaining the documents such as; (i) Authorization 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 Card ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to operate from the premises. The reports also indicate that the exporters were not eligible for the input tax credit (ITC) under the GST. As far as 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 can verify and if necessary, take appropriate action. The Customs Broker has no locus standi or power to verify the ITC taken. The Customs Broker is not an officer with the power to verify the ITC. Therefore, for any ITC wrongly taken by any assessee, the Customs Broker is in no way responsible. 16. Regulation 10(n) of CBLR 2018 assigns certain responsibilities to the CB. For the sake of easy reference, the said Regulation reproduced below: 10. Obligations of Customs Broker - A Customs Broker shall- .(n) 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 decl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by DGFT and the Central Goods and Services Tax Act (or state GST Act) under which the GSTIN is issued by the GST officers which is not a correct construction of the legal provisions. Therefore, the verification 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 ce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as moved and continues to file documents with the wrong address, it is a different matter. 29. When a Government officer issues a certificate or registration with an 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 re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... officer and is not a ground to suspend/cancel the licence of the Customs Broker who processed the exports. We also find that there is nothing in 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. 17. From the above discussion, we find ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 questioned either. The same hut-dweller, who gets his ration card after due verifications can get an IEC from DGFT based solely on an online application and after submitting his documents and can file a shipping bill for export of goods worth several crores of rupees and his lack of means does not mean that the officers can stop such an export. All that is required is that the exporter or importer should have an IEC issued by the DGFT. The IEC is issued by the DGFT on an online application in Form ANF2 and some supporting documents. For instance, in case of individuals, the documents that are required are: i. Digital Photograph (3x3cms) of the Proprietor. ii. Copy of PAN card of the Proprietor. iii. Copy of Passport (f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 banks when the remittances pertaining to the exports are received. The export data is transmitted by the Customs to the Reserve Bank of India online where it is matched with the remittance data obtained from the banks. Remittances have to be received within one year and so there is no immediate check at the time of export. It is a sort of postmortem exercise for possible remedial action. 44. As far as the export incentives such as drawback are concerned, they are received on the basis of the shipping bills cleared by the Customs and the corresponding Export General Manifest (EGM) filed by the Master of the Vessel or his agent confirming that the container is loaded on to the ship. Regardless of whether the remittance is received (for which a time of one year is available or not, the exporter gets drawback into his account immediately from the Government. 45. To sum up, the entire sys ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... framed by us in paragraph 4 above. The answer to question (a) is that in the factual matrix of the case and evidence available on record, the Commissioner was not correct in holding that the appellant Customs Broker has violated Regulation 10(n) of CBLR, 2018. Consequently, the answer to questions (b), (c) and (d) are negative. 49. The impugned order cannot be sustained and is set aside and the appeal is allowed with consequential relief, if any. 20. We find that the ratio of the above said order of the Tribunal is squarely applicable in this case. In the present case also, the original Offence report was based on the DGARM Report, as in the case of Anax Air Services Pvt. Ltd., cited above. In the present case also, as per DGARM Report, the 10 exporters facilitated by the appellant were later found to be non-existent during subsequent verification by the department. The appellant has verified all the documents such as IEC, GSTIN, Aadhar, PAN etc. submitted by the exporters before processing their shipping bills. Later if they were not found to be existing in the said addresses, the appellant cannot be held responsible for that as held by the principal bench in the case of A ..... X X X X Extracts X X X X X X X X Extracts X X X X
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