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Preamble Board Of Trade Duty Exemption/ Remission Scheme Special Economic Zones Definitions Legal Framework Export Promotion Capital Goods Scheme Free Trade & Warehousing Zones Special Focus Initiatives Promotional Measures Export Oriented Units (Eous) 
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as well as the standing instructions issued earlier, if any, stand repealed.
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.
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.
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.
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 )
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