Feroz Abdul Khan, alias Hamza, 51, an accused in 1993 Mumbai blast case, was arrested from a village in Navi Mumbai February last year and was handed over to CBI for further investigation.
CBI had issued an Interpol Red Corner Notice against Khan in 1994 but the notice was not withdrawn even after the agency has got his custody.
"CBI has conveyed to the Home Ministry that the lapse was on the agency`s part. When CBI forwarded the list to MHA, they forgot to delete the name of this person," a Home Ministry spokesperson said.
Khan is alleged to have facilitated transport and distribution of arms and ammunitions during the blast and subsequently. Mumbai police had alleged that following Dawood Ibrahim`s instructions, Khan arranged for landing of arms allegedly used in the blast.
"We are examining the matter and strict action will be intitiated against erring officials," CBI spokesperon Dharini Mishra said.
Earlier, Wazhur Kamar Khan, whose name had also figured in India`s most wanted list, was traced in Mumbai, in the first case of the goof-up.