The increase of competition in the market has made everyone to look for different ways to grow their business beyond the domestic limit. For doing business globally it is obligatory to conform to several laws and procedures and it is necessary to get different registration and license. The IEC registration is one of the important prerequisite when the business involves importing or exporting from India. It is also known as Importer- Exporter Code where the business dealer gets the IEC (Import Export Code) license. Similarly, if the dealer wishes to discontinue with the business then he can carry out the surrender of IEC license to the issuing authority. In this article, we shall deal in detail on surrender of IEC License.
Why is IEC license required?
IEC (Import Export Code) license is obligatory for anyone planning to start their import or export business worldwide. It is a license issued by the DGFT (Director General of Foreign Trade) on registration. IEC license is a 10-digit code with a validity of lifetime for dealing with the business during import or export of goods.
This IEC license acts as a precondition for Importers and they are not allowed to proceed without this code. Likewise, even the exporters are not allowed to take any benefit of export from DGFT, Export Promotion Council or customs if they are not having the IEC license. Few of the situations where IEC license is required are given below:
- IEC license is required by the customs authorities whenever an importer has to clear his shipments from the customs.
- The bank demands for the IEC code whenever an importer sends money abroad through banks on his business dealing.
- The customs port asks for IEC code when an exporter has to send his shipments.
- IEC code is required by the banks whenever an exporter gets money in any foreign currency directly into his bank account.
What is the Benefit of IEC license?
There are many benefits of obtaining the IEC registration. Few of the benefits of IEC license are:
International Market Reach
On getting the IEC registration and availing the IEC license, the business dealers can easily expand their business globally and can have international customers.
Primary document to deal globally
IEC acts as a primary document to deal with import and export of goods globally.
The registration process for IEC is very easy and it is done online with the help of government recognized websites.
The IEC registration is a permanent registration and it has a validity of lifetime. The validity of the license continues till the existence of the business.
PAN Based Registration
The IEC registration is done based on the permanent account number of the given business enterprise.
Simple Documents Required
The Registration of IEC requires simple documents like Pan card, registered office address, applicant’s address proof, branch office address.
The benefit that the IEC holder gets is that he is not burdened for fulfilling any particular compliance obligation like return filing or annual filing.
Restricts the dealing in illegal Goods
The most important benefit that follows after getting an IEC registration is that it restricts the dealing of illegal goods as because the registration requires accurate and authentic information. The department issues IEC registration only on getting complete authentic information which ensures that the dealing is conforming to the laws and are legal and valid.
No Annual Maintenance
After the IEC is issued once, it remains valid for a lifetime hence there is no further charges required for annual maintenance.
Benefits of Scheme
Both the importers and exporters can avail these huge benefits after getting IEC registration. The business organization that is registered with IEC can utilize the benefits in the form of subsidies or otherwise as acknowledged by the DGFT, customs Export promotion council or such other authorities. The business entities can also claim the reimbursement of paid taxes while exporting the goods.
After the IEC code is generated once, it becomes legal to export or import any product. Hence, any such transaction done as cross-border business gets easy and hassle free making it legally valid for all such further transactions.
What is the meaning of Surrender of IEC?
After fulfilling all the requirements of IEC registration and starting with the business, there can be various situations in which the owner would like to discontinue with the business transaction of import and export globally. Due to prevailing circumstances the business dealer would like to close the business or would decide on winding up the company or it may happen that the a particular division of such business needs to be closed due to various factors. In such cases, the dealer decides to go on with the surrender of IEC License. When the IEC holder of his own accord revokes his rights to use the IEC for whatsoever reason it is said to be the surrender of IEC.
Hence, it is always advisable to the business organizations to go for surrender of IEC when they are no more using the license or when they intend to discontinue with the use of same.
What are the reasons behind the surrender of IEC?
There can be various reasons behind the surrender of IEC but few of the specific reasons are as given below:
- When the business dealer decides to close down his business.
- When the IEC holder decides to go for winding up his Company.
- When the IEC holder decides to sell the business of Import and Export Code.
- When the business dealer decides to close the division of the Import export in the business.
It is important to mention that the IEC is a ten-digit code given on the basis of an individual PAN or on a company PAN. Hence, the business owner should not surrender the existing IEC number which is not linked with the PAN and apply for a new one. This is due to the reason that the Importer or Exporter will not be able to apply again for the IEC license with the same PAN even if he goes for cancellation or surrender of IEC.
What is the method for surrender of IEC online?
Whenever any IEC holder decides to surrender his IEC License, he can do so by filing an online request for surrender of IEC on the official website of DGFT. The business dealer can submit the documents that are required for the surrender of IEC together with the application for registration of IEC. After the application gets submitted, it shall be considered that the surrender of IEC online has been completed and it shall be revoked for all the future transactions.
The process for surrender of IEC is as given below:
The license holder will have to log in to the official website of DGFT and then from the homepage he shall select the tab ‘Services’ to proceed further.
From the given drop-down menu that will appear on the services, ‘IEC Profile Management’ shall be selected. If the user is not logged in, he can wish to directly reach this page using this link – https://www.dgft.gov.in/CP/?opt=iec-profile-management
In this page, there will be many options like the processes and prerequisites involved with the IEC. After scrolling down the page there, the user shall find the option ‘Surrender of IEC’.
Further on this page, the website shall ask over for the user’s registered email address and the password required to log in.
In case the user does not already have his existing registered email id, he should create his new profile at this stage by filling all the required details like mobile number, contact details, district, city, and the state.
After completing the process of logging in, the user is required to check the relevant business details like the PAN number, company name, etc., and then he shall click on ‘surrender’ for the surrender of IEC.
Thus, the surrender of IEC shall successfully suspend the IEC license and shall revoke it for all future transactions.
What are the documents required for the Surrender of IEC?
The documents that is required for the surrender of IEC is given as below:
- The registered email address and the given password.
- The name of the Company.
- The detailed location and address of the given business.
- The PAN Card of the IEC Holder.
- The given IEC License Number.
- The original IEC certificate shall be enclosed.
- The Covering letter that is addressed to the Additional Director General of Foreign Trade shall be enclosed.
It is important to note that once the surrender of IEC is done, the issuing authority shall inform all the respective departments such as the RBI, the Customs or Licensing authorities or other such concerned authorities regarding the surrender of IEC number and that it has become inoperative.
When can the IEC be cancelled?
According to the DGFT framed rules, only one IEC shall be issued against a single PAN number. Any business owner can have only one IEC number, and in case if he is having more than one IEC or more than one IEC is allotted to the proprietor, the same shall be surrendered to the regional office for getting it cancelled. If the business dealer does not comply with the same then the department can impose penalties and direct for cancellation of the code.
What is the difference between surrender of IEC and suspension of IEC License?
The difference between the surrender of IEC and suspension of IEC license is as follows:
- In case of suspension of the license, it is the Directorate General Foreign Trade who enforces it. In case of surrender of IEC, it is a voluntary application for surrender by the business dealer.
- The suspension of IEC can be initiated by the officials of the DGFT in case they think that it is hampering the trade relations of India with other countries. The holder is given an opportunity to represent his case before the direction of suspension is given in such case.
In case of surrender of IEC, it is the voluntary decision of the IEC holder to give up the license due to various reasons like closure of business etc.
- After the cancellation or suspension of IEC code, the business dealer shall not be allowed to deal with the importation or exportation of any goods except with a special license.
In case of surrender of IEC license, after the license holder surrenders the license he shall not be eligible to deal with the business any further.
IEC license is one essential requirement for all the business dealers planning to start their business for importing and exporting the goods internationally. Therefore, as it is important to get the registration done before starting with the transaction globally it is equally important to follow the procedure when the business dealer feels that he is done with such business. Hence, it becomes imperative on the part of the business dealer to decide on surrender of IEC license when he feels that he no longer requires the use of the IEC license.
Thus, the business dealers has the option to go for voluntarily surrender of IEC by following the due process of law.
Read our article:What is the IEC Registration Process in India?