AEO is a program under the aegis of the World Customs Organization (WCO) SAFE Framework of Standards to secure and facilitate Global Trade. The programs aim is to enhance international supply chain security and facilitate movement of legitimate goods. AEO is a voluntary compliance program. It enables Indian Customs to enhance and streamline cargo security through close cooperation with the principal stakeholders of the international supply chain viz. importers, exporters, logistics providers, custodians or terminal operators, custom brokers and warehouse operators. In the light of recent international developments, as well as in view of the focus of the Government of India on “Ease of Doing Business”, it is imperative to develop a comprehensive program on AEO providing with additional facilities to the legitimate trade who have demonstrated strong internal control system and willingness to comply with the laws administered by the Central Board of Indirect Taxes and Customs. The objective of the revised AEO Program shall continue to remain same as earlier that is to provide businesses with an internationally recognized quality mark which will indicate their secure role in the international supply chain and that their Customs procedures are efficient and compliant. An entity with an AEO status can, therefore, be considered a ‘secure’ trader and a reliable trading partner.
Three tier AEO program for importers and exporters (AEO-T1, AEO-T2, and AEO-T3)
It has been decided that the existing ACP (“Accredited Client Program”) and AEO programs will be merged into this new AEO program. For the economic operators other than importers and the exporters, the new program offers only one tier of certification (i.e. AEO-LO) whereas for the importers and the exporters, there will be three tiers of certification (i.e. AEO-T1, AEO-T2 and AEO-T3).
Benefits of an AEO Certificate
AEO-Eligibility Criteria for an entity
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. The list is not exhaustive.
Businesses that are not involved in Customs related work / activities will not be entitled to apply. This means that in general, banks, insurance companies, consultants and the like categories of businesses will not be eligible for AEO status.
Application for AEO status will only cover the legal entity of the applicant and will not automatically apply to a group of companies.
In order to apply for AEO status the applicant must be established in India. For this purpose, the applicant should provide evidence which may include:
(i) A certificate of registration issued by the Registrar of Companies.
(ii) Details of places/locations where goods are being handled, e.g. loading, unloading, storage etc., in the course of supply to/from international supply chain.
(iii) Proof that the business has its own accounts.
The applicant should have business activities for at least three financial years preceding the date of application. However in exceptional cases, on the basis of physical verification of internal controls of a newly established business entity, the AEO Program Manager may consider it for certification.
AEO program is made open to all Importers/Exporters whose threshold of import or export declarations is 25 documents i.e. either Bills of Entry or Shipping Bills during the last financial year. The other economic operators should have handled at least 25 documents i.e. Bills of Entry or Shipping bills during the last financial year.
Validity of AEO Certificate
The validity of AEO certificate shall be three years for AEO-T1 and AEO-T2, and five years for AEO-T3 and AEO-LO.
Renewal of AEO certificate
|AEO Status||Time limit for submission of application for renewal before lapse of validity|
While submitting the application for renewal, the applicant must clearly highlight the changes from the last application.
Total number of AEOs Program
Details and Framework
The Circular 33/2016 – Customs was amended by the Circular 03/2018 – Customs dated 17.01.2018. Amendment Circular 03/2018 – Customs has further liberalized, simplified and rationalized the AEO accreditation process so as to promote Ease of Doing Business and to emulate global best practices. Recently, the AEO T1 processing was rationalized via new circular 26/2018 – Customs. The present circular has cut down on the Annexure required for AEO T1 certification from earlier 7 to the present 2. The present circular has not just rationalized the AEO T1 processing by taking away redundancy in earlier processing but it has also made more thorough certain key compliance requirements. Apart from the above changes, the new circular has completely decentralized the processing of AEO T1. In the present the setup, the AEO T1 file can be approved at the Customs Zonal level. This has completely eliminated the time that was wasted in transit of application from zonal offices to DIC (AEO HQ).
References and Circulars