Procedure for transfer of Advance Authorization/EPCG Authorization
Procedure for Transfer of Advance Authorization/EPCG Authorization
The Directorate General of Foreign Trade has notified the online Procedure for transfer of Advance Authorization/EPCG Authorization in case of amalgamation/de-merger/acquisition. The Trade Notice 14/2021-22 dated 04.08.2021 announced that in case of amalgamation, de-merger, investment, or insolvency, the export obligation or contingent liability is required to be transferred from the earlier entity to the new entity as required under the related laws and rules on the amalgamation, de-merger, acquisition and insolvency process. The current article briefs the Procedure for Advance Authorization/EPCG Authorization transfer.
Modification of IEC
It is essential to update every data of a company. That is, branch details, activity statuses like manufacture or merchant, address change, change in PAN card number, a director change, deletion or addition of a partner, and transfer of Advance Authorization/EPCG Authorization in the Import Export Code.
If not done, there will be consequences during the import-export process due to the mismatched details in DGFT and customs.
When an IEC holder seeks modification in its IEC and which involves a shift in its jurisdictional RA, a request to that effect will have to be made to RA concerned under whose jurisdiction the applicant exists
Based on this request, the RA (Custodian of the IEC File till now) will process such requests and amend IEC, if found appropriate, under intimation to the RA under whose jurisdiction the applicant wants a transfer. The new RA shall allow the person in its new address to carry out necessary functions and apply for eligible benefits as per Foreign Trade Policy 2015 – 2020.
The Advance Authorization is a scheme where the import of inputs will be allowed to be made duty-free if they are physically incorporated into a product that is going to be exported. An export obligation is usually set as a condition for issuing Advance Authorization.
EPCG Authorization – Transfer of Advance Authorization/EPCG Authorization
Export Promotion Capital Goods Scheme enables an export-oriented importer to import capital goods at zero rates of customs duty. However, the scheme is subject to an export value equivalent to 6 times of duty saved on the importation of such capital goods within six years from the date of issuance of the authorization.
Documents Required for transfer of Advance Authorization/EPCG Authorization is as follows:
- PAN card of the individual or company
- current/savings account cancellation cheque
- Passport size photo
- ANF – 2A application form
- Aadhar card of all the partners and directors
- Digital signature
Online Procedure for transfer of Advance Authorization/EPCG Authorization
Applicants need to request for amalgamation/de-merger/ acquisition of IEC through the official webpage of DGFT. From the home page click the Services option and then select IEC Profile Management.
The link will redirect to the new page, click on the ‘Request for Merger/De-merger’.
- After approval of the given IEC request, the firm needs to apply for amendment of each Advance Authorization/EPCG Authorization separately.
- The request may be submitted by visiting the DGFT website. From the homepage click on the service and then select AA (or EPCG). The applicant needs to select the Transfer of Authorization from the new page.
- The request for the authorization amendment will be auto-submitted to the concerned jurisdictional RA from 0.2 the Authorization was issued.
- On approval of the request the given authorization will be amended and updated details will be transmitted electronically to Customs
- For EPCG authorizations, for the Annual Average Export Obligation (AEO) mentioned on EPCG authorizations, Company A (EPCG authorization holder merging into Company B) the AEO of new entity = AEO of Company A + AEO of company B based on the date of merge
- For AEO of Company B, the firm would be required to submit Chartered Accountant Certificate (CAC) to the concerned RA as part of the online amendment request.
- S/Bs and B/Es under the earlier IEC would be available under Bill’s Repository of the new IEC during the authorization closure process.
Surrender IEC in case of amalgamation, merger, or acquisition
On account of amalgamation, merger, or acquisition of an IEC holding firm by another firm, the IEC holder firm is required to surrender IEC.
In such cases, the assets and liabilities of the IEC holder firm are invariably taken over by the new entity. 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:
- The list of licenses/authorizations issued to the IEC holder firm/company should be checked from the system/records.
- The status of pending export obligation in respect of each such license/authorization issued to the IEC holder should also be checked. Following actions must be taken before surrendering of IEC:
- For each unredeemed license/authorization issued to the IEC holder (i.e. acquired firm/company) should be checked whether any demand notice/refusal order or ECA action has been initiated
- Authorizations should be amended using the amendment menu by changing the old IEC with the new IEC of the firm/company acquiring the existing IEC holder.
- EOM actions like demand notice/refusal order/ECA action should then be recorded against the new IEC of the acquiring firm/company.
- 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 the IEC of the acquiring firm.
- In case no monitoring action (viz. demand notice/refusal order/show cause notice) has been initiated in respect of IEC of the acquired entity, authorization with outstanding export obligation should be directly amended by substituting the existing IEC with the new IEC.