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 24.11.2005old ACP scheme and Circulars No. 28/2012-Customs dated 16.11.2012old AEO programme).

Validity and Renewal of AEO

AEO status Applicability Validity Time limit for submission of application for renewal before lapse of validity
AEO-T1 Granted only to an importer or to an exporter without physical verification of places/premises. 3 Year 30 days
AEO-T2 Granted only to an importer or to an exporter after physical verification of premises/places. 3 Year 60 days
AEO-T3 Granted 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. 5Year 90 days
AEO-LO Granted 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 Year 90 days

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 REGULARIZATION 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)

Benefits AEO-T1 AEO-T2 AEO-T3
Shorter cargo release time Yes Yes Yes
Direct Port Delivery (DPD) / or Direct Port Entry (DPE Yes Yes Yes
ID to authorized personnel Yes Yes Yes
Separate space earmarked in Custodian’s premises. Yes Yes Yes
Bank Guarantee only to extent 50% 25% 0.00%
Investigations in six to nine months Six month Six month
Dispute resolution within six months. six six
e-mail regarding arrival/ departure of the vessel Yes Yes Yes
24/7 clearances on request at all sea ports and airports Yes Yes Yes
No Merchant Overtime Fee (MOT) charges need to be paid Yes Yes Yes
Waiver of seal verification/scrutiny of documents . No Yes Yes
out of charge/let export order without any scrutiny by the officers No Yes Yes
Front line of treatment for container scanning. No Yes No selection for scanning
Facility of deferred payment of duty No Yes Yes
Disbursal of drawback amount within 72 hours of EGM submission faster
Assessment and/or Examination on priority Yes Yes Yes
Faster completion of Special Valuation Branch (‘SVB’) proceedings No Yes, in time bound manner Yes
Facility to paste MRP stickers in their premises No Yes Yes
Post clearance audit Yes onsite PCA will be conducted once in three years only, no regular PCA. On Intelligence information
Access to their consolidated import/export data through ICEGATE No Yes Yes
Facility of submitting paperless declarations with no supporting documents in physical form No Yes Yes
Client Relationship Manager”(CRM)  at AC/DC level at all port No Yes Yes

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

AEO status holder shall be issued advance authorization on self certification and declaration basis without ratification by the Norms Committee.

Benefits for AEO-LO certificate

Logistic Service Providers

ü  Waiver of bank Guarantee.

ü  Facility of Execution of running bond.

ü  Exemption from permission in case of transit of goods.

ü  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.

 

Customs Brokers

ü  Waiver of Bank Guarantee

ü  Extended validity (till validity of AEO status) of licenses

ü  System Manager to incorporate date of validity of AEO from time to time in the System Directory

ü  Waiver from fee for renewal of license.

 

Warehouse Operators

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

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

ü  Waiver of solvency certificate requirement under circular 24/2016

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

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

 

Custodians or Terminal Operators

ü  Waiver of bank Guarantee

ü  Extension of approval for custodians under regulation 10(2) of the ‘Handling of cargo in Customs Area Regulation 2009 ‘for period of 10 years.

 

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 entry Duty 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 march By the 1st day of the following month.
16th day till the 31st day of March By 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

Sl. No Annexure Subject Application for grant of
AEO- T1 AEO- T2 AEO- T3 AEO- LO
1 Annexure-A Application Form YES YES YES YES
2 Annexure-B Security Plan NO YES YES YES
3 Annexure-C Process Map YES YES YES YES
4 Annexure-D Site Plan YES YES YES YES
  Annexure-E Self-Assessment Form
5 Annexure- E.1 General Compliance YES YES YES YES
6 Annexure- E.2 Legal Compliance YES YES YES YES
7 Annexure- E.3 Managing commercial and (where appropriate) transport records YES YES YES YES
8 Annexure- E.4 Financial Solvency YES YES YES YES
9 Annexure- E.5 Safety and Security NO YES YES YES
10 Annexure-F Business Partner Details NO NO YES NO

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.)
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 FY.

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)

Annexure E.3 Managing commercial and (where appropriate) transport records 1.  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

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- Head CRM CRM

Disclaimer : Effort have been made to make document error free , but it is possible that some error might have crept into this document.

Prepared and Compiled by : CA Rajnish Kumar, (E-24, Basement, Lajpat Nagar-III, New Delhi-110024, Email :osganconsultants@hotmail.com, Phone : 011-29832120, Mobile :+91-8588867453/9811207924/9891512285

More Under Custom Duty

Posted Under

Category : Custom Duty (6932)
Type : Articles (16737)
Tags : CBEC (398)

One response to “Procedure for AEO certification and Benefits of AEO under Customs”

  1. sanjana says:

    I need the quotes and required documents details for AEO registration. kindly send me the details to my mail id

Leave a Reply

Your email address will not be published. Required fields are marked *