The Kolkata Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), observed that Customs Broker cannot be held responsible for exporters found non-existent during subsequent verification.
The genesis of the levelling of the charge against the Customs Broker is on the basis of an offence report, received via email from Additional Director General of Police (ADG), wherein it was informed that in connection with the analysis being undertaken for identification of risky exporters involved in fraud relating to Integrated Goods and Services Tax (IGST) refunds, the feedback from field formations was analysed to examine possible collusion of customs brokers with the risky exporters in export related frauds.
The department suspended the Customs Broker License of the appellant, M/s. Baid International Services Ltd, with immediate effect under the Provisions of Regulation 16(1) of (Customs Brokers Licensing Regulations, 2018) CBLR, pending completion of the enquiry contemplated against the appellant under regulation 17 of CBLR.
The report stated that 18 Customs Brokers handled multiple consignments for these untraceable exporters. Thus, a show cause notice, was issued to the appellant in terms of Regulation 10(n) of CBLR as the Customs Broker is under obligation to verify correctness of IEC number, GST Identification number (GSTIN), identity of the client and functioning of the client at the declared address by using reliable, independent, authentic documents, data or information.
The appellant submitted that there has been no allegation, nor does the order charge the appellant for committing any offence under the Provisions of the Customs Act, 1962, in relation to various exports which were caused through the agency of their license. The appellants contend that the offence committed by the various exporters was extraneous to their (the appellant) functions as a Customs Brokers.
A Two-Member Bench comprising R Muralidhar, Judicial Member and Rajeev Tandon, Technical Member observed that “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. “The 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.”
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