Suspension and Cancellation of the Code
Chapter Seven
Syllabus topic 2, "Registration Procedure of Importer Exporter Code under The Foreign Trade (Development and Regulation) Act, 1992."
Pages 14 to 15 of 62
The grounds
Section 8(1) of the Foreign Trade (Development and Regulation) Act 1992 sets out three, and each is a different kind of wrong.
(a) any person has contravened any of the provisions of this Act or any rules or orders made thereunder or the foreign trade policy or any other law for the time being in force relating to Central excise or customs or foreign exchange or has committed any other economic offence under any other law for the time being in force as may be specified by the Central Government by notification in the Official Gazette; or
Ground (a) is a contravention, and it reaches far outside this Act: excise, customs, foreign exchange, and any other economic offence the Central Government notifies.
(b) the Director General or any other officer authorised by him has reason to believe that any person has made an export or import in a manner prejudicial to the trade relations of India with any foreign country or to the interests of other persons engaged in imports or exports or has brought disrepute to the credit or the goods of, or services or technology provided from, the country; or
Ground (b) is reputational and diplomatic, and it needs only a reason to believe. Three limbs: prejudicial to India's trade relations, prejudicial to other importers and exporters, or bringing disrepute to the credit of the country or of its goods, services or technology.
(c) any person who imports or exports specified goods or services or technology, in contravention of any provision of this Act or any rules or orders made thereunder or the foreign trade policy,
Ground (c) is about specified goods, services or technology, the controlled list section 14A deals with.
The safeguards
The rest of section 8(1) is procedure, and it is generous to the person:
- the Director General or an authorised officer may call for the record or any other information;
- he must give a notice in writing informing him of the grounds on which it is proposed to suspend or cancel;
- he must give a reasonable opportunity of making a representation in writing within a reasonable time stated in the notice;
- and if that person so desires, of being heard.
Only then may the Code be suspended for a period, or cancelled.
Four safeguards: the grounds in writing, a written representation, a time to make it, and a hearing on request. A suspension without them is bad, and a question on the section is usually asking for exactly this list.
Suspension against cancellation
| Suspension | Cancellation | |
|---|---|---|
| Effect | The Code is inoperative for a period | The Code is gone |
| Duration | As specified | Permanent, subject to appeal |
| While it runs | The person cannot import or export | The same |
| Way back | It expires | A fresh application, if the Director General permits |
Suspension and Cancellation of the Code
Section 9, the licence, which is a different thing
Section 9 is issue, suspension and cancellation of licence, and a candidate must not confuse it with section 8.
The Code is the entity's identity. A licence is permission for a particular import or export of goods whose import or export is restricted. So a business may hold a Code and still need a licence for one restricted item, and losing the licence does not touch the Code.
Section 9 provides for the grant of a licence, certificate, scrip or any instrument bestowing financial or fiscal benefit, and for its suspension and cancellation, with the same discipline of notice and hearing.
The remedies
Section 15, appeal. A person aggrieved by an order made under the Act by an Adjudicating Authority may appeal to the prescribed appellate authority within the prescribed time, and the appellate authority may confirm, modify or reverse the order.
Section 16, review. The Central Government, or the Director General or any officer superior to the officer who made the order, may on its own motion or otherwise call for and review the record of any proceeding, and pass such order as it thinks fit.
Two routes, and they are different. An appeal is taken by the person; a review may be taken by the authority itself. A candidate who names only the appeal has given half the answer.
What suspension actually costs a business
Not the penalty. The stopped consignment.
A firm whose Code is suspended cannot clear goods already on the water, cannot ship goods already sold, and cannot receive or remit the money for either, because the bank asks for the Code. The commercial loss is measured in demurrage and cancelled contracts, and it is why the section's safeguards matter to somebody advising the firm.
The rest of this subject
These notes are cut from the University's printed syllabus. Open the syllabus itself, or the past papers, for the same subject.