Customs Broker Not Required to Conduct Physical KYC Verification of Exporters, Govt Issued Certificates Presumed Authentic: CESTAT [Read Order]
KYC verification based on government issued documents carries a legal presumption of genuineness under section 79 of the Indian Evidence Act.
The Customs, Excise and Service Tax Appellate Tribunal, New Delhi Bench, held that a Customs Broker is not required to conduct physical verification of exporters and may rely upon government-issued documents, which carry a legal presumption of genuineness under Section 79 of the Evidence Act, 1872.
M/s ATR Logistics India Pvt. Ltd, the appellant, is a licensed Customs Broker under the Customs Brokers Licensing Regulations (CBLR), 2018. The Directorate General of Analytics and Risk Management (DGARM) under the Central Board of Indirect Taxes and Customs identified certain risky exporters allegedly involved in fraudulent exports.
Upon verification by the jurisdictional GST officers, two exporters, for whom the appellant acted as Customs Broker, were found to be non-existent at their registered premises.
The Commissioner issued a Show Cause Notice (SCN) to the appellant and appointed an Inquiry Officer. The appellant submitted that it had taken all due precautions and had obtained the required Know Your Client (KYC) documents from both exporters before filing the Shipping Bills.
However, the Commissioner passed an order holding that the appellant had violated Regulations 10(d), 10(e), and 10(n) of the CBLR, 2018.
The counsel for the appellant, Amit Atri, contended that the appellant had not violated any of the regulations.
Girijesh Kumar, appeared as the counsel for the respondent.
Justice Dilip Gupta, President, and P. V. Subba Rao, Member (Technical), observed that Regulation 10(d) mandates a Customs Broker to advise the client to comply with the provisions of the Customs Act and other Acts and Rules.
In case of non-compliance of clients, the matter is reported to the Assistant Commissioner or Deputy Commissioner. The Tribunal held that there was no evidence to establish that the appellant had violated Regulation 10(d).
The Tribunal held that there was nothing on record to show that the appellant had imparted any incorrect information to its clients violating Regulation 10(e).
The Tribunal further observed that, under regulation 10(n), a Customs Broker is required to verify the correctness of the Importer Exporter Code (IEC), Goods and Services Tax Identification Number (GSTIN), the identity of the client, and the functioning of the client at the declared address by using reliable, independent, and authentic documents, data, or information.
The Tribunal clarified that a Customs Broker is not required to conduct Physical Verification on client’s premises and conduct continuous surveillance over the client to ensure that the client continues to operate from the declared address or has not changed its operations.
The customs broker can rely on government-issued documents such as the IEC and GSTIN, based on the legal presumption of genuineness attached to documents issued by the Government under Section 79 of the Evidence Act, 1872. Therefore, the appellant has not violated Regulation 10(n).
In light of the facts and circumstances of the case, the Tribunal set aside the order passed by the Commissioner and directed that the appellant’s licence be restored.
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