Commissioner Of Customs Admn And Airport Kolkata vs. M/S Sunglory Agency

Held

The Court held that the Tribunal had rightly explained the scope and obligation under Regulation 10(n) of the Customs Broker Licensing Regulation, 2018. The regulation mandates verification using reliable, independent, and authentic documents, data, or information. The Tribunal correctly noted that it would be extremely difficult, if not impossible, for a customs broker to physically visit each client's premises. The Tribunal's finding that the respondent fulfilled its obligation by using authentic documents issued by government authorities, which were not shown to be fake or fabricated, was upheld. The Court agreed that Regulation 10(n) does not impose an obligation on the customs broker to keep continuous surveillance on clients or to ensure the correctness of actions by government departments. The reliance on the decision in M/s. Anax Air Services Pvt. Limited was found appropriate. The Court distinguished the case of HLPL Global Logistics Pvt. Ltd. by noting that in that case, action was initiated under Section 124 of the Customs Act, and the nature of goods required a more vigilant approach, which was not the situation here. Therefore, the appeal was dismissed, and the substantial questions of law were answered against the revenue.

Facts

The Commissioner of Customs (Administration & Airport), Kolkata, the appellant, filed an appeal against an order passed by the Customs, Excise and Service Tax Appellate Tribunal (Tribunal). The respondent, M/s. Sunglory Agency, a customs broker, had its license revoked and security deposit forfeited by the Principal Commissioner of Customs (Airport and Administration), Kolkata, through an Order-in-Original dated August 8, 2022. This action was taken for alleged violation of Regulation 10(n) of the Customs Broker Licensing Regulation, 2018, which mandates verification of client identity and functioning. The Tribunal, in its impugned order, allowed the appeal filed by the respondent. The revenue contended that the Tribunal failed to consider the spirit of Regulation 10(n) and Circular No. 09/10-CUS, did not provide independent reasons, and exceeded its jurisdiction by disregarding GSTN reports.

Key Issues

1. Whether the Learned Tribunal was required to consider the true spirit and meaning of Regulation 10(n) of the Customs Broker Licensing Regulation, 2018, read with Circular No. 09/10-CUS dated April 8, 2010, before setting aside the Order-in-Original dated August 8, 2022? (Question of law) 2. Whether the Learned Tribunal was required under law to provide independent reasons for setting aside the Order-in-Original? (Question of law) 3. Whether the documents submitted by the respondent could be considered as full compliance with the provisions of Regulation 10(n) read with Circular No. 09/10-CUS dated April 8, 2010? (Question of mixed law and fact) 4. Whether the Learned Tribunal exceeded its jurisdiction by denying the report of the GSTN Authorities regarding the non-existence/fictitious business place of the exporters when the Tribunal has no jurisdiction to interfere with matters related to the CGST Act, 2017? (Question of law) Petitioner's arguments (Revenue): The Tribunal erred by not properly considering Regulation 10(n) and the related circular. The Tribunal should have provided independent reasoning. The documents submitted by the respondent were insufficient for compliance. The Tribunal improperly interfered with GSTN reports, overstepping its jurisdiction concerning the CGST Act. Respondent's arguments: The respondent contended that they had fulfilled their obligation under Regulation 10(n) by collecting and verifying reliable, independent, and authentic documents, including GSTIN, KYC forms, PAN, and Aadhar cards, from their clients. They argued that it is practically impossible for a customs broker to physically visit every client's premises. They relied on the Tribunal's decision in M/s. Anax Air Services Pvt. Limited vs. Commissioner of Customs, New Delhi.