Continuation to the yesterday’s post, today we’ll look into the next part of the
AD Code series…
Why does an exporter need an AD Code ?
An AD Code is absolutely essential to the export process for the following
reasons:
• A Shipping Bill is one of three mandatory documents required for export
customs clearance. And without an AD Code registration, you cannot generate
a Shipping Bill on Icegate, Indian Customs’ electronic data interchange
platform.
• An AD Code registration with customs ensures that any government
benefits you avail of – duty rebates and exemptions, GST (Goods and Services
Tax) refunds, etc – are credited directly to your current account.
Example of AD Code
For example, if an exporter wishes to export your consignment from Nhava
Sheva Port, Maharashtra, then the exporter would have to register the AD
code at Nhava Sheva Custom port.
Without an AD Code Registration, the Electronic Data Interchange (EDI)
system, which is a part of the ICEGATE Portal (Customs National Trade Portal)
will not allow the shipping bill number to be generated. The shipping
bill number is mandatory for customs clearance, and an AD Code is required to
receive government benefits directly into your business’s current account.
Importance of AD Code in Exports
A registered AD Code for export is essential for customs clearance. If you do
not have one, you will not be able to generate your shipping bill number,
which is compulsory for customs clearance. The EDI system of
the IceGate portal will not allow the generation of the shipping bill in the
absence of a registered AD Code.
If you are eligible for government benefits, an AD Code registration with the
customs enables you to get the same directly credited into your current
account. Therefore, you should register for the AD Code at your customs
port(s) once you obtain your Import Export Code.
Importance of AD Code for Import & Export
Registration of the AD code is required at each port where customs clear your
products. As part of the customs clearance process, your Customs House Agent
(CHA) will request the AD Code for that specific port.
It is mandatory for an exporter to register each port or airport from which
products will be shipped separately. The purpose of this code is to monitor
foreign exchange transactions involving the exporter’s bank account.
To verify the legitimacy of transactions. In accordance with the format
prescribed by the Director-General of Foreign Trade (DGFT), the code must be
printed on the letterhead of the Bank.
Is AD Code registration essential?
One of three documents required by customs for the clearance of exports is a
Shipping Bill. A shipping bill contains comprehensive information about the
items being shipped, the port of export, and the destination country.
Customs officers approve exports based on Shipping Bills. Unless you have
registered your AD Code with Icegate (Indian Customs’ electronic data
interchange platform), you cannot create a Shipping Bill.
Furthermore, registering your AD Code with customs may be eligible for
government benefits, such as duty exemptions and rebates. Thus, after
acquiring your Import Export Code, you must get AD Code Registration.
An inland container depot (ICD) needs to register its AD code with the
associated port if the shipment is being sent there.
Moreover, an AD Code registration never expires. Nonetheless, if the exporter
ships from multiple ports in the same or different states, he must register the
AD code for each port. Each port will have a different AD code. Recently, there
have been updated ruling on this.
The Importance of AD Code in Import-Export Business
The AD Code plays a significant role in the import-export business, offering
several benefits that contribute to a streamlined trade process and a stable
economy. Here are some key reasons highlighting the importance of AD code:
Tracking Foreign Currency Trades
AD code registration allows the government to monitor and track foreign
currency trades. This helps ensure transparency and stability in the economy
by enabling authorities to record foreign exchange transactions conducted by
importers and exporters.
Mandatory for Customs Clearance
Generating a shipping bill is crucial for customs clearance during import-
export operations. Without a registered AD code, traders will face obstacles in
generating the shipping bill. AD code is a unique identifier that links the
trader’s details with customs authorities and facilitates smooth customs
clearance procedures.
Direct Deposit of Government Benefits
AD code registration offers the advantage of having government benefits,
incentives, or subsidies directly deposited into the exporter’s bank account.
This streamlined process eliminates the need for manual paperwork and
administrative procedures, ensuring quick access to financial support to which
exporters may be entitled.
Simplifying Import-Export Processes
Understanding and obtaining an AD code is crucial for startups and businesses
entering the import-export arena. By generating an AD code, dealers can enjoy
a hassle-free import-export process, as it is a standardized identification for
engaging in foreign trade activities. Additionally, AD code registration helps the
government maintain a comprehensive record of dealers involved in
international trade, contributing to effective regulation and oversight.
In summary, the AD code is paramount in the import-export business. It
enables the government to track foreign currency transactions, ensures
compliance with customs requirements for customs clearance, facilitates direct
deposit of government benefits, and simplifies import-export processes for
traders. By familiarizing themselves with the AD code and its functionalities,
importers and exporters can optimize their trade operations and contribute to
a well-regulated and thriving international trade environment.