The New Delhi bench of the Customs Excise & Service Tax ( CESTAT ) observed that the Customs Broker cannot be liable for the shifting of the client’s premises and the omission of the client to inform the authority and set aside the penalty imposed. It was found that once verification of the address is complete 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.
M/s. Shakti Cargo Movers filed the appeal, challenging the order in originally passed by the Commissioner revoking the Customs Brokers’ licence of the appellant and imposing a penalty of Rs. 50,000/-.
The Directorate General of Analytics and Risk Management of the Central Board of Excise and Customs analysed data, identified suspicious registrants under the Goods and Services Tax and got physical verification of some of these suspected registrants and found that they did not exist at all at the declared places of their business. It also found that some of these GST registrants also had importer-exporter codes from the Directorate General of Foreign Trade and actually exported goods. DGARM further identified which Customs Brokers had processed their exports 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 (Airport & General) New Delhi, who had issued the Customs Broker’s licence to the appellant issued a show cause notice and suspended the licence of the appellant.
The inquiry officer submitted his report and finally the Commissioner passed the impugned order revoking the CB licence of the appellant and imposing the penalty of Rs. 50,000/-.
The SCN alleged violation of Regulations 10 (d), 10 (e) and 10 (n) but after enquiry, the inquiry officer submitted his report that the appellant had not violated any of these. However, the Commissioner did not agree with the enquiry officer insofar as the violation of 10(n) is concerned and passed the impugned order.
It was evident that the obligations of the Customs Broker under Regulation 10(n). It requires the Customs Broker to verify the correctness of the 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.
A two member bench of Ms Binu Tamta, Member (Judicial) and Mr P V Subba Rao, Member (Technical) 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. Therefore, 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.
The Court found that the Customs Broker has not failed in discharging his responsibilities under Regulation 10(n). The impugned order is not correct in concluding that despite obtaining and providing authentic documents issued by various Government officers, the Customs Broker has violated Regulation 10(n) because the exporters were found to not exist during subsequent verification by the officers.
While allowing the appeal, the CESTAT set aside the impugned order with consequential relief to the appellant. Priyadarshi Manish appeared for the appellant and M. K. Shukla, the Authorized Representative appeared for the Department.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
