The big problem here is that you try to read KEY over and over, once for each line of DATA. It will read the KEY file once for the first line of DATA and then fail. Instead, you should store the values from KEY in a hash first:

   my %keyval = ();
   while(<KEY>){
        ($s1,$s2) = split(/,/);
         $keyval{$s1} = $s2;
   }
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In the DATA loop, look up $c5 in the hash:

    if (exists $keyval{$c5}) {
       $custnmbr = $keyval{$c5};
       $flag = 1;
    }
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Also, you might want to split into an array instead of using such repetitive variable names.