TMI Blog2023 (5) TMI 614X X X X Extracts X X X X X X X X Extracts X X X X ..... on cast upon the CB, under Rule 10(n) of CBLR, 2018. The Tribunal has examined the scope of these obligations in the case of M/S Anax Air Services Pvt Limited vs Commissioner of Customs, (Airport and General), New Delhi [ 2022 (1) TMI 115 - CESTAT NEW DELHI] where it was held that 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 these documents - the Tribunal in the above said Order further examined the reliability of these documents issued by various Government agencies and analyzed the scope of the Custom Broker in relying on these documents to fulfill their obligations under CBLR 2018. The ratio of the above said order of the Tribunal is squarely applicable in this case. In the present case also, the appellant has collected the documents such as IEC, GSTIN etc. submitted by the exporter S S Impex, Hyderabad before processing their shipping bills. Later if they ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty of Rs 50,000 under Regulation 18 of CBLR 2018. The Appellant is before us against the above said Order dated 23/11/2021 (hereinafter referred as the Impugned Order) passed by the Principal Commissioner of Customs. 3. From the Impugned Order it is observed that the Appellant has cleared 81 Shipping Bills of Raw Human Hair, classifiable under CTH0501, of M/s S.S Impex, Hyderabad, who has been found to be non existent as per the Report received from the concerned GST authorities. The investigation conducted also revealed that all these consignments were grossly undervalued and no BRC (Bank Realization Certificate) is available in respect of any of these consignments as per the DFGT website. In view of the above findings during investigation, the Department contended that all these Shipping Bills were exported with a malafide intention and were highly undervalued as no genuine exporter can continue exporting goods without getting money from foreign buyers. 4. The allegation of the Department is that the Appellant has transferred all the works related to clearance of under-invoiced Raw Human Hair to Mr. Arup Ghosh who misused the license to clear the consignments of Raw Human H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Appellant to Mr. Arup Ghosh. Hence, there is no violation of Regulation 1 (4) of CBLR 2018. (e) The Shipping Bill No 7926810 dt 15/01/2021, for export of Human Hair by the Exporter S S Impex, Hyderabad, was filed by Just Logistic-1 and they are only responsible for undervaluation or any other violation in the said shipping bill. The Appellant cannot be held responsible for non realization of the export proceeds by the exporter for the goods exported. (f) The investigation has concluded that S.S Impex is non-existent at the address declared in the IE Code and GSTIN, on the basis of the report received from GST Authorities of Telengana. The investigation completely ignored the KYC documents such as IE Code and GSTIN submitted by M/s S S Impex, in compliance with Regulation 10 (n) of CBLR 2018. (g). M/s S S Impex has not attended the investigation in connection with the shipping bill no 7926810 dated 15/01/2021. The Report from the GST Authorities indicated that the said exporters are presently not available in the address declared in the IE Code and GSTIN. Hence, The Offence Report of SIB (Airport) concluded that they were non-existent for all the 81 consignment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f security deposit is 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? 8. The Impugned Order alleges that the Appellant has violated the Regulations 1(4),10(d),10(m),10(n) and 13(12) of CBLR 2018. We will examine each of the violations based on the submissions made by the Appellant and the material evidences available on record. 9. Regarding the violation of 1(4) of CBLR, 2018, the Department stated that the Appellant has transferred all the works related to clearance of under-invoiced Raw Human Hair to Arup Ghosh and he misused the license to clear the consignments of Raw Human Hair through Air Cargo Complex, Kolkata. To substantiate this claim, the Department relied upon the statement dt 03/02/2021 of Shri Tarun Kumar Koley, Proprietor of the Appellant Company, wherein he admitted that he used to get payments by transfer from Bank Account by M/s LG Enterprises only irrespective of the exporters. L G Enterprises is the sister company of M/s. Just Logistic-1 owned by Shri Arup Ghosh. This means that Customs clearance charges were collected by Shri. Arup Ghosh in the account o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Department about these clearances. In fact, the present shipping bill in question was filed by Just Logistic-1 and not by the Appellant. For any violation in this shipping bill, only Arup Ghosh and the CB Just Logistic-1 need to answer and not the Appellant. We find that there is no evidence available on record to substantiate the allegation that the Appellant has not advised their client properly. Thus, we find that the allegation of violation of Regulations 10 (d) is not sustainable. 11. Regarding violation of Regulation 10(m), we find that it obliges a Customs Broker to perform his duties with efficiency and utmost speed. There is nothing on record to prove the allegation that the Appellant has not performed their duties with speed and efficiency. They have cleared 81 shipping bills of S S Impex, Hyderabad during the period June 2019 to December 2020. There was no objection raised by the Department during the clearance of these consignments. Thus, we hold that the allegation of violation of Regulation 10 (m) by the Appellant is not substantiated. 12. Regarding violation of Regulation 13(12), we find that it obliges a Customs Broker to exercise such supervision as may ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Regulation 10(n) of CBLR, 2018. The most important documents in these cases are the IEC and the GSTIN one issued by the same department and the other by the DGFT. The IEC issued by the DGFT has not been disputed at all without which the goods could not have been exported . The Appellant has obtained these documents as prescribed in the said Circular. 15. We observe that the Customs Brokers play an important role in the Customs administration and have to fulfill 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 a report received from the CGST authorities of Telengana. Their report indicate that the exporter S S Impex , Hyderabad were not available at the address declared in the IE Code and GSTIN. 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 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... FT 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 certif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 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 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 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 ..... has 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ense 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 Custom Broker can be fouled 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 these documents. 17. From the above discussion, we find that physical verification of the business premis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stoms 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 (first last page)/Voter s I-Card/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 system of exports is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 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 appellant has collected the documents such as IEC, GSTIN etc. submitted by the exporter S S Impex, Hyderabad 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 their non existence at the address specified, as held by the Tribunal, New Delhi in the case of Anax Air Services. 21. Thus we find that the allegation against the appellant in the impugned order that they have violated Regulation 10 (n) is not sustainable. 22. In view of the above, we proceed to answer the questions framed by us in paragraph 7 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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