Customs Brokers Not Liable Once Verification Of Address Is Completed: Delhi CESTAT
Mariya Paliwala
29 Jun 2024 3:05 PM IST
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 continuous surveillance on the client to ensure that he continues to operate from that address and has not changed his operations. The bench of Rachna Gupta (Judicial Member) and P. V. Subba Rao (Technical...
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 continuous surveillance on the client to ensure that he continues to operate from that address and has not changed his operations.
The bench of Rachna Gupta (Judicial Member) and P. V. Subba Rao (Technical Member) observed that once verification of the address is completed by a Customs Broker, if the client moves to a new premises and does not inform the authorities or does not get his documents amended, such an act or omission of the client cannot be held against the Customs Broker.
The Directorate General of Analytics and Risk Management (DGARM) of the Central Board of Indirect Taxes and Customs analyzed the data, identified risky exporters involved in the execution of fraud, got the requisite verification done by the jurisdictional GST officers, and identified exporters who could not be found at all physically at their registered premises.
DGARM also found that exports by these exporters were handled by certain customs brokers, including the appellant, and reported them to the respective commissionerates.
The Commissioner issued a Show Cause Notice to the appellant and appointed an inquiry officer, who, after considering the reply filed by the appellant and completing the inquiry, submitted his inquiry report in favor of the appellant on 23.3.2021.
The inquiry officer found that the charge in the show cause notice that the appellant had violated Regulation 10(n) of the Customs Brokers Licensing Regulations, 2018 (CBLR, 2018) was correct.
The Commissioner passed the order holding that the appellant had violated Regulations 10(n) of CBLR 2018.
Regulation 10(n) of CBLR, 2018 states that a customs broker shall verify the correctness of the Importer Exporter Code (IEC) number, the Goods and Services Tax Identification Number (GSTIN), the identity of his client, and the functioning of his client at the declared address by using reliable, independent, authentic documents or data.
The customs broker contended that Regulation 10(n) does not place an obligation on the customs broker to oversee and ensure the correctness of the actions by the government officers. Therefore, the verification of documents part of the obligation under Regulation 10(n) on the Customs Broker is fully satisfied as long as the Customs Broker 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 tribunal noted that the customs broker has fulfilled this part of the obligation under Regulation 10(n).
The CESTAT, while allowing the appeal, held that the customs broker had not failed in discharging his responsibilities under Regulation 10(n). The order is not correct in concluding that the customs broker violated Regulation 10(n) because the exporters were found to not exist during subsequent verification by the officers.
Counsel For Appellant: Pawan Kumar Tiwari
Counsel For Respondent: Rajesh Singh
Case Title: M/S Pawan Kumar Tiwari Versus Commissioner, Customs-New Delhi
Case No.: Customs Appeal No. 51181 Of 2022
