Know the Complete Difference Between IEC Certification and Import License

Difference between IEC Certification and Import License
Japsanjam Kaur Wadhera
| Updated: Jan 09, 2021 | Category: IEC

The IEC Certification and Import License/Authorization are significantly different from each other as both of them serves difference purpose. The difference between IEC certification and Import license is based on the fact that where one is a unique number that permits the businesses to trade in import export activities while the other one is a notification that states the legal restrictions associated with such activities. This article will help you to know the complete difference between IEC Certification and Import License in India.

The Import Export Code (IEC) is a basic form of registration that ever business engaged in import export activity has to acquire before commencing the foreign trade business. The business deals cease to exist in import export activities without obtaining IEC. Whereas when a business wants to conduct an import export trade or import of certain articles, under both of these cases an Import license is required.

Understanding Import Export Code

The Import Export Code (IEC) is a license in a form of a unique number or code which is allotted by the regional office of the Director General of Foreign Trade (DGFT) upon the submission of the application and requisite fee. Every business who is engaged in the import export trade has to necessarily acquire this code. The Import Export Code is a PAN based registration. The validity of the code remains for a specific period of time or until it is cancelled or surrendered for any reason. It is one of the key differences between the Import license and Import Export Code. The features of IEC are discussed as follows: –

  1. The Import Export Code is a 10 digit code which is comprised on alpha-numeric.
  2. It is mandatory to obtain the Import Export Code for any business engaged in the import export activity.
  3. The Import Export Code is a PAN based registration.
  4. Not more than one IEC code can be obtained with one PAN number.
  5. The Import Export Code registration process has to be done online.
  6. If any cause arises then the clarification in regard to this has to be done in an offline mode.
  7. Without the digital signature, IEC registration cannot be done.
  8. Without obtaining Import Export Code, a business cannot get involved in import or export activity.
  9. The unique identification code is provided by the Director General of Foreign Trade (DGFT[1]).
  10. The Import Export Code remains valid unless it is cancelled or surrendered.
  11. The IEC code clears the transactions in the importer’s bank and also legalizes the shipping process.
  12. The Import Export Code allows the exporter’s bank to validate the payment coming from the export’s bank.
  13. The Import Export Code is used in shipping the documents such as a certificate of origin, bill of lading and the packing list.
  14. The Import Export Code (IEC) is required by the customs to clear shipment from ports.

Understanding Import License/Authorization

Where the matter concerning the ethics of the materials that are exported or imported is involved, the obtaining of Import License becomes mandatory. There are certain items that cannot be and should not be considered to either be export or import material, including human cargo. The Import license is applicable to limited grounds. The license to import or export is required to impose some restrictions to ensure that the business activity is conducted with the limits confined to law. The individuals have to obtain Import license in the following scenarios, as according to the Director General of Foreign Trade (DGFT):

  • If the restricted items are to be imported by an individual under the Indian Trade Clarification based on the Harmonized System of Coding ITS (HS) for the commercial purpose.
  • If the commodities are imported by an individual from the United States from the commercial purpose.

In either of these cases the import license from the authority is mandatory to obtain and a separate application in regard to this has to be filed by the applicant to serve the above mentioned purposes. It is important to note that the Non- IEC holder cannot fill these forms and IEC registration is required to fulfil these prerequisites.

Reasons for Existence of Principal Restrictions for Import License and IEC under the EXIM policy

The trading of goods is encountered to certain limitations enlisted in the Export Import (EXIM) Policy in order to promote the following objectives: –

  1. To protect the morals of the public.
  2. To protect the lives of the humans, animals and plants.
  3. IPR protection.
  4. To maintain the artistic, historic and archaeological value of national treasure.
  5. To conserve the natural resources.
  6. To discourage and limit the trafficking of war related items, weapons and illegal drugs.

The purpose of Import License is to ensure that the import activities are conducted within a legal paradigm. If any illegal activity is abounding or taking place, the Import License shall be ceased along with other drastic penalties and imprisonment.

Difference between IEC Certification and Import License

IEC Certification

Import License

IEC is a basic license for import export activity in India.

Import License is required in special cases or circumstances in order to conduct the import export business in a legal way.

An online form has to be filled by the applicant for IEC Certification.

An ANF-2M form has to be filled by the applicant that is available on the DGFT portal or manually.

Import Export Code (IEC) is applicable on all the activities related to import and export.

The Import License is applicable in two cases: –

1. To import the restricted items which are listed under the ITS (HS).

2. To import goods from the United States.

The filing and submission of IEC application is online completely.

The ANF-2M form is filed and submitted manually.

Conclusion

Import Export Code and Import License/Authorization are significantly different from each other in many ways. The difference between IEC Certification and Import License has been discussed above in this article. Where the Import License provides the legal framework for the businesses who are engaged in the import export activities, the IEC Certification is required to validate the import export trade.

Also, Read: All That You Need To Know: When IEC Code is Required?

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Japsanjam Kaur Wadhera

Japsanjam Kaur Wadhera is an Advocate and has completed her BA.LLB (Hons) and has experience of writing various research papers during her college time. Earlier she was working as an Associate Advocate in a reputed Law Firm. She has an extreme interest in writing legal content and her core area falls under legal enactments, tax and finance.

 

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