The Delhi Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that the responsibility of the Customs Broker under Regulation 10(n) does not include keeping a continuous surveillance.
The bench of Justice Dilip Gupta (President) and P.V. Subba Rao (Technical Member) has observed that once verification of the address is complete as discussed in the above paragraph, 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.
Background
The appellant/assessee, Jiva Cargo Logistics who is a customs broker filed the appeal challenging the order passed by the Commissioner revoking its licence of the appellant under the Customs Brokers’ Licensing Regulations, 2018, forfeiting its security deposit and imposing penalty of Rs. 50,000.
The Directorate General of Analytics and Risk Management (DGARM) of the Central Board of Excise and Customs (CBEC) analysed data, identified suspicious registrants under the Goods and Services Tax (GST) and got a physical verification of some of these suspected registrants and found that they did not exist at all at the places of their business.
DGARM also found that some of these GST registrants also had obtained importer exporter codes from the Directorate General of Foreign Trade and actually exported goods. DGARM further identified which Customs Brokers had processed the exports of exporters and conveyed the data to the concerned commissioners. Among the Customs Brokers so identified by the DGARM was the appellant.
Based on the information received from DGARM, the Commissioner initially suspended the licence of the appellant and gave a post-decisional hearing to the appellant. The Show Cause Notice was issued and an inquiry officer was appointed. The Inquiry officer submitted his report which was supplied to the appellant and a personal hearing was held.
Arguments – Duty Of Customs Broker
The customs broker contended that the alleged violation of Regulation 10(n) is not supported by facts. The report of DGARM alleged that some Customs Brokers including the appellant had handled exports of allegedly ‘risky exporters’.
The customs broker contended that the appellant’s licence was first suspended and then the suspension was confirmed and finally the SCN was issued and an inquiry officer was appointed. The report of the inquiry officer was sent to the appellant and the appellant made its submissions. Without considering the submissions made, the Commissioner passed the order. The only allegation in the order is that the appellant had not fulfilled its obligations under Regulation 10(n) of the CBLR.
The customs broker contended that out of the 34 allegedly suspicious exporters, verification was done only in respect of five viz., M/s. Retriovis Fashion (P) Ltd., M/s. Kashish Oversaes, M/s. Laxmi Overseas, M/s.M D Impex and M/s. Aakar International There is no assertion that any verification was made in respect of any other exporters. The appellant had verified the GSTIN from the GST website and IEC from the website of the DGFT. The appellant also obtained other documents viz., Voter ID Card, PAN Card, Aadhar Card of its clients and they were found to be in order. Thus, the appellant had fulfilled its obligation under Regulation 10(n) of verifying the identity of its clients and functioning of its clients at the addresses.
Conclusion
The tribunal noted that the entire verification report is based on the GSTIN. Further, IECs issued by the DGFT also show the address. There is nothing on record to show that either of these documents were fake or forged. Therefore, they are authentic and reliable and we have no reason to believe that the officers who issued them were not independent and neither has the Customs Broker any reason to believe that they were not independent.
The Tribunal while allowing the appeal held that the Customs Broker did not fail in discharging its responsibilities under Regulation 10(n). The order is not correct in concluding that the appellant had violated Regulation 10(n) because the exporters were found to not exist during subsequent verification by the officers.
Case Title: M/s Jiva Cargo Logistics Versus Customs Commissioner
Case No.: Customs Appeal No. 51018 Of 2021
Date: 13.09.2024
Counsel For Appellant: Gaurav Prakash
Counsel For Respondent: Rajesh Singh
