Customs Broker not Responsible for Relocation of Client to New Premises after Completion of Address Verification: CESTAT [Read Order]

The New Delhi Bench of Customs, Excise, and Service Tax Appellate Tribunal ( CESTAT ) has ruled that once address verification is finished, the customs broker is not liable if the client relocates.

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The Commissioner of Customs (Airport & General), New Delhi, granted the assessee/appellant, Akanksha Global Logistics Pvt. Ltd., a customs broker license that was good until June 5, 2024. After analyzing the data of the GST registrants, the Joint Director of the Directorate General of Analytics and Risk Management in New Delhi discovered suspicious exporters who might have been complicit in IGST refund scams. Additionally, DGARM discovered the customs brokers that handled the assessee's and other exporters' exports. After verifying the existence of a few of these exporters through field formation, DGRAM discovered that they did not exist.

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DGARM wrote to the concerned commissioners, including the Commissioner of Customs/respondent, requesting that they take action in accordance with the Customs Broker Licensing Regulations based on the study.  The contested order resulted from the Commissioner of Customs/respondent issuing a show cause notice.

 The assessee argued that he could not be accused of violating Regulation 10(n) of the Customs Broker Licensing Regulations, 2018 because he had confirmed the exporter's existence using the documents provided by the Government Office, even if they were discovered to be absent from the address.

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According to the bench, the Customs Broker's responsibility cannot include confirming that the officers properly issued the certificate or registration.  Naturally, nothing stops the customs broker from bringing these data to the attention of customs authorities for their evaluation and appropriate action if it learns that its customer received these credentials through deception or fraud.  However, as long as the certificate or registration granted by a government official is legal, the customs broker cannot sit in judgment over it.

The two member bench of Justice Dilip Gupta (President) and P.V. Subba Rao (Technical Member) observed that according to Regulation 10(n), the Customs Broker is not required to continuously monitor the customer to make sure he is still operating from that address and hasn't altered his business practices.  Consequently, the Customs Broker cannot be held accountable for the client's act or omission if, after the address has been verified, the client moves to a different location and fails to notify the authorities or have his documents updated.

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While allowing the appeal, the tribunal held that the impugned order is not correct in concluding that the Customs Broker has violated Regulation 10(n) because the exporter was found to not exist during subsequent verification by the officers, added the bench.

To Read the full text of the Order CLICK HERE

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