The IEC, Licences and Quantitative Restrictions

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No person may import or export without an Importer-exporter Code Number, and what he may import or export is governed by licences and, where a surge of imports injures domestic industry, by quantitative restrictions. Section 7 requires the code; section 8 allows it to be suspended or cancelled; section 9 governs licences, certificates and scrips; section 9A is the safeguard power to impose quantitative restrictions; section 10 gives powers of search and seizure; and section 19 is the rule-making power under which the Foreign Trade (Regulation) Rules 1993 are made.

Section 7: the Importer-exporter Code Number

No person shall make any import or export except under an Importer-exporter Code Number granted by the Director General or an officer authorised by him, in accordance with the procedure specified by the Director General. A proviso confines the requirement, in the case of services or technology, to a provider who is taking benefits under the foreign trade policy or dealing with specified services or specified technologies.

The code is the gateway to the whole system. It is a single registration which identifies a trader to the Directorate General of Foreign Trade, to customs and to the banks; a customs declaration cannot be filed without it, and an authorised dealer will not remit against an import without it.

In practice the code is now the trader's Permanent Account Number. The Directorate moved to a PAN-based code so that one entity has one code, and the code is issued electronically on the Directorate's portal. The requirement to keep it current matters: an Importer-exporter Code Number must be updated electronically every year, even where there is no change, and a code not updated within the period specified is de-activated until it is updated.

Note the negative form of the section, because it explains the enforcement. Section 7 does not say a person may obtain a code; it says no person shall make any import or export except under one. An import made without a valid code is therefore a contravention of the Act itself under section 11(1), independently of any licensing question.

Section 8: suspension and cancellation of the code

Section 8(1) sets out three gateways. The Director General or an officer authorised by him may act where:

(a) any person has contravened any provision of this Act, or any rules or Orders made under it, or the foreign trade policy, or any other law for the time being in force relating to central excise or customs or foreign exchange, or has committed any other economic offence under any other law specified by the Central Government by notification;

(b) the Director General or an authorised officer has reason to believe that any person has made an export or import in a manner prejudicial to the trade relations of India with any foreign country, or to the interests of other persons engaged in imports or exports, or has brought disrepute to the credit or the goods of, or services or technology provided from, the country; or