The Delhi bench of CESTAT (Customs, Excise and Service Tax Appellate Tribunal) in its recent verdict emphasized the role of Customs Broker in preventing illegal transactions.
Their appointment as accredited brokers is governed by regulations, and they are expected to fulfill all associated responsibilities. The Customs Broker (or Custom House Agent) is a very important person in the transactions in the Custom House and it is appointed as an accredited broker as per the Regulations and is expected to discharge all its responsibilities under them.
SKH Freight Logistics (a customs brokerage agency), the appellant, acted on behalf of M/s. Linwood Sales without proper authorization. Transactions involving M/s. Linwood Sales Pvt Ltd were conducted through Shri Chandra Shekhar Hore, who lacked authorization from the company. CESTAT noted this as a clear violation of Regulation 10 (a) of CBLR.
Shri Hore, instead of directly dealing with exporters, delegated this responsibility to Souvik Guha Sarkar, breaching Regulation 10 (b) of CBLR.
The Customs Broker was implicated in facilitating fraudulent, significantly undervalued exports. According to Regulation 13 (12) of CBLR of 2018, the broker is accountable for all actions of their employees during employment. It was obligatory for the appellant to advise the exporter to comply with Customs Act provisions or report non-compliance to the Dy. Commissioner Customs, as stipulated by Regulation 10 (d) of CBLR.
The G card holder/agent of the customs brokerage firm admitted to not verifying the correctness of IEC and GSTIN of the exporter. The exporting firm was discovered to be non-existent upon inquiry. The Customs Broker failed to accurately specify the address of the proprietors of M/s Linwood Sales, misrepresented the directors of the company, and presented forged Articles of Association.
This failure to conduct appropriate client inquiries prior to business transactions in the custom house station led to findings confirming violations of Regulation 10 (k) and 10 (n).
The two-member bench, comprising Dr. Rachna Gupta, Member (Judicial), and Hemambik R. Priya, Member (Technical), revoked the appellant’s license based on these violations.
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