pri CBIC introduces flagship Liberalised AEO Package for MSMEs CBIC introduces flagship Liberalised AEO Package for MSMEs

About AEO

In 2011, Indian Authorised Economic Operator (AEO) Programme was introduced by Central Board of Indirect Taxes & Customs (“CBIC”). In 2012, Government came up with further rules and instructions in reference to AEO Programme. Administered by CBIC, the Indian AEO Programme is a voluntary programme that applies to all business entities that participate in the global supply chain:

a) Provides businesses with an internationally recognized security standard.

b) Promotes an AEO certified entity as a secure and reliable trade partner.

c) Incentivizes AEO entities with defined benefits that translate into savings in time & costs thereby enhancing business competitiveness. 

Who can apply?

Anyone involved in the international supply chain that carries out custom related activities can apply for AEO status irrespective of the size of their business:

a) Importer & Exporter

b) Warehouse Operator

c) Logistic Service Provider

d) Customs Brokers

e) Port Operators, authorised couriers, Stevedores, etc.

f) Custodians or Terminal Operators

Eligibility criteria for AEO

The eligibility conditions and criteria for granting AEO Status has been listed in the Section 3 of the AEO Circular No. 33/2016 –Customs dated 22nd July, 2016 as amended by Circular No. 3/2018-Customs dated 17th January, 2018. An entity should fulfil the following criteria:

a) Established in India;

b) Business should be involved in Customs related activity;

c) Should have dealt with minimum 25 Customs documents (either Bill of Entry or Shipping Bill) in the last fiscal year;

d) Should have been in business activity for last 3 Financial Years.

As per the Indian AEO requirements, the applicant should have business activities for at least three financial years preceding the financial year of date of application. However, in exceptional cases, on the basis of physical verification of internal controls of a newly established business entity, the AEO Programme Manager can consider it for certification.

e) Proven financial solvency

f) Maintenance of approved security and safety standards

g) System of managing commercial and, where appropriate, transport records.

However, AEO Programme could not be availed by MSME Sector due to various conditions. But, in line with the Prime Minister’s Aatma Nirbhar Bharat Abhiyan to support MSMEs against the challenges of the COVID-19 Pandemic, Central Board of Indirect Taxes & Customs (CBIC) has taken a new initiative to introduce its flagship “Liberalised MSME AEO Package” for Micro Small and Medium Enterprises (MSMEs).

Relaxation to MSMEs are as under provided an applicant has a valid MSME certificate from the line Ministry:

a) Condition 1: Should have dealt with minimum 25 Customs documents (either Bill of Entry or Shipping Bill) in the last fiscal year

Relaxation: For MSMEs, handling of 25 documents has been reduced to 10 documents, subject to handling at least 5 documents in each half year period.

b) Condition 2: Should have been in business activity for last 3 Financial Years.

Relaxation: 3 financial years has been relaxed to 2 financial years.

c) Condition 3: Qualifying period of legal and financial compliance of 3 years

Relaxation: 3 financial years has been relaxed to 2 financial years.

d) Various Annexures which are required to be filed for AEO T1 and AEO T2 accreditation have been supplanted with two Annexures viz. Annexure 1 & Annexure 2.

e) Time Limit for processing of MSME AEO T1 & T2 applications has been reduced to 15 working days & 3 months respectively.

f) The benefit of relaxation in furnishing of Bank Guarantee for AEOs has been further relaxed to 25% from 50% and 10% from 25% of that required to be furnished by an importer/exporter who is not an AEO certificate holder, for MSME AEO T1 and MSME T2 respectively.

Press release of Ministry of Finance dated 7th January 2021 can be accessed at: https://taxguru.in/custom-duty/cbic-introduces-flagship-liberalised-authorised-economic-operator-package-msmes.html

In case of any query, please mail us at pooja@indiaparamarsh.com

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Location: Noida, Uttar Pradesh, IN
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