Authorised Economic Operator (AEO) Procedure & Benefits

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AEO CERTIFICATION AND BENEFITS OF AEO UNDER CUSTOMS

What is AEO (Authorized Economic Operator)?

AEO is a trade facilitation scheme for ease of doing business in light of international development, holder of this certificate is entitled for privilege, benefits, exemption and relaxation on account of import and export. This certificate is issued for particular period after that to be renewed.

This scheme is based on principle of sharing role and responsibility of customs with trade and industry and objective is to delink payment and clearance, to accept paperless declaration, increases efficiency, self-certification, earliest refund and drawback, request based examination/inspection etc.

ACP (accredited client program) and old AEO (authorized economic operator) is merged together and resulted into three certification namely AEO-T1, AEO-T2, AEO-T3, AEO-LO.

This three-tier certification is launched by Customs Circular No. 33/2016 dated 22th July, 2016 (in suppression of Circulars No. 42/2005 dated 24.11.2005- old ACP scheme and Circulars No. 28/2012-Customs dated 16.11.2012- old AEO programme).

AEO statusApplicabilityValidityTime limit for submission of application for renewal before lapse of validityAEO status
AEO-T1Granted only to an importer or to an exporter without physical verification of places/premises.3 Year30 daysAEO-T1
AEO-T2Granted only to an importer or to an exporter after physical verification of premises/places. 3 Year60 daysAEO-T2
AEO-T3Granted to (i) an importer or to an exporter who continuously enjoyed the status of AEO-T2 for a period of two years preceding the date of application or (ii) The importer/exporter holding AEO-T2 certificate, and its other business partners namely importers or exporters, Logistics service providers, Custodians/Terminal operators, Customs Brokers and Warehouse operators are holders of AEO-T2or AEO-LO certificate or any other equivalent AEO certificate granted by a foreign Customs.5Year90 daysAEO-T3
AEO-LOGranted to economic operators other than importers and exporters, (e.g. Logistics Providers, Custodians or Terminal Operators, Customs Brokers ,Warehouse Operators) after physical verification of premises/places. 5 Year90 daysAEO-LO

Treatment of existing AEOs and ACPs

Existing AEOs

•      Existing AEOs shall be granted either AEO- T2 or AEO-LO Certificate depending upon their category by the AEO Programme Manager within 15 days of issue of this circular.

•      They shall remain AEO-T2 or AEO-LO certificate holders till the validity period mentioned in their AEO certificate issued under Circular 28/2012 – Cus dated 16-11-2012. Thereafter, they will have to follow renewal procedure.

Existing ACPs

•        Existing ACP shall be PROVISIONALLY granted AEO- T1 Certificate by the AEO Programme Manager within 15 days of issue of this circular.

•        All such ACP clients shall have an opportunity to submit applications for REGULARISATION of AEO Certificates in terms of this circular within 90 days of issue of this circular. Who fail to submit application within 90 days shall be taken up for review.

•        They shall remain AEO-T1 certificate holders till the validity period mentioned in their ACP renewal /granting letter. Thereafter, they will have to follow renewal procedure as prescribed in this circular.

Who is entitled for AEO Certification?

Anyone involved in the international supply chain that undertakes Customs related activity in India can apply for AEO status irrespective of size of the business. These may include exporters, importers, logistic providers (e.g. carriers, airlines, freight forwarders, etc.), Custodians or Terminal Operators, Customs House Agents and Warehouse Owners. Others who may qualify include port operators, authorized couriers, stevedores. The list is not exhaustive.

AEO for SME Enterprises

Small and medium scale enterprises who has filed 25 documents i.e. either Bills of Entry or Shipping Bills during the last financial year is also entitled for AEO.

AEO is applicable to OLD Company or new company

The applicant should have business activities for at least three financial years preceding the date of application.

Who is not entitled for AEO certification

Businesses that are not engaged in Customs related work / activities will not be entitled to apply, in general, banks, insurance companies, consultants and the like categories of businesses will not be eligible for AEO status.

AEO is branch wise or entity wise

 

AEO certification is entity wise not branch/location/group wise. If a group of company have 5 companies then all company will have to apply separately.

AEO status of Customs Broker and AEO status of Importer/Exporter are Independent

AEO status can be granted to a Customs Broker, but this will not confer similar status on its client importers / exporters who will need to apply separately for that status.

AEO Is Applicable To OLD Company Or New Company

The applicant should have business activities for at least three financial years preceding the date of application in exceptional circumstances on physical verification of control and premises may be allowed to new entity.

Communication between AEO programme Manager and Importer/Exporter

All communication between AEO/AEO applicants and Programme Manager shall be through e-mail at  Aeo.India@icegate.gov.in.

Benefits of certificate under AEO scheme for all (AEO-T1, T2, T3)

BenefitsAEO-T1AEO-T2AEO-T3
Shorter cargo release timeYesYesYes
Direct Port Delivery (DPD) / or Direct Port Entry (DPEYesYesYes
ID to authorized personnelYesYesYes
Separate space earmarked in Custodian’s premises.YesYesYes
Bank Guarantee only to extent50%25%0.00%
Investigationsin six to nine monthsSix monthsSix months
Dispute resolutionwithin six months.sixsix
e-mail regarding arrival/ departure of the vesselYesYesYes
24/7 clearances on request at all sea ports and airportsYesYesYes
No Merchant Overtime Fee (MOT) charges need to be paidYesYesYes
Waiver of seal verification/scrutiny of documentsNoYesYes
out of charge/let export order without any scrutiny by the officersNoYesYes
Front line of treatment for container scanning.NoYesNo selection for scanning
Facility of deferred payment of dutyNoYesYes
Disbursal of drawback amountwithin 72 hours of EGM submissionfaster
Assessment and/or Examination on priorityYesYesYes
Faster completion of Special Valuation Branch (‘SVB’) proceedingsNoYes, in time bound mannerYes
Facility to paste MRP stickers in their premisesNoYesYes
Post clearance auditYesonsite PCA will be conducted once in three years only, no regular PCA.On Intelligence information
Access to their consolidated import/export data through ICEGATENoYesYes
Facility of submitting paperless declarations with no supporting documents in physical formNoYesYes
Client Relationship Manager” (CRM) at AC/DC level at all portNoYesYes

 

Benefits for AEO under Advance Authorization scheme of under Foreign Trade Policy

Logistic Service Providers

Waiver of bank Guarantee.

Facility of Execution of running bond.

Exemption from permission in case of transit of goods.

In case of international transshipped cargo (Foreign to Foreign), for the pre-sorted containers wherein Cargo does not require segregation, ramp to ramp or tail to tail transfer of cargo can be effected without Customs escorts.

Warehouse Operators

Faster approval for new warehouses within 7 days of submission of complete documents

Waiver of antecedent verification envisaged for grant of license for warehouse under circular 26/2016

Waiver of solvency certificate requirement under circular 24/2016

Waiver of security for obtaining extension in warehousing period under circular 21/2016

Waiver of security required for warehousing of sensitive goods under circular 21/2016

 

 

What Is Deferred Duty Payment Under Customs (Delinking duty payment and Customs clearance)

 

In terms of customs Notification No. 135/2016-Customs, Importers certified under Authorized Economic Operator programme as AEO (Tier-Two) and AEO (Tier-Three) are entitled for payment of duty under deferred payment scheme, means option of deferred payment is extended only to AEO-T2 and AEO-T3 certificate holder.

 

Date of bill of entryDuty shall be paid
1st day to 15th day of any month.By the 16th day of that month
16th day till the last day of any month except marchBy the 1st day of the following month.
16th day till the 31st day of MarchBy the 31st March.

Notification No. 134/2016-Customs (N.T.) dated 2nd November, 2016 read with Circular No. 52/2016

The eligible importer who intends to make deferred payment shall indicate the same using flag “D” in the Payment Method column of Bill of Entry filed.

Application for an AEO certificate

 

An applicant for AEO-T1, AEO- T2, AEO-T3 and AEO-LO, should submit the application. The application form contains ten annexures. However, an applicant is required to fill-in and submit only those annexures which may be applicable to it, as mentioned below :

Sl. NoAnnexureSubjectApplication for grant of
AEO- T1AEO- T2AEO- T3AEO- LO
1Annexure-AApplication FormYESYESYESYES
2Annexure-BSecurity PlanNOYESYESYES>
3Annexure-CProcess MapYESYES

YES

YES
4Annexure-DSite PlanYESYESYESYES
Annexure-ESelf-Assessment Form

5

Annexure- E.1General ComplianceYESYESYESYES
6Annexure- E.2Legal ComplianceYESYESYESYES
7Annexure- E.3Managing commercial and (where appropriate) transport recordsYESYESYESYES
8Annexure- E.4Financial SolvencyYESYESYESYES
9Annexure- E.5Safety and SecurityNOYESYESYES
10Annexure-FBusiness Partner DetailsNONOYESNO

Application Form: (applicable for grant of AEO-T1, AEO-T2, AEO-T3 and AEO-LO)

 

Annexure-A:

APPLICATION FORM

1.                Name/Address of all location/site of applicant.

2.                Name/Designation/Email/Mobile/Fax/Phone of central point of contact person.

3.                PAN of the applicant.

4.                Major items /Country of Import/Export with Tariff Code.

5.                No. of BE/SB field during the Previous FY.

6.                               Copy of MSME certificate (if any)

7.                               Board resolution for authorized signatory.

Annexure – B

SECURITY PLAN

1.       Procedural security.

2.       Document security.

3.       Physical security.

4.       Access controls.

5.       Personnel security.

6.       Training and skill up gradation.

7.       Compliance with other Government security related requirements, if any.

Annexure – C

PROCESS MAP

Process map for flow of goods/documentation/ information from receipt of order to the point of export/delivery/receipt of the product describing all the activities/ operations and role of the applicant and other business partners (e.g. CHA, Logistics provider etc.)
Annexure – D

SITE PLAN

Site plan with respect to all the sites of the entity describing (External perimeter/all access point/Lighting/Office/storage/CCTV/Container storage/Parking etc.)

 

Self-Assessment Form (Annexure-E) applicable for grant of AEO-T2, AEO-T3 and AEO-LO)
Checklist

Annexure- E.1

General Compliance

1.       Copy of AEO/ACP if any.

2.       Copy of all statutory registration(e.g. GST/IEC/Factory License/PAN)

3.       Certificate of incorporation (in case of company/LLP)/Partnership agreement

4.       Detail of Director/Company Secretory/Partner.(Name/Father/PAN/DIN/Mobile/address)

5.       Details of Place/Location where goods are handled (e.g. loading/storage)(address/responsible person/GSTN/Phone).

6.       Cross Cheque/Bank statement.

7.          Details of minimum 25 Bills of entry or shipping bill for preceding

8.          Details of conviction (if any)

Annexure-E.2

Legal Compliance

1.       Detail of infringement of Customs Laws(if any)

2.       Detail of SCN for removal of Excisable Goods(Fraud/Forgery/Clandestine removal) for 3 FY.

3.       Detail of SCN of Service Tax collected from customers but not deposited to the Government

4.       Detail of prosecution launched (if any)

5.       Disputed duty/Disputed Drawback/Total Duty Paid/Total Drawback claimed for 3 FY.

6.       Notes on Internal control to identify and disclose any irregularities or errors to the Customs authorities and to take remedial action.(SOPS on Internal Control)

Self-Assessment Form (Annexure-E) applicable for grant of AEO-T2, AEO-T3 and AEO-LO)

 

Annexure E.3 Managing commercial and (where appropriate) transport records1.     Snap shot of record room where documentary file is stored.

2.       Organizational chart (if any)

3.       SOPs of person handling license/authorization/ Data recovery policy/ Training to employee for change in customs laws/Cargo handling/ IT security policy.

Annexure E.4

Financial Solvency

1.     Audited Balance sheet for 3 FY.

2.     Compliance certificate for filling of annual account with register of company for 3 FY.

3.       Solvency certificate issued by the Statutory Auditor in case of AEO- T3/LO otherwise from  Chartered Accountant.

4.       Declaration of solvency.

Annexure E.5

Safety and Security

1.     Security policy and procedure manual to preserve the integrity of the cargo.

2.     Procedures and manual on seals to be controlled and affixed to cargo and transport conveyances.

3.     Notes on Documentation on clearing of cargo.

4.     Premises Security.

5.     Cargo Security:

6.     Conveyance Security

7.     Personnel security:

8.    Business Partner Security

9.    Security Training and Threat Awareness

Annexure F

Business Partners Details

(applicable for grant of AEO-T3 only)

Copy of AEO certificate of all business partner (e.g Supplier/CHA/Logistics etc.)

Legal Compliance

•      There should be:

No show cause notice issued to applicant during last three financial years involving fraud, forgery, outright smuggling, clandestine removal of excisable goods OR cases where Service Tax has been collected from customers but not deposited to the Government. However if issued detail shall be furnished. Show Cause Notice issued involves only technical issues like classification, valuation etc., they are entitled to get benefit of AEO.

–  No case wherein prosecution has been launched/completed against the applicant or its senior management.

 

–  Ratio of disputed duty during the last three financial years to the total duty paid during the said period is not more than ten percent.

 

–  Ratio of disputed drawback during the last three financial years to the total drawback claimed during the said period is not more than ten percent.

Managing commercial and (where appropriate) transport records:

 

•      The applicant should have a satisfactory

–        System of managing commercial, transport records,

–        Procedures for verifying the accuracy of Customs declarations,

–        Aware of the need to inform the Customs authorities whenever compliance difficulties are discovered.

–        Administrative set up which corresponds to the type and size of business

Financial solvency

 

The applicants must be financially solvent during the three financial years preceding the date of application and submit an undertaking regarding its solvency and a Solvency Certificate issued by the independent Chartered Accountants or Statutory Auditor of the applicant for AEO-T1 and AEOT-T2, but for AETO-T3 and AEO-LO only certificate from Statutory Auditor of the applicant.

To whom application to be made for certification and renewal

• The application should be sent directly to the respective jurisdictional Custom Chief Commissioner’s office, in case of any doubt with a copy to the AEO Programme Manager, Directorate of International Customs.

• The Commissioner, Directorate of International Customs, 10th Floor, Tower II, Jeevan Bharti Building, Connaught Place, New Delhi – 110001 will be the AEO Programme Manager.
• “AEO officer at New Customs House, Near IGI Airport Delhi” are as under:

   AEO Programme Team (New Customs House, Delhi)

 

Mr. Anurag Sehgal

Joint Commissioner

Ms. Komila Punia

DC-Air Cargo(Import)

Mr. Radhe Tallo

AC-General

AEO Cell- HeadCRMCRM

Disclaimer: All reasonable care has been taken in preparing this write up. We accept no responsibility for any error it may contain, whether caused by negligence, or otherwise or for any loss, however caused or sustained by the person relying on it. This document is not an offer, invitation or solicitation of any kind and is meant for reference purpose only.

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