Custom, Excise & Service Tax Tribunal
Treveni Cargo vs Commissioner, Customs-New Delhi ... on 26 April, 2024
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
NEW DELHI.
PRINCIPAL BENCH,
COURT NO. I
CUSTOMS APPEAL NO. 51097 OF 2022
[Arising out of the Order-in-Original No. 52/MK/Policy/2021 dated
16.06.2021 passed by Commissioner of Customs (Airport & General), New
Delhi.]
M/s Triveni Cargo ......Appellant
D-293, Anand Vihar
New Delhi - 110 092.
Versus
Commissioner of Customs ....Respondent
(Airport & General) New Customs House, Near I.G.I. Airport, New Delhi - 110 037.
APPEARANCE:
Dr. G. K. Sarkar and Shri Prashant Shrivastava, Advocates for the appellant.
Shri M K Shukla, Authorized Representative for the Department CORAM:
HON'BLE JUSTICE MR. DILIP GUPTA, PRESIDENT HON'BLE MR. P.V. SUBBA RAO, MEMBER (TECHNICAL) FINAL ORDER NO. 55639/2024 DATE OF HEARING : 22.04.2024 DATE OF DECISION: 26.04.2024 P.V. SUBBA RAO M/s. Triveni Cargo1 filed this appeal to assail the order-in- original2 passed by the Commissioner revoking the Customs Brokers‟ licence of the appellant, forfeiting its security deposit of Rs. 85,000/- and imposing penalty of Rs. 50,000/-.
1. the appellant
2. Impugned order
2 C/51097 OF 2022
2. We have heard learned counsel for the appellant and the learned authorised representative for the Revenue and perused the records.
3. The issue which falls for consideration in this case is as follows:
(a) Did the appellant violate regulation 10 (n) of the Customs Brokers Licensing Regulations, 2013? and
(b) If so, is the revocation of its Customs Broker‟s licence, forfeiture of security deposit of Rs.
85,000/- and imposition of penalty of Rs. 50,000/- proportionate to the violation?
4. The factual matrix of this case is that the Directorate General of Analytics and Risk Management3 of the Central Board of Excise and Customs4 analysed data, identified suspicious registrants under the Goods and Services Tax5 and got a physical verification of some of these suspected registrants and found that they did not exist at all at the places of their business.
5. It also found that some of these GST registrants also had Importer Exporter Codes6 from the Directorate General of Foreign Trade7 and actually exported goods. DGARM further
3. DGARM
4. CBIC
5. GST
6. IEC
7. DGFT 3 C/51097 OF 2022 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, initially suspended the licence of the appellant on 25.8.2020 and thereafter, issued show cause notice8 dated 24.12.2020 and appointed an inquiry officer. The Inquiry officer submitted his report on 22.3.2021, a copy of which was supplied to the appellant and a personal hearing was held on 11.6.2021. Thereafter, the impugned order was passed on 16.6.2021. Submissions on behalf of the appellant
6. Learned counsel for the appellant made the following submissions:
a) The alleged violation of Regulation 10(n) is not supported by facts.
b) The report of DGARM which was the offence report was enclosed as Relied Upon Document9 and it alleged that some Customs Brokers including the appellant had handled exports of allegedly „risky exporters‟.
c) Based on this letter, the appellant‟s licence was first suspended and then the suspension was confirmed and finally the SCN was issued and an inquiry officer was appointed. The report of the inquiry officer was sent to the appellant and the appellant made its submissions. Without considering the submissions made, the Commissioner passed the impugned order.
d) The only allegation in the impugned order is that the appellant had not fulfilled its obligations under Regulation 10(n) of the CBLR. In support of this
8. SCN
9. RUD 4 C/51097 OF 2022 allegation, the only evidence relied upon is the email received from DGARM (RUD 1) and the supposedly three verification reports (RUD 2 and RUD 3).
e) Along with the SCN, only RUD 1(email from DGARM) and RUD 2 (verification report in respect of M/s. Vinod Kumar, HUF) have been enclosed. RUD 3 was not enclosed to the SCN and this was pointed out in the reply to SCN. It has not been supplied till date.
f) The three exporters in respect of whom the verification was conducted as per the SCN are at S.No. 15,22 and 34 of the list of 53 allegedly suspicious exporters and the appellant had obtained the requisite documents from all three. There is no assertion that any verification was made in respect of any other exporters.
g) The exporter listed at S.No. 15 was an HUF and the appellant had obtained PAN Card, KYC Form, IEC, GST Registration and Aadhar card of the Karta for verification as required in Regulation 10(n).
h) The exporter listed at S.No. 22 was a proprietorship firm and the appellant had obtained PAN Card, Voter ID, KYC Form, IEC, GST Registration, Aadhar card, electricity bill, rent agreement, Authorised Dealer Code letter from the bank for verification as required in Regulation 10(n).
i) The exporter listed at S.No. 34 was a proprietorship firm and the appellant had obtained PAN Card, IEC, GST Registration, Aadhar card, electricity bill, rent agreement, and bank statement for verification as required in Regulation 10(n).
j) The only verification report enclosed with the SCN was in respect of the exporter listed as S.No. 15, viz., Vinod Kumar, HUF and the verification was done on 11.6.2020 more than one year after the exporter had exported the goods. The report says "Non Existing. Not Recommended".
k) The verification report does not even say that the exporter had not existed at the time of export, let alone produce any evidence to support it.
l) Therefore, the impugned order may be set aside and the appellant‟s Customs Brokers licence may be restored.
Submissions on behalf of the Revenue
7. Learned authorised representative for the Revenue supports the impugned order and asserts that it calls for no interference.
5 C/51097 OF 2022 Findings
8. We have considered the submissions on both sides. DGARM did some analysis and came to the conclusion that several GST registrants did not exist and did not operate from their business addresses at all. It is undisputed that their registrations were issued by the very department which initiated the investigation. Thus, the irresistible conclusion is that if the DGARM is correct, then the department issued several benami (pseudonymous) GSTIN registrations to several entities which did not exist at all. Some of these non-existent entities have also been filing GST returns with the department.
9. These allegedly non-existent entities were also issued IEC by the DGFT. Thus, if the DGARM is correct, DGFT had issued benami IECs.
10. As far as the appellant is concerned, there were fifty three exporters who the DGARM suspected to be non-existent but verification was done only in respect of three. Of these, according to the appellant, verification report only in respect of one M/s. Vinod Kumar HUF was enclosed with the SCN.
11. The verification reports in respect of all three exporters were reproduced, though, in paragraph 6 of the SCN as follows:
(i) M/s. Vinod Kumar Remarks of jurisdictional officer (RUD 2) 6 C/51097 OF 2022 Non Existing. Not recommended.
(ii) M/s. Raw Overseas Remarks of jurisdictional officer (RUD 3) Non Existent entity. ITC is not admissible.
(iii) M/s. Irah Exim Remarks of jurisdictional officer (RUD 3) Non Existent entity. ITC is not admissible.
12. Clearly, none of the three reports say that the exporters did not exist at the time of export. All that they say is that they did not exist when the officer verified. It is not clear as to how the verification was carried out and if the exporters existed before and had ceased to exist by the time of verification, when they ceased to exist. It is also not clear that if the entities never existed, why the jurisdictional officer had issued the GSTIN to such a firm in the first place.
13. The report in respect of M/s. Vinod Kumar says „Not recommended.‟ It must be borne in mind that the recommendation of the jurisdictional officer or, for that matter of any authority, is NOT REQUIRED for the exporter to export goods or for the Customs Broker to process exports.
14. The reports in respect of M/s. Raw Overseas and M/s. Irah Exim say "ITC is not admissible". ITC, apparently refers to the input tax credit under the GST. Admissibility or otherwise of the input tax credit under GST has nothing to do with the 7 C/51097 OF 2022 right of an exporter to export or of the Customs Broker to process documents related to such exports.
15. Thus, even taking the reports at their face value, they do not show that the exporters never existed or had not existed at the time exports had taken place. There was no basis to draw such a conclusion, let alone, extrapolate it to conclude that the appellant had not fulfilled its obligations under Regulation 10(n).
16. We now proceed to examine the scope of the obligations of the Customs Broker under Regulation 10(n). It 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. This obligation can be broken down as follows:
(a) Verify the correctness of IEC number
(b) Verify the correctness of GSTIN
(c) Verify the identity of the client using reliable, independent, authentic documents, data or information
(d) Verify the functioning of the client at the declared address using reliable, independent, authentic documents, data or information
17. Of the above, (a) and (b) require verification of the documents which are issued by the Government departments.
8 C/51097 OF 2022 The IEC number is issued by the Director General of Foreign Trade and the GSTIN is issued by the GST officers under the Central Board of Indirect Taxes and Customs of the Government of India or under the Governments of State or Union territory. The question which arises is has the Customs Broker to satisfy himself that these documents or their copies given by the client were indeed issued by the concerned government officers or does it mean that the Customs Broker has to ensure that the officers had correctly issued these documents. In our considered view, Regulation 10(n) does not place an obligation on the Customs Broker to oversee and ensure the correctness of actions by the Government officers. Such an interpretation would amount to saying that the Regulations under the Customs Act prevail over the actions under the Foreign Trade (Development and Regulation) Act, 1992 under which the IEC is issued by DGFT and the Central Goods and Services Tax Act (or state GST Act) under which the GSTIN is issued by the GST officers. Therefore, the verification of certificates under Regulation 10(n) on the Customs Broker is fully satisfied so long as the Customs Broker satisfies itself that the IEC and the GSTIN were, indeed issued by the concerned officers. This can be done through online verification, comparing with the original documents, etc. and does not require an investigation into the documents by the Customs Broker. The presumption is that a certificate or registration issued by an officer or purported to be issued by 9 C/51097 OF 2022 an officer is correctly issued. Section 79 of the Evidence Act, 1872 requires even Courts to presume that every certificate which is purported to be issued by the Government officer to be genuine. It reads as follows:
"79. Presumption as to genuineness of certified copies. The Court shall presume to be genuine every document purporting to be a certificate, certified copy or other document, which is by Law declared to be admissible as evidence of any particular fact and which purports to be duly certified by any officer of the Central Government or of a State Government, or by any officer in the State of Jammu and Kashmir who is duly authorized thereto by the Central Government.
Provided that such document is substantially in the form and purports to be executed in the manner directed by law in that behalf. The Court shall also presume that any officer by whom any such document purports to be signed or certified, held, when he signed it, the official character which he claims in such paper."
18. The onus on the Customs Broker cannot, therefore, extend to verifying that the officers had correctly issued the certificate or registration. Of course, if the Customs Broker comes to know that its client has obtained these certificates through fraud or misrepresentation, nothing prevents it from bringing such details to the notice of Customs officers for their consideration and action as they deem fit. However, the Customs Broker cannot sit in judgment over the certificate or 10 C/51097 OF 2022 registration issued by a Government officer so long as it is valid. In this case, there is no doubt or evidence that the IEC, the GSTIN and other documents were issued by the officers. So, there is no violation as far as the documents are concerned.
19. The third obligation under Regulation 10(n) requires the Customs Broker to verify the identity of the client using reliable, independent, authentic documents, data or information. In other words, he should know who the client is and the client cannot be some fictitious person. This identity can be established by independent, reliable, authentic:
a) documents;
b) data; or
c) information
20. Any of the three methods can be employed by the Customs Broker to establish the identity of his client. It is not necessary that it has to only collect information or launch an investigation. So long as it can find some documents which are independent, reliable and authentic to establish the identity of his client, this obligation is fulfilled. Documents such as GSTIN, IEC and PAN card issued etc., certainly qualify as such documents as none of these departments have any interest in the relationship between the client and the Customs Broker and these documents are presumed to be authentic and reliable having been issued by the Government officers. However, these are not the only documents the Customs 11 C/51097 OF 2022 Broker could obtain; documents issued by any other officer of the Government or even private parties (so long as they qualify as independent, reliable and authentic) could meet this requirement. While obtaining documents is probably the easiest way of fulfilling this obligation, the Customs broker can also, as an alternative, fulfill this obligation by obtaining data or information. In the factual matrix of this case, we are fully satisfied that the appellant has fulfilled this part of the obligation under Regulation 10(n).
21. The fourth and the last obligation under Regulation 10(n) requires the Customs Broker to verify the functioning of the client at the declared address using reliable, independent, authentic documents, data or information. This responsibility, again, can be fulfilled using documents or data or information so long as it is reliable, independent and authentic. Nothing in this clause requires the Customs Broker to physically go to the premises of the client to ensure that they are functioning at the premises. Customs formations are only in a few places while exporters or importers could be from any part of the country and they hire the services of the Customs Brokers. Besides the fact that no such obligation is in Regulation 10(n), it will be extremely difficult, if not, totally impossible, for the Customs Broker to physically visit the premises of each of its clients for verification. The Regulation, in fact, gives the option of verifying using documents, data or information. If there are authentic, independent and reliable documents or data or 12 C/51097 OF 2022 information to show that the client is functioning at the declared address, this part of the obligation of the Customs Broker is fulfilled. If there are documents issued by the Government Officers which show that the client is functioning at the address, it would be reasonable for the Customs Broker to presume that the officer is not wrong and that the client is indeed, functioning at that address. In the factual matrix of this case, we find that the GSTIN issued by the officers of CBIC itself shows the address of the client and the authenticity of the GSTIN is not in doubt. In fact, the entire verification report is based on the GSTIN. Further, IECs issued by the DGFT also show the address. There is nothing on record to show that either of these documents were fake or forged. Therefore, they are authentic and reliable and we have no reason to believe that the officers who issued them were not independent and neither has the Customs Broker any reason to believe that they were not independent.
22. The responsibility of the Customs Broker under Regulation 10(n) does not include keeping a 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.
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23. We, therefore, find that the Customs Broker did not fail in discharging its responsibilities under Regulation 10(n). The impugned order is not correct in concluding that the Customs Broker has violated Regulation 10(n) because the exporters were found to not exist during subsequent verification by the officers.
24. In view of the above, the appeal is allowed and the impugned order dated 16.06.2021 passed by the Commissioner is set aside with consequential relief to the appellant.
Order pronounced in open court on 26/04/2024.) (JUSTICE DILIP GUPTA) PRESIDENT (P.V. SUBBA RAO) MEMBER (TECHNICAL) PK