Legal principle

A Customs Broker who verifies a client through government-issued documents such as the IEC and GSTIN fulfils Regulation 10(n), for it cannot be faulted for trusting certificates issued by government officers and need not physically verify premises or keep continuous surveillance — the officer who issued a benami registration, not the broker who relied on it, is accountable.

Court decision

The Tribunal allowed the appeal in favour of the appellant broker: the findings of violation of Regulations 10(d), 10(e) and 10(n) could not be sustained, the impugned order was set aside, the Customs Broker licence was to be restored forthwith on production of a copy of the order, and the forfeiture of the security deposit and the Rs. 50,000 penalty were quashed.

Facts

M/s Falcon Air Cargo & Travels Pvt. Ltd., a Customs Broker licensed under CBLR 2018, filed four shipping bills for exporter Utkarsh International, NOIDA, one of ten exporters identified by DGARM as suspected non-existent firms that had claimed export incentives and potential IGST refunds on readymade garments. Utkarsh International's GSTIN, registered on 7.2.2022, was cancelled suo moto retrospectively from 17.2.2022 after a DGARM/NCTC alert of 19.12.2022, making it valid for only ten days. On a show cause notice dated 25.9.2024, based on a DGARM Expert Risk Review Report and a Chief Commissioner's email, the Commissioner by order dated 6.3.2025 revoked the broker's licence, forfeited its entire security deposit and imposed a penalty of Rs. 50,000 for violating Regulations 10(d), 10(e) and 10(n) of CBLR 2018.

Key provisions

• Regulation 10(d), Customs Brokers Licensing Regulations, 2018 — Obligations of Customs Broker