Hi Chandravadan
The external application has to register the server program in the gateway first before you create the RFC type T.
After they have registered, check SMGW to see if it's there, then only create the RFC destination.
Check out the link below for more details on registering the server RFC program.
http://help.sap.com/saphelp_nwpi711/helpdata/en/48/a98f837e28674be10000000a421937/content.htm
Rgds
Eng Swee