2007 (11) TMI 259 - HC - Customs

Petitioner s name was entered in Denied Entities List (provision u/r 7, FTDR) mere on basis of communication received by DRI - effect of the name appearing in the Denied Entities List has civil consequences - case of the petitioner that they were not given an opportunity before their name was included in the list - requirement of Circular dated 31st December, 2003 was not satisfied - inclusion of the name of petitioner in list was without authority of law and the order has to be set aside

Summary

Issues:
1. Inclusion in 'Denied Entities List' without opportunity for hearing.
2. Compliance with guidelines for maintaining the list.
3. Civil consequences and principles of natural justice.

Analysis:
1. The petitioner's name was added to the 'Denied Entities List' without being given an opportunity to present their case, which has civil consequences. The petitioner argued that they were not heard before their inclusion, violating rule 7 of the Foreign Trade Regulation Rules, 1993.

2. The revenue department justified the inclusion based on a letter from the Director of Revenue Intelligence (DRI) alleging fraudulent exports. The guidelines for maintaining the list, as per a circular dated 31st December, 2003, require external agencies like DRI to provide evidence to the satisfaction of the licensing authority before listing an entity as denied. The court found that the revenue failed to follow this procedure before including the petitioner's name.

3. The court emphasized that the revenue's action lacked legal authority as there was no final order, only a temporary measure. The Circular mandates adherence to natural justice principles, requiring affected parties to be given an opportunity before any adverse action. Since the petitioner was not provided with a chance to be heard, the court set aside the inclusion in the 'Denied Entities List' for non-compliance with the law.

4. The judgment clarified that if the revenue has valid grounds, they can still exercise their power but must follow the guidelines outlined in the Circular. The court ruled in favor of the petitioner, declaring the order to include their name in the list as unauthorized and directed its reversal without costs.