" CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL NEW DELHI PRINCIPAL BENCH-COURT NO. 1 CUSTOMS APPEAL NO. 51436 OF 2022 [Arising out of Order-in-Original No. 39/MK/POLICY/2021 dated 09.06.2021 passed by the Commissioner of Customs, Airport & General, New Delhi] M/S PRAHALAD SINGH ......APPELLANT B-7, Krishna Park, New Delhi-110080 Vs. COMMISSIONER, CUSTOMS-NEW DELHI .....RESPONDENT Airport & General NCH, IGI Airport Appearance: Present for the Appellant : Shri G. S. Arora, Advocate Present for the Respondent: Shri Rajesh Singh, Authorised Representative CORAM: HON'BLE MR. JUSTICE DILIP GUPTA, PRESIDENT HON'BLE MR. P. V. SUBBA RAO, MEMBER ( TECHNICAL ) FINAL ORDER NO. 50399 /2025 Date of Hearing :24/12/2024 Date of Decision : 13/03/2025 P.V. SUBBA RAO: 1. Shri Prahlad Singh1 filed this appeal to assail the Order in Original dated 09.06.20212 passed by the Commissioner of Customs (Airport & General) New Delhi whereby he revoked the customs broker licence of the appellant, forfeited the entire amount of security deposit and imposed a penalty of Rs. 1 the appellant 2 Impugned order 2 C/51436/2022 50,000/- on the appellant. 2. The appellant had a Customs Broker licence valid up to 02.06.2024 issued by the Commissioner of Customs (Airport & General)3, New Delhi. A communication dated 17.08.2020 was received by the Commissioner from the Joint Director, Directorate General of Analytics and Risk Management, New Delhi4 that DGARM had conducted an analysis of the data of the GST registrants and identified risky exporters who may have been involved in IGST refund frauds. DGARM also identified the Customs Brokers who handled exports of such exporters including the appellant. DGRAM got the existence of some of these exporters verified from field formation and found that they were not existence. Based on the analysis, DGARM wrote to the concerned commissioners including the respondent herein to take action under the Customs Broker Licensing Regulations. Accordingly, a show cause notice dated 14.12.20205 was issued to the respondent which culminated in the impugned order. 3. As per the SCN the appellant had handled exports in respect of 8 suspected exporters listed in table 1 of the SCN. Of this physical verification was conducted only in respect of one- M/s Windchime Overseas Pvt. Ltd.-through the GST officers. The report of the Assistant Commissioner who conducted the verification is as follows: 3 Commissioner 4 DGARM 5 SCN 3 C/51436/2022 “Remarks of jurisdiction officer (RUD-I): “On physical and financial verification of the exporter assessee, it was found to be suspicious, therefore, the assessee in pursuance of CBIC Circular No. 131/1/2020-GST dated 23.01.2020 is non-bonafide.” 4. Based on this report the SCN alleged that the appellant had violated regulation 10(n) of Customs Broker Licensing Regulations, 20186 which reads as follows: “10. Obligations of Customs Broker.— A Customs Broker shall — (n) 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;” 5. The Commissioner appointed an inquiry officer in the SCN who, after considering the submissions of the appellant, submitted a report dated 12.03.2021 that the appellant had failed to comply with the provisions of Regulation 10(n) of CBLR 2018 to some extent. However, he was of the view that a lenient view may be taken in the matter. 6. The inquiry report was forwarded to the appellant with a request to submit representation within 30 days. On 02.06.2021, the appellant submitted its written representation resisting that the contention that the appellant had violated the Regulation 10(n). 7. After considering the SCN, inquiry report and the 6 CBLR 2018 4 C/51436/2022 appellant’s representation the Commissioner passed the following order. ORDER In exercise of powers conferred in terms of Regulation 14 &18 read with Regulation 17(7) of CBLR, 2018 (erstwhile Regulation 18 & 22 read with Regulation 20(7) of CBLR, 2013), (i) I hereby revoke the CB License No. R-88/DEL/CUS/2006 (PAN No. BFXPS4140E) valid upto 03.06.2025 of M/s Prahlad Singh; (ii) I order for forfeiture of the whole amount of security deposit of Rs. 75,000/- (Rupees Seventy Five Thousand Only) furnished by them; (iii) I impose penalty of Rs. 50,000/- on M/s Prahlad Singh. 8. Aggrieved, the appellant filed this appeal. Submissions of the appellant 9. Learned counsel for the appellant made the following submissions: (i) After GST has been introduced no shipping bill could be processed without mentioning the GST number in the shipping bill which was valid at the time of export; (ii) The GST refunds are also credited automatically to the account of the exporter which is registered via an authorised dealer’s code with the department; (iii) Mere non-traceability, as alleged, of the exporter is no basis to assume that the exports were fraudulent and exporter was ineligible for IGST refund; 5 C/51436/2022 (iv) Regulation 10(n) mandates the Customs Broker to verify the identity of the importer by way of independent documentation and the appellant ad done so. All the documents which were collected from the exporters at the time of processing of shipping bills were submitted during the adjudication proceedings; (v) The only thing against the appellant is a report by DGARM that the exporters were found to be non- existent which is not on the basis of any evidence; (vi) Even if the exporter was found non-existent at the address, the appellant had verified their existence on the basis of the documents issued by the Government Office and he cannot be held accused of violation Regulation 10(n); and (vii) As far as the sole exporter in respect of which verification was done in this case is concerned, the appellant had obtained their import export code, GSTIN, PAN and bank details. Therefore, the appellant had sufficiently fulfilled the requirements of regulation 10(n) and, therefore, was not liable to action under the CBLR 2018. In view of the above, the appeal may be allowed and the impugned order may be set aside. 6 C/51436/2022 Submissions of the Revenue 10. Learned authorised representative appearing for the department vehemently supported the impugned order and asserted that it calls for no interference. He also submitted that the responsibility of the Customs Broker is critical to prevent misuse of the export promotion schemes and other fraudulent activities as held in Barskar Brothers vs. Commissioner of Customs (General)7. He prayed that impugned order may be upheld and appeal may be rejected. 11. We have considered the submissions on both sides and perused the records. 12. The undisputed facts of the case are that although DGARM had identified 26 exporters whose exports the appellant had processed and who in the opinion of DGARM, had not existed physical verification was conducted only in respect of one exporter, namely M/s Windchime Overseas Pvt Ltd.. The charge against the appellant is that it had violated regulation 10(n) of CBLR 2018. Regulation 10 places several obligations on the licensed Customs Broker. Clause (n) requires the Customs Broker to verify correctness of importer exporter code number, goods and services tax identification number (GSTIN), identity of its client and functioning of its client at the declared address using reliable independent authentic documents, data or information. 13. It requires the Customs Broker to verify correctness of Importer Exporter Code (IEC) number, Goods and Services 7 2009 (244) ELT 562 7 C/51436/2022 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 14. Of the above, (a) and (b) require verification of the documents which are issued by the Government departments. 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 does the Customs Broker have to satisfy himself that these documents or their copies given by the client were indeed, issued by the concerned government officers or does the Customs Broker have 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 the actions by Government officers. Therefore, the verification of documents part of the obligation under Regulation 10(n) on the Customs Broker is fully satisfied as long as the Customs Broker satisfies 8 C/51436/2022 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. Therefore, the appellant was correct in verifying the GSTIN issued by the department on the GST portal. The presumption is that a certificate or registration issued by an officer or purported to be issued by 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.” 15. 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 9 C/51436/2022 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 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. 16. 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 17. 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 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. However, these are not the only documents the Customs Broker could obtain; documents issued by any other officer of the 10 C/51436/2022 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). 18. 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 to the Customs Broker the option of verifying using documents, data or information. If there are authentic, independent and reliable documents or data or information to 11 C/51436/2022 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, IEC issued by the DGFT also shows 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. 19. 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. 20. We, therefore, find that the appellant Customs Broker did 12 C/51436/2022 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 exporter was found to not exist during subsequent verification by the officers. 21. The impugned order, therefore, cannot be sustained and is set aside. The appeal is allowed with consequential relief to the appellant. [Order pronounced on 13/03/2025] (JUSTICE DILIP GUPTA) PRESIDENT (P. V. SUBBA RAO) MEMBER ( TECHNICAL ) Tejo "