Procedure for Surrender of Additional Importer Exporter Code in Amalgamation and Merger Cases

[Ref: ZPRU Circular No. 06/AM-12 dated 16th November, 2011]

Sub: Surrender of IEC (Importer Exporter Code) in case of amalgamation/merger/acquisition/takeover of the IEC holder firm/company by another firm/company – procedure to be followed.

On account of amalgamation/merger/acquisition/takeover of IEC holding firm/company by another firm/company, the IEC holder firm/company is required to surrender IEC.

In such cases, the assets and liabilities of the IEC holder firm/company is invariably taken over by the new entity. The pending export obligation in respect of various licences/authorisations issued to the acquired firm/entity constitutes “liability” and unless it is transferred in the name of the new entity and properly accounted for, the export obligation in respect of IEC holder firm/company subsequent to surrender of IEC will go out of the monitoring loop causing loss of revenue to the government.

It is, therefore, desirable that in order to safeguard the revenue interest of the Government, the following drills are required to be meticulously followed at the time of surrender of IEC by a company/firm getting amalgamated/merged/acquired by a new entity:

1. List of licences/authorisations issued to the IEC holder firm/company should be checked from the system/records.

2. The status of pending export obligation in respect of each such licences/authorisations issued to the IEC holder should also be checked.

3. Wherever export obligation is found to be outstanding against licences/authorisations issued to the IEC holder or IEC is found to be in the Denied Entity List (DEL) or EO monitoring actions like demand notices/refusal orders/ECA show cause notices are found to have been initiated against the IEC holder or IEC is found to be blacklisted, following actions must be taken before surrender of IEC:

(a) for each unredeemed licence/authorisation issued to the IEC holder (i.e. acquired firm/company) it should be checked whether any demand notice/refusal order or ECA action has been initiated.

(b) Thereafter, these actions need to be withdrawn stating the reason that “licence/authorisation is transferred to new IEC XXXXXXXXXX”.

(c) Licences/authorisations should be amended using amendment menu by changing the old IEC with the new IEC of the firm/company acquiring the existing IEC holder.

(d) EOM actions like demand notice/refusal order/ECA action should then be recorded against the new IEC of the acquiring firm/company.

(e) Then the EOM details in respect of the new IEC including BL/DL status should be checked for the new IEC to ensure that the data has been fully transferred to IEC of the acquiring firm/company.

(f) In case no monitoring action (viz. demand notice/refusal order/show cause notice) has been initiated in respect of IEC of acquired entity, licence(s)/authorisation(s) with outstanding export obligation should be directly amended by substituting the existing IEC with the new IEC.

Only when this drill is completed and liability is completely transferred to the new entity, steps towards surrender of IEC should be taken.

This issues with the approval of the competent authority.