Rule 7 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Rule 7 lets the Director General or the licensing authority refuse to grant or renew a licence, certificate, scrip or other instrument for reasons recorded in writing, on any of fourteen listed grounds from (a) to (n). Sub-rule (2) says a refusal does not stop other action under the Act. Sub-rule (3), added in 2015, lets the authority recover or adjust benefits paid in error after a written notice and a hearing opportunity. This article explains rule 7 as per the Rules as notified in 1993 read with the 2015 Amendment Rules.
The Director General or the licensing authority may refuse to grant or renew a licence, certificate, scrip or instrument for reasons recorded in writing if one of fourteen grounds applies: for example a contravention of customs or foreign exchange law, a false statement, pending action against the applicant or a firm he controls, non-payment of a penalty, or ineligibility under the Policy. Under rule 7(3) (new in 2015), benefits paid in error can be recovered as arrears of land revenue or adjusted against future claims, after a notice and a hearing opportunity.
What changed in 2015
The 2015 Amendment Rules (G.S.R. 300(E), 17 April 2015) gave rule 7 a new heading ("Refusal to grant licence, certificate, scrip or any instrument bestowing financial or fiscal benefits and recovery of benefits"), widened "licence" in sub-rules (1) and (2) to the same phrase, extended clause (c), added "or services or technology" to clause (d), substituted clauses (f) and (n) and added sub-rule (3). In this article "licence" stands for the whole phrase.
The link with section 9(2)
Section 9(2) lets the Director General or an officer authorised by him grant, renew or refuse, and rule 7 lists the grounds. See our article on section 9. An appeal against a refusal lies as under section 15 (section 9(5)); see section 15.
If you have been refused a licence and want to know whether the ground cited is one of those in rule 7, a legal consultation can help you test it against the words.
Rule 7(1): the grounds
Rule 7(1) begins: "The Director General or the licensing authority may for reasons to be recorded in writing, refuse to grant or renew a licence if—". Two conditions are built in: it is a power ("may"), and reasons must be recorded in writing.
| Clause | Ground (short form) |
|---|---|
| (a) | The applicant has contravened any law relating to customs or foreign exchange |
| (b) | The application does not substantially conform to any provision of the Rules |
| (c) | The application or any supporting document contains a false, fraudulent or misleading statement, or (added 2015) any person makes, abets or attempts to make an export or import in contravention of the Act, the rules and orders or the Policy |
| (d) | The Central Government has decided to canalise the export or import of goods or services or technology, and distribution, through special or specialised agencies |
| (e) | Any action against the applicant is for the time being pending under the Act or the rules and Orders |
| (f) | (Substituted 2015) The applicant is or was a partner in a partnership firm (including a limited liability partnership), or is or was a director of a company or proprietor of a proprietorship firm, having controlling interest, against which any action is pending under the Act or rules and Orders |
| (g) | The applicant fails to pay any penalty imposed on him under the Act |
| (h) | The applicant has tampered with a licence |
| (i) | The applicant, or any agent or employee with his consent, has been a party to any corrupt or fraudulent practice to obtain any other licence |
| (j) | The applicant is not eligible for a licence under any provision of the Policy |
| (k) | The applicant fails to produce any document called for by the Director General or the licensing authority |
| (l) | For an import licence, no foreign exchange is available for the purpose |
| (m) | The application has been signed by a person other than a person duly authorised under the Policy |
| (n) | (Substituted 2015) The applicant has attempted to obtain, has obtained or has erroneously claimed Terminal Excise Duty, duty drawback, cash assistance benefits admissible to an Importer-exporter Code holder or similar benefits from the Central Government or an authorised agency, in relation to exports made by him, on the basis of any false, fraudulent or misleading statement or any document which is false, fabricated or tampered with |
Notes on particular grounds
Clause (g). Section 11(7) of the Act lets the Adjudicating Authority suspend the Importer-exporter Code of a person who fails to pay a penalty; rule 7(1)(g) is a separate consequence for licences. See section 11(5) to (9).
Clauses (e) and (f). Pending action is a ground. Clause (f) goes to the persons behind a firm: in 1993 a "managing partner" or a director of a "private limited company"; since 2015 a partner (including in a limited liability partnership), a director of a company or a proprietor, "having controlling interest". The words say "pending" action, not a finding.
Printing slip: substituted clause (f) is printed "a Director or a company or a proprietor of a proprietor ship firm"; the sense is evidently "a Director of a company". It is flagged and the quotation keeps the printed words.
Clause (l) applies to an import licence where "no foreign exchange is available for the purpose"; the sources consulted do not say how availability is judged. Clause (n) now adds "erroneously claimed" to "attempted to obtain" and refers to benefits "from the Central Government or any agency authorised by the Central Government"; it lists no current scheme.
Rule 7(2): refusal does not bar other action
"The refusal of a licence under sub-rule (1) shall be without prejudice to any other action that may be taken against an applicant by the licensing authority under the Act."
Rule 7(3): recovery of benefits paid in error
Rule 7(3), inserted in 2015, deals with recovery. It applies "in case of any erroneous payment of Terminal Excise Duty, duty drawback, cash assistance benefits admissible to Importer-exporter Code holder or any other similar benefits from the Central Government or any agency authorised by the Central Government in relation to exports made by him".
The steps are: the Director General or the licensing authority gives the person "a notice in writing informing him of the details of erroneous payment for which recovery or adjustment of arrears or claims is to be made"; the person has "a reasonable opportunity of making a representation in writing within such time, as specified therein" and, if he so desires, of being heard; and the authority "may" then authorise (a) recovery of benefits as arrears of land revenue, or (b) adjustment against future claims, "after recording reasons in writing, provided the Adjudicating Authority is satisfied with the facts relating to erroneous payment."
Printing slip: the sub-rule names the Director General or the licensing authority as the one who authorises, but ends with a proviso that the Adjudicating Authority must be satisfied with the facts. The rule does not say how the two roles fit together, or whether "after recording reasons in writing" governs both (a) and (b) or only (b). Check the official text.
The Policy in the background
FTP 2023, para 2.13 (in the copy consulted), headed "Authorisation - not a Right", says no person can claim an Authorisation as a right and that the Director General or the Regional Authority has power to refuse to grant or renew it in accordance with the Act, the Rules and the Policy. The Policy can change; check the current text.
Need help with a refusal or a recovery notice?
If a licence has been refused, or you have received a notice for recovery of benefits, our legal consultation service can help you check the ground relied on, prepare the written representation and consider the appeal. Later amendments to the Act, the Rules and the Policy should be checked.
Key takeaways
- Rule 7(1) allows refusal to grant or renew a licence, certificate, scrip or instrument for reasons recorded in writing on fourteen grounds, (a) to (n).
- The 2015 Rules extended clause (c), widened clause (d) and substituted clauses (f) and (n).
- Refusal is without prejudice to other action under the Act (rule 7(2)).
- Rule 7(3) allows recovery of benefits paid in error as arrears of land revenue, or adjustment against future claims, after notice and an opportunity to represent and be heard.
- An appeal against a refusal lies as under section 15 (section 9(5)).
Read next
- Rules 8 and 10: amendment and cancellation of licence
- Rule 9: suspension of licence
- Section 9: issue, suspension and cancellation of licence
- Section 15: appeal against adjudication orders
Disclaimer: Based on the Foreign Trade (Development and Regulation) Act, 1992 as enacted read with the Amendment Act of 2010, and on the Foreign Trade (Regulation) Rules, 1993 as notified read with the Amendment Rules of 2015, as consulted on 2 October 2026. Later amendments, the current Foreign Trade Policy and the Handbook of Procedures should be checked. This article is general information, not legal advice; check the official text before acting.