Customs Broker not required to Verify correct issuance of documents under Regulation 10(n): CESTAT quashes SCN [Read Order]

The Principal Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) recently held that Customs Brokers are not obliged to verify correctness of documents as per the Regulation 10(n).

The Directorate General of Analytics and Risk Management1 of the Central Board of Excise & Customs (CBEC) conducted an analysis of the GSTIN data and came to the conclusion that certain registrants of the GSTIN who also exported goods were risky exporters. Subsequently, DGARM sent an email to the respective Commissionerates of Customs in whose jurisdiction the Customs Brokers who processed exports in respect of such exporters were registered including to the respondent in these appeals.

The Jurisdictional Officers reached the conclusion that the exporters did not exist, following the search made pursuant to the emails. They also issued show-cause notices to the appellants-customs brokers in regard to non-fulfillment of Regulation 10(n) of the Customs Broker Licensing Regulations (CBLR), 2018.

Aggrieved by the impugned orders passed after the show cause notices were served, the customs brokers preferred an appeal before the Delhi Bench of Customs Excise and Service Tax Appellate Tribunal (CESTAT).

Regulation 10(n) requires the Customs Broker to verify correctness of 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.

The appellant had submitted that it had indeed conducted the necessary verification as is required under Regulation 10 (n) and had documents from each and every one of its clients.

The Commissioner did not agree that the appellant had fulfilled its obligation holding that documents obtained by the appellant were not sufficient.

The Tribunal of Justice Dilip Gupta and Technical Member P V Subba Rao observed that, “The Customs broker is not required to obtain any “Recommendation” or a certificate from any officer that the exporter is “bonafide” The impugned orders were subsequently set aside.

To Read the full text of the Order CLICK HERE

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