Can One Exporter Use Multiple AD Codes? Here’s What You Need to Know

When an exporter engages with export-import activities, it becomes subject to mandatory AD code registration. But what will be the condition when an exporter deals in multiple countries? Sometimes, the requirements of the number of AD codes depend on the business’s needs and the nations involved. On the other hand, the AD (Authorized Dealer) code is granted by those banks that deal as the authorized dealer under RBI regulations. Registration for the code gives the exporter legal authorization to ship goods from one country to another. Authorization through banks and customs authorities is standard practice with relevant trade compliance. Now, the question arises whether a single exporter can apply more than one AD Code? Let’s break down the page to know more in detail.

How is RBI Involved in Issuing the AD Code?

For the approval of the AD code, the Reserve Bank of India plays an instrumental role. However, it is crucial to note that the RBI doesn’t issue the ‘Authorized Dealer’ code directly. In place, it gives authorization to specific banks that act as the Authorized Dealers and issue codes to exporters. RBI’s authorized banks’ role is to approve the AD code, ensure compliance with regulations, and keep track of transaction recordings. In short, through the approval of the RBI, certain banks get access to deal in foreign exchange. On the other hand, the Reserve Bank of India (RBI) supervises authorized banks to ensure they follow the foreign exchange norms. 

What is the Role of Banks?

The following are the roles of banks for exporters:

• Banks are responsible for issuing the 14-digit authorized dealer code to businesses that deal in foreign exchange transactions.
• Before issuing the code, banks conduct verification sessions in which they ensure exporters’ details, including a valid Import-Export code (IEC).
• Banks serve as the intermediary between the exporters and customs authorities. By issuing code, the links are exported with authorization. 

Why Would an Exporter Use Multiple AD Codes?

Well, there is no doubt that we can use multiple codes. However, the requirements depend on the different events for a variety of reasons. Here is in more detail

1. Multiple Product Categories

The variety of products requires different stringent regulations. Understand it through an example:

• Controlled Products: Various goods require a separate export authorization. The goods like military equipment, chemicals, and sensitive technology items require special permission before export or a specific AD code. 
• Non-Controlled Products: Everyday use consumer goods don’t have the stringent export regulations. But still, goods such as clothes, electronics, or raw food items require the AD code.

2. Exports to Different Countries or Regions

Every country has its own set of requirements and laws. In this situation, the exporter might be required to apply for multiple AD codes. In case an exporter deals with the same goods in different regions, it must hold different AD codes. This can be understood as:

• Export to the EU: If the exporter is dealing in European countries, they might be subject to different, stringent laws. For these countries, you might need to apply for an EU-specific AD code. 
• Export to US: In a similar way, the U.S. government has set its own export/importing rules and requirements. For the goods shipments in the U.S., the exporter might require a separate AD code. 

3. Changes in Regulations

Export control regulations can change over time. For example:

With new requirements and other reasons, the export regulations change from time to time. 

In one case, the government introduced more stringent laws for goods control, which might be subject to changes in the AD code. If laws are imposed after receiving an AD code, the exporter is required to apply for a new AD code to align with the new guidelines. 

4. Different Types of Authorizations

For a specific goods export, the dealer required a special export license. For example, an exporter dealing with dual-use goods may require dual-use export authorization. This special authorization is separate from the commercial export authorization. Sometimes, a separate authorization becomes mandatory when an exporter deals with goods for research purposes. 

5. Exporting to Restricted Countries

Due to political, security, and human rights reasons, a few specific countries are listed as under international sanctions. An Indian exporter dealing in these restricted countries, such as North Korea, Iran, or others, might need a separate AD code with a special license.   

Consequences of Wrong AD Code Use

Using an incorrect AD code may create major problems for shipping and customs clearance. Let’s look at some of the consequences in more detail: 

• Shipment Blocked: Customs will stop shipments in ports and does not permit goods to go in any further without an AD code, and going into more detail, a wrong code can effectively halt a shipment from entering ports.
• Issues during Customs Clearance: Difficulty for Customs Clearance: It is clear that AD code registration is, in all cases, a prior step. If the customs department does not hold or clear the goods at the ports. 
• Face Challenges to Receive Funds: Export-supported incentives or credits will not be deposited directly into the exporter’s bank account.
• Break FEMA Compliance: Non-compliance with Foreign Exchange Management Act (FEMA) guidelines can lead to potential legal action. Exporters might be subject to hefty fines or other penalties.
• Challenging for Tracking: A wrong AD code can raise challenges for RBI to track the foreign exchange transaction activities. It has a deep impact on tracking the economic chain. 

Sum Up | Exporters’ Guide to Multiple AD Code Registration

In essence, using multiple AD bank codes for exporters is often considered common and crucial for businesses. Holding multiple codes becomes more crucial when an exporter deals in complex international trade. AD code, which contains 14-digit numbers, is mandatory and helpful to align with export control regulations. On the other hand, for a separate AD code, exporters are required to apply to each separate bank. But, you need to register the code only at one port; it will be accessible at all other customs ports. Meanwhile, through AD code bank account registration, the exporters can ensure seamless foreign transactions, avoid expenses, and maintain a positive image in front of authorities. Need help with smooth export code registration? Get in touch with LegalRaasta experts, who will guide you from the start to the end.

FAQs | AD Code Registration for Different Ports

1. Can you register my 2 AD codes on ICEGATE?

Ans. Yes, you can register multiple authorized dealer codes with a single IEC number. But note that different AD codes must have different bank accounts.

2. Can a single bank issue multiple AD codes?

Ans. No, a single bank cannot issue multiple authorized dealer codes. But exporters can apply to more than two AD codes in each separate bank. 

3. In how many days will my AD code be registered on ICEGATE?

Ans. The registration process on ICEGATE typically takes 1 to 3 working days. However, the days can increase due to various factors.

4. What does “bill of entry status” refer to?

Ans. During the export process, the ‘bill of entry’ is used. To show the right details to customs officials. It is used by the importers to import goods into a country.

5. What is the difference between a Bill of Export and a Bill of Entry?

Ans. The certificate of ‘Bill of Entry’ is filed by the importers with the customs department. Importers need to get goods clearance and pay the prescribed duties. Meanwhile, the ‘bill of export,’ which is also known as the shipping bill, is a document generated by exporters on ICEGATE. Exporters file it with customs for goods clearance to leave the country.