In this article, we will be looking at the Authorised Economic Operator Programme, which is being carried out by Indian Customs Administration since 2011 and through this programme many business entities have been benefited in different ways in their import transactions. We will also be learning about the different aspects of AEO programme which will be helpful for any future applicant.
1] What is Authorised Economic Operator (AEO) Programme?
The AEO programme has been started to enable the Custom administration in identifying safe & compliant business entities in order to provide them trade assurance. Also, it helps Custom administration to identify less/non-compliant business entities and focus on them for more control. AEO helps to secure international trade by giving assurance to reliable businesses in international supply chain. One can say that, through AEO programme, custom administration shares responsibility with reliable businesses by giving them status of “Authorised Economic Operators” & rewarding them with additional benefits.
Thus, an “Authorised Economic Operator” is a business entity identified by Customs Administration which is involved into international trade and complies with National Customs law and is approved by World Customs Organisation (WCO) or equivalent supply chain standards. These standards are detailed in the “SAFE Framework of Standards (SAFE FoS)” as finalised by WCO & the same is considered as the base of Indian AEO Programme.
2] Background of AEO Programme & adoption in India:
AEO was first introduced by USA in the year 2001 and it highlighted the need to strengthen the international supply chain in order to not only facilitate trade with other countries but also to control the acts of terrorism and thereby making trade stronger. In order to make trade stronger, it was realized that the Custom Administration, which is the main authority in any country’s supply chain, has to partner with businesses to secure supply chain.
Later, the WCO adapted the (SAFE-FoS) in 2005 which consisted of 3 dimensional partnerships namely, Customs to Customs partnership, Customs to Businesses partnership and Customs to Other Government stakeholder partnership. AEO programme has been categorized under the SECOND Partnership i.e Customs to Businesses partnership.
Indian Customs Administration introduced AEO programme in 2011 vide Circular 37/2011-Customs Dtd 23rd August 2011. This circular was then amended in 2012 vide Circular 28/2012-Customs Dtd 16th November 2012 in which the “SAFE Framework of Standards by WCO” was adopted. With continuous developments in International Trade & focus of Government of India being on ease of doing business, it was decided by Indian Customs Administration to merge existing Accredited Client Programme with the ongoing AEO Programme of 2012 & it revised AEO programme was introduced vide Circular 33/2016-Customs Dtd 22nd July 2016.
3] General details about AEO programme:
1. AEO programme is basically divided in a 3 Tier programme for Importers & Exporters namely AEO T1, AEO T2 & AEO T3 The level of benefits given by Customs Administration & compliance requirement increases with every Tier as given above. In addition to above, there is a separate Single Tier programme, AEO-LO, for the Logistics providers, Custom brokers, Terminal Operators & warehouse operators.
2. The main aim of AEO certification is to provide international recognition to business entities as Secure & Reliable trading partners. Thus, business entities get incentivized for their trade as per the predefined rules that help in saving of money & time.
3. AEO programme ensures to secure international supply chain by enhancing the border clearance privileges in Mutual Recognition Agreement (MRA) partner countries. Currently Indian Customs has signed MRA with South Korea, Taiwan & Hong Kong Customs to get reciprocal benefits in trade.
4. AEO certification has a validity period as per its Tier level which has to be renewed well in advance as per norms so that Business entities can enjoy continued benefits. AEO T1 & AEO T2 have a validity of 3 years each, whereas AEO T3 & AEO-LO have a validity of 5 years.
5. Deferred duty is one of the major benefit which is available under AEO programme as given under “Deferred Payment of Import Duty” Rules 2016 vide Notification No 134/2016-Customs (NT) & 135/2016-Customs (NT) both Dtd 02nd November 2016 and applied w.e.f 16th November 2016. AEO T2 & AEO T3 certified businesses only can avail this facility.
6. As per Rule 4 of Deferred Payment of Import Duty Rules 2016, every eligible importer who wants to use the benefit of Deferred Duty Payment has to submit in writing his intent to Jurisdictional Principal Commissioner of Customs or Commissioner of Customs & get registered on ICEGATE portal for the same.
4] Method of Application for AEO Certification:
1. Any business entity which carries out movement of goods internationally i.e international supply chain including Logistics providers, Custom brokers, Terminal Operators & warehouse operators can apply for AEO status.
2. Circular No 33/2016-Customs Dtd 22nd July 2016 which was further amended by Circular No 03/2018-Customs Dtd 17th January 2018 guides about the eligibility & other provisions for applying to AEO certification.
3. To apply for AEO Status, a business entity which is established in India, must be engaged in customs related activities for minimum 3 years and has to do at least 25 customs documentations in either Bill of Entry or Shipping Bill.
4. In case of application of AEO T1 status, the same has to be done online through governments domain named aeoindia.gov.in and along with application, Annexures A-1 & A-2 also need to be submitted in the prescribed format.
5. In case of application for AEO T2, AEO T3 & AEO LO status, it should be submitted in the format as specified in Circular No 33/2016-Customs Dtd 22nd July 2016 along with 10 Annexures (as given at the end of this article) to the office of Jurisdictional Chief Commissioner of Customs with a copy to AEO Programme Manager – Directorate of International Customs, 10th Floor, Tower II, Connaught Place, New Delhi – 110001
6. Jurisdictional Chief Commissioner of Customs is different for different zones as specified on AEO Portal. Hence, applicant has to identify the office of Jurisdictional Chief Commissioner of Customs as per the zone in which he is doing majority of his business in International supply chain.
5] Time limit for submission of application to renew AEO Status:
AEO Status is NOT a one-time status as there are certain conditions & criteria laid down by the AEO Programme manager which need to be followed from time to time otherwise the AEO status holder may become liable for Suspension or down gradation of AEO Status. Thus, the time limit for submission of applications for renewal of AEO Status are given below-
a. For AEO T1 Status – Renewal applications need to be filed within 30 Days before end of validity period.
b. For AEO T2 Status – Renewal applications need to be filed within 60 Days before end of validity period.
c. For AEO T3 Status – Renewal applications need to be filed within 90 Days before end of validity period.
d. For AEO LO Status – Renewal applications need to be filed within 90 Days before end of validity period.
6] Suspension & Restoration of AEO Status:
1. AEO Programme Manager has the authority to suspend the AEO Status if it is found that there has been non-compliance with the conditions / criteria as issued by the Customs Authority or in case if the basic license of custodian/custom broker/logistics operator has been suspended by competent authority.
2. AEO Programme manager can also downgrade the AEO status, from AEO T3 to AEO T2 or from AEO T2 to AEO T1, in case there is a Show Cause Notice for contravention of Customs/GST Law.
3. In any of the cases of either suspension or downgrading of AEO status by the AEO Programme manager, the status holder cannot file an appeal against this decision. However, the status holder can file for restoration of suspended / downgraded AEO status after the status holder fulfills certain criteria to the satisfaction of the AEO Programme manager.
4. If there is suspension of AEO Status due to non-compliance with AEO conditions, the status holder has to take necessary remedial measures at the satisfaction of AEO Programme manager within 60 Days of Suspension, then only the suspension can be restored.
5. If there is suspension of AEO Status on account of some actions under the Customs Act, like issuance of a Show Cause Notice or suspension of License issued to Custom Broker, the AEO Programme manager may restore the AEO status if the Show Cause Notice is dropped by the authority issuing it or if the suspended license of Custom Broker is revoked.
6. In case of down gradation of AEO status, the status may apply again for higher status as and when the eligibility conditions required for higher status are met & any Show Cause Notice issued for contravention of Customs/GST Law have been dropped. Such applications for higher AEO status will be considered as fresh applications.
7. In case if AEO Status has been revoked, the AEO T1 & AEO T2 status holders may re-apply only after a period of 01 Year from the date of revocation & AEO T3 & AEO LO status holders may re-apply only after a period of 03 Years from the date of revocation.
7] Conclusion:
Authorised Economic Operator Programme is one of the most business-friendly step taken by the Indian Customs Authorities to ensure that genuine entities can benefit from this programme with minimal documentation and government interventions for every import consignment. With AEO programme, the Indian Customs Authority aims to support the business entities which are most compliant and efficient by giving them various benefits & also to identify less compliant business entities and exercise more strict control over them.
AEO portal also provides answers to various questions of business entities through their FAQ sheet which proves very helpful for any first time applicant also.
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Article By – Vallabh Dattatray Dani
Author Bio
Here is the list of Annexures required to be submitted while applying for AEO T2 & AEO T3 certification.
1. Annexure – A (Application Form)
2. Annexure – B (Security Plan)
3. Annexure – C (Process Map)
4. Annexure – D (Site Plan)
5. Annexure – E.1 (General Compliance)
6. Annexure – E.2 (Legal Compliance)
7. Annexure – E.3 (Managing Commercial and (where appropriate) transport records)
8. Annexure – E.4 (Financial Solvency)
9. Annexure – E.5 (Safety and Security)
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