Page 43 - ELT_15th July 2020_Vol 373_Part 2

2020 ] PROCESS OF SUSPENSION OF IEC NUMBER A49

 When the authorised officer or Director General (hereinafter will be
referred as “DG”) has ‘reason to believe’ that any person has done
any of the following :
• Has made an export or import in a manner prejudicial to the
trade relations of India with any foreign country; or
• Has made an export or import in a manner prejudicial to in-
terests of other persons engaged in imports or exports; or
• has brought disrepute to the credit or the goods of, or ser-
vices or technology provided from, the country.
Here before trudging any further on this topic, it is paramount to fathom
the meaning ‘reason to believe’ as expounded by Hon’ble Supreme Court in the
following cases :
(a) Madhya Pradesh Industries Ltd. v. Income Tax Officer, AIR 1970 SC
1011
“The belief must be held in good faith. It cannot be merely a pre-
tence. It is open to the Court to examine whether the reasons for the
belief have a rational connection or a relevant bearing to the for-
mation of the belief and are not extraneous or irrelevant to the pur-
pose of the section”.
(b) Ganga Saran and Sons (Pvt.) Ltd. v. Income Tax Officer, AIR 1981 SC
1363
“The important words under s. 147(a) are ‘has reason to believe’
and these words are stronger than the words ‘is satisfied’. The belief
entertained by the Income Tax Officer must not be arbitrary or irra-
tional. It must be reasonable or in other words it must be based on
reasons which are relevant and material”.
 When any person who imports or exports specified goods or ser-
vices or technology [as defined u/s. 2(l) of the FTDR Act, 1992], in
the following manner :
• In contravention of any provision of this Act or any rules or
orders made thereunder; or
• In contravention of provisions of rules or order made under
Foreign Trade Policy.
In the above-mentioned situations, DG or any other officer authorised by
him has to do the following :
 Call for the record or any other information from that person.
 Has to give notice (commonly known as “SCN”) to such person in
writing intimating such person grounds on which such person’s
IEC is proposed to be suspended.
 Thereafter, has also to give such person opportunity (which must be
‘reasonable’) of making a representation (generally understood as
‘Physical Hearing’).
 In case officer decides to suspend IEC, he has to mention ‘Period of
Suspension’.
Before moving any further, it is indispensable to tackle following two
questions :
EXCISE LAW TIMES  15th July 2020  43