Upgradation from AEO-T2 to AEO-T3 – Eligibility, Conditions & Clarification

Summary: The Authorised Economic Operator Tier 3 (AEO-T3) certificate is exclusively available to importers and exporters. To qualify, an applicant must have maintained AEO-T2 status continuously for a minimum of two years without any suspension or revocation. Alternatively, an applicant holding an AEO-T2 certificate can also qualify if all of its business partners—including importers, exporters, logistics providers, and customs brokers—are also AEO-certified (T2 or LO). The application process requires submitting Annexure-F, detailing the AEO status of these business partners. Unlike AEO-T2, AEO-T3 eligibility does not require a review of legal compliance under all paragraphs (i.e. Para 3.2, which is for Legal compliance, is not mandatory to get AEO-T3 certificate). The certificate, valid for five years, offers significant benefits, including the highest level of facilitation, reduced physical verification and scanning, and a faster refund/rebate process.

Upgradation from AEO-T2 to AEO-T3 to an importer/exporter

Eligibility for AEO-T3  [Para 1.2.3 of circular No. 33/2016-Customs]

 This AEO-T3 certificate available only to an importer/exporter or both

• Applicant continuously enjoyed the status of AEO-T2 for at-least a period of two years preceding the date of application for grant of AEO-T3 status;

(continuously enjoyed mean there should not be any suspension or revocation or disruption of AEO-T2 facility for at-least a period of two years preceding the date of application for grant of AEO-T3, in this regard, reports shall be submitted by the office of the CRM that is AEO Cell to Zonal AEO programme manager and National AEO programme Manager)

or

(c ) Applicant must be an AEO-T2 certificate holder and its other business partners are holders of AEO-T2 or AEO-LO certificate.

(Other business partners may importers or exporters, Logistics service providers, Custodians/Terminal operators, Customs Brokers and Warehouse operators from whom applicant have dealing in relation to imports or exports)

Example

• applicant is procuring the goods on high sea sale then seller shall be AEO certified.
• Applicant is storing goods in warehouse prior to import or exportsh then warehouse operator shall be AEO certified.
• CHA of applicant shall be AEO certified.

In this regard Annexure-F shall be submitted by the applicant at the time of application in following formats;

BUSINESS PARTNERS DETAILS [ANNEXURE F]

Show cause notice and AEO-T3 application

Para 1.2.2 of circular read with Para 1.2.3 of circular it appears that

• eligibility for AEO-T2 is specified in Para 3.1, 3.2, 3.3, 3.4 and 3.5 but for aeo-T3 eligibility is that application is AEO-T2 holder continuously for last two years or applicant is AEO-T2 holder and all other business partners is also AEO certified.
• Hence compliance of para 3.3 does not appear mandatory for grant of AEO-T3.

Para 3.2 of circular is for Legal Compliance:

There should be no show cause notice issued to them 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.

It is also noted that maximum company have show cause notice under section 74 of the CGST and Section 28(4) of the customs Act 1962 in ordinary course of business alleging the charge of Fraud, Suppression, Misstatements etc. Directorate of international customs issuing authority of AEO certificate and being facilitator is excepted to clarify on the fact of eligibility where there is show cause notice under section 74 or section 28(4) of the Customs Act. It is also notable that show cause notice is only allegation but not proof of fraud in maximum case it is dropped or quashed at appellate forum.

Time Limit for issuance of certificates- Para 4.4.8 of circular No. 33/2016-Customs

In case an application for grant of AEO-T3 status is submitted by

• a holder of AEO-T2 status, who has been continuously enjoying the AEO-T2 status for a period of two years or more, AEO-T3 certificate shall be issued within 30 days of submission of the application without any physical verification.

Physical verification for grant of AEO-T3

• No Physical verification for grant of AEO-T3 if applicant is a holder of AEO-T2 status, who has been continuously enjoying the AEO-T2 status for a period of two years or more, AEO-T3 certificate shall be issued within 30 days of submission of the application without any physical verification.
• If applicant is a holder of AEO-T2 status, who has not been continuously enjoying the AEO-T2 status for a period of two years but all the business partners is AEO certificates holders’ physical verification will be done only of the INFORMATION AND DOCUMENTS SUBMITTED IN ANNEXURE-F (that is no physical verification of Annexure A to Annexure E5).

In case of any significant changes in the BUSINESS OR THE PROCESSES since the previous/last physical verification by an AEO Programme Team at the time of grant of AEO-T2 then, the applicant may be subjected to physical verification as may be deemed necessary by the AEO Programme Manage.

In case NO significant changes in the BUSINESS OR THE PROCESSES applicant shall submit an affidavit cum undertaking that there is no significant changes in the BUSINESS OR THE PROCESSES then the AEO Programme Team shall exempt the requirement of physical verification and will issue AEO-T3 without having physical verification.

Validity of AEO-T3 Certificate: five years from the date of issuance Benefits associated with AEO Tier T3

• All facilities of Tier 2 PLUS following
• Highest facilitation
• Scanning only on intelligence
• Reliance on self-certified copies
• No Bank Guarantee
• Risk based intervention by other departments
• Refund/rebate in 30 days
• OSPCA (Onsite site post clearance audit) in 3 years
• Automated Out of Charge vide Circular No 01/2025
• Self-Ratification Scheme advance licence scheme

Solvency Certificate as per Circular No. 3/2018- Customs  applicants applying for T3 must submit a Solvency Certificate from the Statutory Auditor of the applicant

In view of the above Directorate of International Customs is expected to request all AEO-T2 certified company/firm for upgradation in AEO-T3 if they continuously enjoyed the AEO-T2 facility.

*****

Disclaimer: This is for academic purpose only and effort have been made to make document error free, but it is possible that some error might have crept into this document Prepared by: CA Rajnish Kumar, , Mobile +91-8130883807, carajnishkumarca@gmail.com