TMI Blog2023 (8) TMI 1056X X X X Extracts X X X X X X X X Extracts X X X X ..... emises. When a Government Officer issues the certificate bearing registration number with an address, it is not for the Customs Broker to sit in judgement over such a certificate. The Customs Broker cannot be faulted for trusting the certificates issued by the various government bodies/department. It is a different matter, if the documents are not authentic and are forged by the Customs Broker or the Customs Broker had reason to believe that the said documents were not truthful and their veracity was in doubt. The Customs Broker is only a processing agent of documents with respect to a document submitted to him. The Customs Broker is neither omniscient nor omnipotent. The Customs broker is not concerned with to ensure that the documents issued by the various organisations were issued correctly. If they were issued wrongly, the fault lies with the authorities issuing such certificate, and registrations, and not with the Custom Broker. It is not for the Custom Broker to needlessly doubt the government issued IDs and registration numbers. The broker cannot be faulted for believing in them. The Customer Broker in terms of regulation 10(n) of the CBLR, is obligated to verify the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Original No. KOL/CUS/AIRPORT/ADMN/15/2022 dated 06.05.2022. The Appellants are holder of Customs Broker license number B 61, Code number 2183, valid up to 01.04.2027, issued by the Commissioner of Customs, (Airport and Admin.), Kolkata. They were accordingly permitted to transact business under the jurisdiction of Kolkata Customs Commissionerate, Mumbai Commissionerate and West Bengal (Prev.) Commissionerate. 2. The appellant submits that during the financial year 2019 20, 2020 21 they have filed several Bills of Entry and Shipping Bills for its customers numbering approximately 2000. They contend that before taking up the job and/or assignment under the Custom Brokers Licensing Regulations, 2018 [The Regulations], they verify the antecedents and functioning of their clients at the declared address by reliable, independent, authentic document, data or information. In usual course they verify the importer exporter code number, GST number and identity of the clients by taking bank verified documents etc and conduct physical verification by visits, and only after being satisfied and bonafides of the client being established, the assignment of the work is accepted by them. 3. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reported as untraceable, with the appellants having filed 121 Shipping Bills of these exporters who were untraceable and a total IGST of over Rs.8 crore was involved in these cases. Of the 15 such exporters eight of them pertain to Surat, Gujarat, while the other seven fall apparently under the jurisdiction of Mumbai-based CGST Commissionerates, namely of Palghar, Belapur, Thane, Navi Mumbai, Mumbai, East, Mumbai Central and Mumbai West jurisdictions. 7. Before dwelling on the subject any further, it would be appropriate to reproduce Regulation 10(n) of the CBLR. Regulation 10-Obligations of Customs Broker. A Customs Broker shall : (a) . (b) (c) (d) (e) . (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 declared address by using reliable, independent, authentic documents, data or information; 7.1. The show cause notice inter alia charged as under : 7. On the basis of aforesaid Offence Report dated 09.07.2021, vide email dated 09.07.2021 fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bmissions made by the proprietor Hearing on 01.12.2021. In the inquiry conducted by the undersigned in connection with the Show Cause Notice No. 07/2021 dated 13.10.2021 passed by the Pr. Commr. (A A), following are the findings on alleged violations of regulations 10(n) of CBLR, 2018- (a) Customs Broker has violated the Regulation 10(n) of CBLR, 2018 Findings:- As per Regulation 10(n) of CBLR, 2018, a Customs Broker shall verify correctness of Importer Exporter Code (IEC), Goods and Service 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. I find that Regulation 10(n) of C.B.L.R., 2018 puts strict liabilities on the C.B. 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. Though, Mr. Praveen Kumar stated in his written submission as well as oral submission during PH that they had physically visited the premises of the exp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its behalf, copy of PAN allotment letter and copy of telephone bill and in respect of a partnership firm, the documents required for KYC are registration certification, partnership deed, power of attorney granted to a partner/employee to transact business and any official document for identification of partner as well as telephone bill in the name of firm/partners. However, subsequently, as per Board Circular no. 2/2018 dated 12.01.2018, the Board decided that in line with KYC norms stipulated by the Reserve Ban k of India, only two documents one for proof of identity and other for proof of address are required for KYC verification. The aforesaid KYC norms are basically intended to verify the correctness of IEC, GSTIN and address of the customer which has been incorporated under Rule 10(n) of CBLR, 2018. In their defence, the notice has simply said that they have followed the KYC norms but no evidence to this effect has been adduced in this regard. Their claim is negated by the investigation conducted by Addl. Director General, Directorate General of Analytics and Risk Management (DGARM), New Delhi which found the exporters non-existent (untraceable) at the given addresses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iving at the aforesaid conclusion, that the Enquiry Officer did not consider the KYC tendered at the time of hearing. They further submitted as under : 12(c) Circular No. 2/2018-Cus dated 12.01.2018 read with Circular No. 9/2010-Cus dated 08.04.2010 stipulates that Board had decided that two documents, one for proof of identity and other for proof of address are required for KYC verification and the features and documents obtained from clients to be verified by the Customs Broker. The department failed and/or neglected to follow the norms laid down in the circulars issued in this regard. (d) It is admitted fact that KYC documents were submitted by the Customs Broker but the same has not been discussed in the enquiry report. (e) The show cause notice has not been issued within the time limit stipulated under Regulation 17(1) of CBLR, 2018 and the explanation given for the delay does not appear to be satisfactory. Hence the entire proceeding is liable to be set aside on this ground alone. 10.1 At the outset the appellant denied and disputed that they had handled consignments for multiple untraceable exporters. It was their claim that only after obtaining KYC do ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and functioning of his client at the declared address by using reliable, independent, authentic documents, data or information . He, therefore, held that the Customs Broker had not even contacted the exporters and voluntarily in lieu of monetary consideration facilitated by the exporters, without verifying the KYC, caused huge loss to the Department. We are afraid that the said finding of the learned Commissioner is purely conjectural and without shred of evidence in support of his claim. We observe, and as submitted by the appellants repeatedly during the course of enquiry proceedings that they had complied with all norms of KYC prescribed under the CBLR and had also submitted to the authorities the requisite KYC documents at the time of shipment as also during enquiry proceedings ordered against them. Thus, there is sufficient force in their contentions. It is on record that the appellant submitted in each case, towards discharge of the KYC requirements, at least the following: a) IEC number b) GSTIN number c) PAN number d) A D Code number. e) Address Further, all the mandatory compliance field for processing of export shipping bills as required in the EDI s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or proof of address as required for KYC verification. Having obtained copies of PAN card, Aadhaar card, GST, registration certificate, ITC certificate, ITR we are of the view tantamounts to sufficient compliance of the KYC requirements. The following table lists out exporter wise documents submitted by the appellant Customs Broker towards discharge of their KYC Obligation under Regulation 10(n), as also recorded in Para 17.4 of the impugned order. Table of Documents Submitted: SI. No. Exporter s GSTIN Trader Name (as per GSTIN records) Exporter s IEC KYC Docs list as submitted by CB 1. 24ARMPC 136 1K1ZX Maheshwari Enterprise ARMPC1361K GSTIN, IEC, PAN No., Aadhar Card, ITR-V 2018-19, Bank Account letter From Punjab Sindh Bank, Authorization Letter 2. 24AWYPP793 5P1Z8 Unity Creation AWYPP7935P GSTIN, IEC, PAN No., Aadhar Card, Ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 27DNSPR698 1P1ZH Mahendra Inc DNSPR6981P GSTIN, IEC, PAN No., Aadhar Card, Authorization Letter 14. 27DXEPK949 3R1Z9 Akash Trading DXEPK9493R GSTIN, IEC, PAN No., Aadhar Card, Authorization Letter 15. 27MSOPS447 2A1Z6 Redsky Enterprises MSOPS4472A GSTIN, IEC, PAN No., Aadhar Card, Bank Account letter FROM CENTRAL Bank, Authorization Letter 16. In view of above it is categorical to note that the learned Commissioner has recorded in his adjudication order below the table in para 17.4 that the Customs Broker is in possession of KYC documents, alongwith Authorisation Letters from each of the subject fifteen exporters. 17. Despite aforesaid, categorical assertion by the Adjudicating Authority, it is observed that for no wonton reason the learned Commissioner affixes the Customs Broker with the charge of failure of their duties, and responsibilities. In Para 17 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... obtain the BRC in respect of 121 Shipping Bills to prove that the 15 exporters had got the forex remittance into the country, albeit they were found to be untraceable. All these factors lead me to infer that the CB has played a pivotal role in defrauding of Government revenue by sanction of Rs. 8.04 Crore as IGST refunds in respect of 121 Shipping Bills. It is simply not possible that an exporter can cheat/hoodwink Customs without active involvement/consultancy provided by the Customs Broker. 18. Thus, the Ld. Adjudicating Authority arrived at a finding that there is no reason to disagree with the Inquiry Report received on 28.12. 2021 and therefore ordered, the revocation of the Customs Brokers License. In support of his proposition, the learned Adjudicating Authority also cites the decision of the Hon ble Supreme Court in the case of Commissioner of Customs vs. KM Ganatra( CA No. 2940 of 2008), to state as indicated in discussions supra. 19. We are deeply anguished by the impugned order passed by the Ld. Adjudicating Authority merely on surmises and conjectures. While the issue is no more res integra and has been dwelt extensively by this Tribunal in the case of (i) Perf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e into and verify the genuineness of the ID code given to it by client for each import export transaction. When such code is mentioned, there is a presumption that an appropriate background check in this regard that is the KYC would have been done by the customs authority. 22. The appellant has relied upon the registration certificate issued by the appropriate authority, it is an error of the authority issuing registration, if and when the firm does not exist. There is nothing on record to indicate the role of the Customs Brokers in getting the various certificates issued. It is particularly noteworthy that all the documents referred for substantiation of the KYC are all issued by government organisations. Unless, all the officers of various organisations who issued the registration and the necessary documents, either acted fraudulently or carelessly in connivance with the Customs Broker, the letter cannot be faulted upon. The Customs Broker is neither omniscient nor omnipotent. The Customs broker is not concerned with to ensure that the documents issued by the various organisations were issued correctly. If they were issued wrongly, the fault lies with the authorities issuin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in judgement over the decisions of these officers. If the verification reports are true and none of the exporters existed at their premises, the irresistible conclusion is that all these officers of various departments have been either extremely careless or were operating under flawed system which allowed documents to be issued to non-existing business. 19. It would have been a different matter if the documents produced by the appellant were fake or forged and were not issued by the officers. Such is not the case. In fact, the entire investigation by DGARM was initiated based on the GSTIN issued to various assesses as available in its system. Therefore, there is no possibility of the GSTIN being not issued by the department because it was extracted from its own system. Similarly, the Importer-Exporter Code (IEC) is an essential field for filing any Shipping Bill in the Customs EDI system and we find it unbelievable that an IEC not issued by the DGFT would be accepted by the Customs EDI system. Since the GSTIN is PAN based, the PAN must have also been issued by the Income Tax Department. It is a different matter if the Customs Broker files export documents in the name of A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ocuments which are independent, reliable and authentic to establish the identity of the client, this obligation is fulfilled. Documents such as GSTIN, IEC and PAN card are all such documents as prescribed. 27. The responsibility of the Customs Broker as held by judicial bodies does not require then to maintain vigil and continuous surveillance on the client to ensure that they continue to operate from the address as given in the various KYC documents and in case of change as such get the documents amended. 28. Under the circumstances that none of the documents entertained by the Customs Broker obtained for KYC, have been indicated to be fictitious and not genuine, we find that the Customer Broker has not violated Regulation 10(n) of CBLR with regard to the said fifteen exporters. 29. We, therefore, hold that Customs Broker has not failed in discharging his responsibilities under Regulation 10(n) of CBLR, 2018 Under the circumstances, the Customs Broker cannot be held responsible for the exporters found to not exist during subsequent verification undertaken, by the officers or there has been unrealized IGST, availed of by the untraceable exporters. 30. In view of our dis ..... X X X X Extracts X X X X X X X X Extracts X X X X
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