F.No. 18/24//HQ/99-2000/ECA II
Directorate
General Of Foreign Trade
Udyog Bhavan ,New
Delhi
To
All Port Offices Date: December 31, 2003
Sub: GUIDELINES FOR MAINTAINING
THE DENIED ENTITIES LIST(DEL)
The Denied Entities List ( earlier
called ‘Black List’) is drawn under the provision of Rule 7 of Foreign
Trade(Regulation) Rules1993( hereinafter referred to as ‘the Rules’). A total of 14 conditions have been described
for invocation under sub-Rule 7 (1) before a firm can be refused a license. The
licensing authorities may deny license to a person if any one or more of the
above referred conditions are
satisfied. Besides under sub-Rule 7(2) of the Rules, the refusal of a license
under sub-Rule 7(1) shall be without prejudice to any action that may be taken
against an applicant by the licensing authority under the Foreign Trade(
Development & Regulation) Act, 1992(hereinafter referred to as ‘the Act’).
The word ‘license’ has been defined under sub-Section 2(g) of the Act. These
conditions cover a vast variety of offences/contraventions leading to refusal
of licensee to an entity. Guidelines in
this regard were last issued vide enforcement guidelines no. 5/99-2000 dated
3.7.2000 With these guidelines, the
said circular as well as the standing
instructions issued earlier, if any, stand repealed.
A.
General instances leading to refusal of license
Even though the conditions
prescribed under Rule 7 of the Rules are comprehensive and will constitute the
basis of any denial of license, a brief description of most common instances
has been given below:
1. Generally
most common instance of action leading to refusal of license occurs when
firms default in Export Obligation(e.o) fulfillment committed under
various export promotion schemes. The licensing authorities in such cases will
place the firm in DEL after serving a demand notice to the entity to submit
evidence of e.o fulfillment within a reasonable
time. This demand notice shall indicate that the firms’ inability to submit
documents within prescribed duration will lead to refusal of license under Rule
7 of the Rules and the firm’s name will be placed in the DEL. Subsequent to the
action of placing the firm in the DEL, file will be transferred to the
enforcement division for investigations/adjudications.
2. Instances
have come to notice when external agencies such as DRI, CBI, ED etc request
for information in connection with some investigations or sometimes
recommend licensing authorities to
withhold further licensing facilities to the firms under investigation. In such cases if routine information has
been called for, the same should be provided. If recommendations to
suspend/cancel licenses are also contained in the communication then the information supplied should be adequately
examined from the point of view denial of benefits under the Rules/Act. If evidence is found to be
insufficient, agencies may be
informed that more evidence will be
needed before denial of the benefits can be pronounced under the Rules/Acts and
will mention the reasons why the licensing authority thinks that the there is
no sufficient evidence to invoke rules relating to the refusal of license. If
external agencies have supplied
evidence to the satisfaction of the licensing authority, he shall place the
firm in the DEL after issuing a speaking order against the erring firm without
disclosing the source of information in
the denial order.
3. Sub-rule
7(1) ( c) of the Rules deals with cases of fraud and mis-declaration. Whenever it comes to the notice of the licensing
authority that a license has been
obtained by fraud, forgery ,mis-declaration etc, the firm shall be immediately
placed in the DEL by issuing an order and licensing authority shall also suspend the IE Code of the firm. The head of the
office will thereafter enquire into the case and submit the report within 15
days to the Headquarters to indicate if connivance of any officials was found
in perpetrating the fraud.
Simultaneously complaint under the
Indian Penal Code for fraud/forgery will be lodged with the local police. In
cases where head of the office was a party to the decision to grant the
license, the file shall immediately be sent to Headquarters.
B.
Suspension, cancellation of a license
The procedure and policy leading to suspension and cancellation of licenses shall be governed by Section 9 of the Act read with Rule 9 (suspension) and Rule10 (cancellation) of the Rules.
C.
Right to be heard before passing an order
The powers related
to refusal, suspension or cancellation of licenses will also require ,as is the
case while exercising any executive authority under the statute, strict adherence to the principle
of natural justice. Implying thereby
that licensing authority will refuse, suspend or cancel any license after
giving the holder of license a reasonable opportunity of being heard and
thereafter by passing a reasoned order to be recorded in writing.
D. DEL management procedures:
1. The DEL order will explicitly mention that an appeal against the refusal of license will lie under Section 15 of the Act.
2. The DEL maintained by port offices will
contain names of the firms, their registered office address including those of
branch offices, names of their partners, proprietor, directors and their
residential addresses along with IEC No. of the firm and will be maintained as a computerized
database. Licensing benefits will not
only be denied to the firms as legal entities but also to the
individuals/persons owning/controlling these entities.
3. A centralized computerized data is being
prepared at the Headquarters and port offices shall be required to manage the
respective DEL components as per the authorization protocol to be announced
separately.
4. The order removing any entity from the DEL
will likewise be a speaking order by the listening authority mentioning the
grounds of removal.
This issues with the approval of the DGFT.
( P.C.Tripathi )
Jt. Director General of Foreign Trade