The rising competition in the market has compelled businesses to seek avenues for international expansion beyond domestic borders. Engaging in global business requires strict adherence to numerous laws and procedures, demanding various registrations and licences. Among these basics, IEC registration is one crucial requirement, especially when a business involves importing or exporting from India. The IEC licence is a vital licence obtained by business dealers for engaging in international trade.
Conversely, when a dealer decides to discontinue their business activities, they have the option to initiate the surrender of IEC licence to the respective issuing authority. In this article, we shall see the process related to surrender of IEC Licence.
The Importance of IEC Licence in International Trade
The Import Export Code licence is a crucial requirement for individuals aspiring to initiate import or export ventures on a global scale. Issued by the Directorate General of Foreign Trade, this licence is essential for conducting business related to the import or export of goods.
The IEC licence is a 10-digit code with a lifetime validity, enabling businesses to engage in international trade activities with ease and legitimacy. Importers and exporters must obtain this code to proceed with their respective business operations.
The IEC licence serves as an essential for importers, prohibiting them from advancing in their import processes without this vital code. Similarly, exporters cannot avail benefits from DGFT, Export Promotion Council, or customs without possessing a valid IEC licence.
Instances Requiring IEC Licence
Several scenarios require the possession of an IEC licence:
1. Customs Clearance: Customs authorities mandate the presentation of the IEC code when importers need to clear their shipments.
2. Financial Transactions: Banks require the IEC code when an importer sends money abroad for business transactions.
3. Export Shipments: Customs ports demand the IEC code from exporters when they intend to dispatch their shipments.
4. Foreign Currency Transactions: Banks need the IEC code for transactions involving the receipt of money in foreign currencies by exporters directly into their bank accounts.
Advantages of IEC Licence for Global Trade
Before going into the surrender of IEC Licence, let us see the merits of having an IEC licence first. These include:
1. International Market Reach
Acquiring an IEC registration and licence facilitates global business expansion, providing access to international markets and enabling engagement with a diverse range of customers worldwide.
2. Primary Document for Global Trade
The IEC licence serves as a fundamental document for engaging in the import and export of goods at an international level, establishing credibility in global trade transactions.
3. Convenient Online Registration
The registration process for obtaining an IEC licence is easy and user-friendly, conducted online through government-recognised websites for ease and efficiency.
4. Lifetime Validity
IEC registration is permanent, offering a lifetime validity that extends as long as the business remains in operation, eliminating the need for frequent renewals.
5. PAN-Based Registration
IEC registration is linked to the Permanent Account Number of the business enterprise, providing a structured and standardised identification system.
6. Minimal Documentation
The IEC registration process requires minimal documentation, such as a PAN card, registered office address, applicant’s address proof, and branch office address, simplifying the administrative requirements.
7. Compliance Relief
IEC holders are relieved from specific compliance obligations like return filing or annual filing, streamlining administrative burdens associated with other types of licences.
8. Restriction on Illegal Goods Trading
IEC registration helps curb the trading of illegal goods by ensuring that registrations are granted based on accurate and authentic information, maintaining compliance with laws and regulations.
9. No Annual Maintenance Costs
Once issued, the IEC licence remains valid for a lifetime, eliminating the need for any annual maintenance fees, providing cost-efficiency and long-term sustainability.
10. Access to Scheme Benefits
Registered importers and exporters can use IEC registration to access benefits such as subsidies and incentives recognised by DGFT, customs, Export Promotion Council, and other relevant authorities, enhancing business profitability.
11. Legal Validity and Hassle-Free Transactions
With the IEC code in place, all cross-border transactions become legally valid, ensuring smooth and hassle-free import and export activities, contributing to a cleaner and more compliant trade environment.
Understanding the Surrender of IEC Licence
In the world of international trade, an Importer Exporter Code is a crucial requirement. However, there may come a time when businesses or individuals need to discontinue their import and export activities. In such instances, they can opt for the surrender of IEC licence. This process involves voluntarily relinquishing the rights to use the IEC for various reasons.
Reasons for Surrender of IEC Licence
The surrender of an Importer Exporter Code may become necessary for various reasons. Some major reasons for surrender of IEC licence include:
1. Business Closure: When a business owner decides to shut down their import and export operations, surrendering the IEC becomes a requirement.
2. Company Winding Up: In cases where a company is winding up its operations then surrendering the IEC is an essential step in the process. This ensures that the company’s IEC is no longer associated with ongoing import and export activities.
3. Sale of Business: If an IEC holder opts to sell their import and export business, the IEC licence must be surrendered. This allows the new owner to obtain a fresh IEC in their name, facilitating a smooth transition of the business.
4. Division Closure: Sometimes, businesses operate multiple divisions, and a decision is made to close a specific division involved in import and export activities. In such cases, the IEC associated with that particular division should be surrendered, while other divisions may continue to use their respective IECs.
Important Note
It’s essential to note that for the surrender of IEC licence, it’s generally not advisable to relinquish the existing IEC and apply for a new one, especially if it is linked to the same PAN. This is because an importer or exporter may encounter difficulties when reapplying for an IEC licence with the same PAN, even if they have previously cancelled or surrendered their IEC. Careful consideration is required to avoid potential complications in the IEC licencing process.
Documents Required for Surrender of IEC Licence
The process for surrender of IEC licence requires specific documents and information to be submitted. The necessary documents for the surrender of IEC include:
1. Registered Email Address and Password: You will need the login credentials associated with your IEC registration.
2. PAN Card of the IEC Holder: PAN card of the company to which the IEC is issued.
3. IEC Licence Number: The unique IEC licence number that you wish to surrender.
4. Original IEC Certificate: The physical copy of the original IEC certificate issued to you.
5. Covering Letter: A covering letter addressed to the Additional Director General of Foreign Trade explaining your intent to surrender the IEC.
Online Procedure for Surrender of IEC Licence
Surrender of IEC licence online is a simplified process that can be completed through the official website of the Directorate General of Foreign Trade. The steps for surrender of IEC licence online are as follows:
Step 1: Log In to the DGFT Website
Visit the official DGFT website and log in using your credentials.
Step 2: Access IEC Profile Management
From the homepage, select the ‘Services’ tab to proceed.
Step 3: Go to ‘Surrender of IEC’
In the ‘IEC Profile Management’ section, you will find various options related to IEC processes and requirements. Scroll down until you find the option ‘Surrender of IEC’.
Step 4: Provide Login Information
The website will prompt you to enter your registered email address and password to log in. If you don’t have any, you have to create a new profile by providing your mobile no., contact details, etc.
Step 5: Verify Business Details
After successfully logging in, review your business details, including the PAN number, company name, and other relevant information.
Step 6: Initiate the Surrender Process
Once you’ve confirmed your business details, click on the ‘surrender’ option to commence the surrender of your IEC.
Step 7: Confirmation of Surrender
The surrender process will suspend your IEC licence and revoke it for all future transactions.
Cancellation of IEC
According to the rules established by the Directorate General of Foreign Trade, only one IEC shall be issued against a single Permanent Account Number. Business owners are allowed to have only one IEC number. Failure to comply with this requirement may result in penalties and IEC cancellation.
Difference Between Surrender and Suspension of IEC Licence
The difference between the surrender and the suspension of IEC licence is as follows:
1. Initiator of the Action:
- Surrender of IEC licence: The surrender of IEC is initiated voluntarily by the IEC holder or business dealer.
- Suspension of IEC Licence: The suspension of an IEC licence is enforced by the Directorate General of Foreign Trade. This decision is made by DGFT officials when they believe IEC holder’s actions are negatively impacting our trade relations with other countries.
2. Process for Decision:
- Surrender of IEC: The surrender of IEC is a straightforward application process initiated by the IEC holder. It does not involve a formal inquiry or review.
- Suspension of IEC Licence: The suspension of an IEC licence typically involves an inquiry and due process.
3. Outcomes:
- Surrender of IEC licence: After the surrender of IEC, the IEC holder voluntarily gives up the licence and is no longer eligible to engage in import and export activities.
- Suspension of IEC Licence: When an IEC licence is suspended, the holder is temporarily prohibited from participating in import and export transactions. Special permissions or actions may be required to lift the suspension and resume activities.
Final Thoughts
Surrender of IEC licence is a significant administrative process that allows businesses and individuals to voluntarily and formally terminate their engagement in international trade activities. It is a choice made by IEC holders when they decide to cease import and export operations, wind up a company, sell a business, or close a specific division. The process involves submitting required documents and an application through the Directorate General of Foreign Trade website. Once the IEC is surrendered, it becomes inoperative, and the issuing authority informs relevant authorities of this change.
The surrender of IEC offers a legally compliant and straightforward means for individuals and businesses to discontinue their international trade activities when it is no longer viable or necessary.
