Issue/Modification in Importer Exporter Code - DGFT Clarifies
AS Para 2.14(b) of HBP (2015-20), "An application for modification may be made for change in details like name, address, constitution, ownership in Proprietorship firms, change in nature of the firm e.g. from proprietorship to partnership etc. Change in constitution however, does not include change in Directors of Public Limited Company."
It seems there is some problem in modification of IEC in cases where there is a change in the PAN. It is highlighted that with the change in the constitution of the firm/change in the nature of the firm such as from Partnership to Limited Liability Partnership etc., there is a change in the PAN number and the new PAN number needs to be incorporated in the existing IEC, replacing the PAN already registered against the current IEC.
Since each IEC is tagged to a particular PAN in the system, modification in PAN was not being entertained by the Regional Authorities - the prime consideration being how to transfer and seamlessly carry forward the liabilities of one firm, which merges into another or changes its nature and name.
To resolve the issue, matter was taken up with the Ministry of Corporate Affairs and they are of the view that:
1. conversion of a firm or an LLP into a company or
2. merger of a company into another company or
3. merger of two or more companies to form a new company or
4. demerger of a company to form a new company
does not extinguish the liability if any, of the Transferor Entity/Company and the liability of such Transferor Entity/Company would automatically vest in the Transferee Entity/Company, by operation of Law.
So, DGFT directs:
1. the RAs shall henceforth consider applications seeking modification in IEC, involving change in PAN, by ensuring that liabilities of the previous applicant/applicant firm are transferred to the new applicant/applicant firm whose PAN will be reflecting in the modified IEC.
2. RAs must also share the modified IEC, with the changed PAN incorporated in it, with all concerned authorities. (who is concerned?)
Power of Attorney Holder can sign: It is noticed that RAs have been rejecting applications digitally signed by Power of Attorney (instead of a Director) on the ground that power of attorney is not explicitly mentioned in the application format issued vide PN No. 58 dated 01.02.2016. DGFT clarifies that applications digitally signed by power of attorney holders/authorised signatories are to be entertained.
DGFT Trade Notice No. 6/2016., Dated: May 23, 2016