2026 Supreme(Online)(CESTAT) 622

CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL
R. Muralidhar, Judicial Member, Rajeev Tandon, Technical Member
Just Logistics – Appellant
Versus
Pr. Commissioner of Customs (Airport & ACC), Kolkata – Respondent
Customs Appeal No.75610 of 2024

A Customs Broker's obligation under CBLR 2018 to verify a client's identity is satisfied by obtaining reliable KYC documentation; they are not mandated to act as investigative authorities to verify the physical existence of an exporter or the genuineness of every transaction.

Headnote:(A) Customs Brokers Licensing Regulations, 2018 - Regulation 10(d), 10(m), 10(n) - Revocation of Customs Broker Licence - Verification of client identity - Customs Broker is required to verify identity of client using reliable documents, but is not an inspector to weigh genuineness of each transaction or physically verify premises of every exporter - If documents provided appear prima facie bona fide, broker has met legal requirements - Duty of authorities to verify IEC and GSTIN existence through their own mechanisms. (Paras 17, 21, 22)

(B) Disciplinary Proceedings - Compliance with timelines - Undue delay in disciplinary proceedings and failure to consider submissions of the appellant constitutes arbitrary action. (Paras 9, 16)

Facts of the case:
The appellant, a Customs Broker, faced revocation of its licence, forfeiture of security deposit, and penalty due to alleged violations of the CBLR, 2018. The department alleged that the exporter was non-existent and the broker had facilitated undervalued exports. The appellant contended that the exporter held valid government-issued IEC and GSTIN numbers and that many other brokers handled the same exporter's business. The enquiry process was delayed significantly.

Findings of Court:
The tribunal found the department's case based on assumptions rather than evidence. The exporter was recognized by other government bodies through valid registrations. The Broker was not obligated to physically verify the exporter beyond obtaining KYC, which was duly done. The authorities failed to prove any mala fide intent or deliberate defiance of professional obligations.

Issues: Whether the Customs Broker failed in its obligations under Regulations 10(d), 10(m), and 10(n) of the CBLR, 2018, and whether the revocation of its licence and subsequent penalties were justified.

Ratio Decidendi: A Customs Broker acts as a processing agent and is not mandated to act as an inspector of the genuineness of a transaction or physically visit a client's premises when the client holds valid government-issued identifiers. The determination of an exporter's non-existence must be based on concrete evidence, not mere hearsay or assumptions.

Result: Appeal allowed. The revocation is set aside, and the licence is restored with refund of the security deposit and penalty.