Indian Customs AEO Programme

Indian Customs AEO Programme

AEO is a programme under the aegis of the World Customs Organization (WCO) SAFE Framework of Standards to secure and facilitate Global Trade. The programme aims to enhance international supply chain security and facilitate movement of legitimate goods.
AEO encompasses various players in the international supply chain. Under this programme, an entity engaged in international trade is approved by Customs as compliant with supply chain security standards and granted AEO status & certain benefits.
AEO is a voluntary programme. It enables Indian Customs to enhance and streamline cargo security through close cooperation with the principle stakeholders of the international supply chain viz.importers,exporters,logistis providers,custodians, or terminal operators, custom brokers and warehouse operators.

Background​

Prior to adoption of the SAFE Framework by WCO in 2005, Customs administrations all over the world, including India, were already implementing various forms of Customs compliance programmes which focused on compliance with traditional areas of Customs requirements, and which can also be considered as trade facilitation programmes, based
on the Revised Kyoto Convention’s authorized persons provisions. In India, this programme was known as Accredited Client Programme (ACP) vide Notification No.42/2005-Cus dated: 24.11.2005 to provide facilitation to ACP clients subject to their fulfillment of the prescribed eligibility criteria.

Over the years, AEO has become a fiagship programme for WCO Members as it offers an opportunity for Customs to share its responsibilities with the businesses, while at the same time rewarding them with a number of additional benefits. As of March,2015, 168 out of 180 WCO Members have signed Letters of Intent committing to implement the SAFE Framework. In India, the AEO programme was launched in 2011 on pilot basis vide Circular No.37/2011-Cus., dated 23-08-2011 and rolled out in full fiedged manner vide Circular No.28/2012-Customs dated 16.11.2012.

Article 7.7 (Trade Facilitation Measures for Authorized Operators) of the WTO Trade Facilitation Agreement (TFA) also provides for implementation of “Authorized Operator” scheme on the basis of international standards, where such standard exist.

In the light of these international developments, as well as in view of the focus of the Government of India on “Ease of Doing Business”, Central board of Indirect Taxes & Customs has developed a comprehensive unified trade facilitation programme by incorporating the existing ACP scheme and ongoing AEO programme into a revised AEO programme vide Circular No.33/2016-Customs, dated 22.07.2016 providing 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 Excise and Customs.

The Objective of the revised AEO Programme 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.

There are multiple tiers of certification in the new AEO programme. For importers and exporters there are three tiers providing varying level of benefits:
AEO T1 – Verified on the basis of document submission only
AEO T2 – In addition to document verification, onsite verification is also done.
AEO T3 – For AEO T2 holders who have enjoyed the status for 2 years only on the basis of document verification and for AEO T2 holders who has not enjoyed the status continuously or has introduced major changes in business, the applicant is subjected to physical verification.

For Logistics providers, custodians or terminal operators, custom brokers and warehouse operators there is only one tier:
AEO LO – In addition to document verification, onsite verification is done.

Implementation:

All three tiers provide for varying and incrementally increasing level of facilitation to the status holder. This tiered approach allows Indian Customs to cater to the differentiated need of the MSMEs while ensuring adequate security preparedness. There is one more category of AEO- LO that covers all other entities in the supply chain other than the Importers and Exporters.

These changes are also in line with India’s Prime Minister’s vision of implementing ‘Digital India’and ensuring ‘Ease of Doing Business’. This digitization will provide wholesome support to the applicants by allowing them to bypass the requirement of physical documentation and submitting their application with the click of a button to ensure highest degree of ease in doing business for the applicant. The complete application will be processed online by custom officials and the AEO certificate will be relayed online to the certified entity.

BCM Solutions is a consulting team for assistance to trade entities in the import export supply chain for availing benefit of higher facilitation for clearance of cargo and lower bank guarantee etc. under the Authorised Economic Operator (AEO) Programme of the Indian Customs. We also offer our assistance for certification of exporters and other trade entities in the supply chain as per standards of the US Customs’C TPATProgramme.

These Programmes are fast becoming industry standards and trade entities like the importers, exporters, logistics services providers, custodians of bonded goods, customs brokers, bonded warehouse owners are eligible for speedier clearance of documents and cargo at ports, and reduction/waiver of various bank guarantees apart from several other benefits like deferred duty payment, direct port delivery etc. under various conditions. Further, apart from increasing the brand equity that recognises your entity as responsible player in international import and export, certification under these programmes can reduce the transaction cost by way of reduced dwell time at ports and reduced/waiver of bank guarantee.

The earlier ACP and AEO Programmes of Indian Customs have now been merged into a single programme which has three tiers depending upon stage of compliance of the revised AEO Programme.

The scope of the benefits to the AEOs based on their categories would be as mentioned below. Importers and Exporters are covered under Tiers 1,2,3.

Benefits for AEO-Tier1:

  • They shall be accorded high level of facilitation in imports and export of their consignments, thereby ensuring shorter cargo release time.
  • They shall be accorded high level of facilitation in imports and export of their consignments, thereby ensuring shorter cargo release time.
  • Facility of Direct Port Delivery (DPD) of their import Containers and/ or Direct Port Entry (DPE) of their Export Containers would be available to them. However, this facility will be dependent on the volume of their Import/ Export trade in terms of number of containers.
  • In case they are required to furnish a Bank Guarantee, the quantum of the Bank Guarantee would be 50% of that required to be furnished by an importer/ exporter who is not an AEO Certificate Holder. However, this exemption from Bank guarantee would not be applicable in cases where the Competent Authority orders furnishing of Bank Guarantee for provisional release of seized goods.
  • Investigations, if any, in respect of Customs, Central Excise and Service Tax cases would be completed, as far as possible, in six to nine months.
  • They will not be subjected to regular transactional PCA, instead of that onsite PCA will be conducted once in two years only.
  • 24/7 clearances on request at all sea ports and airports – No Merchant Overtime Fee (MOT) charges need to be paid.

Benefits for AEO-Tier2:

  • They shall be accorded higher level of facilitation (as compared to AEO-T1 in imports and export of their consignments.
  • For Importers/Exporters not opting for DPD/DPE, seal verification/scrutiny of documents by Custom officers would
    be waived. Consignments would be given out of charge or let export order, as the case may be, without any scrutiny
    by the officers.
  • Facility of deferred payment of duty will be provided, from a date to be notified
  • Faster disbursal of drawback amount within 72 hours of EGM submission, from a date to be notified
  • Faster completion of Special Valuation Branch (‘SVB’) proceedings in case of related party imports and monitoring of such cases for time bound disposal in terms of new guidelines
  • They will be provided the facility of submitting paperless declarations with no supporting documents in physical form.
  • They will be given access to their consolidated import/export data through ICEGATE from a date that would be communicated separately.
  • The refund/Rebate of Customs/Central Excise duty and Service Tax would be granted within 45 days of the submission of complete documents. xvi. They will get trade facilitation by a foreign Customs administration with whom India enters into aMutual Recognition Agreement/Arrangement.
  • In case they are required to furnish a Bank Guarantee, the quantum of the Bank Guarantee would be 25% of that required to be furnished by an importer/ exporter who is not an AEO Certificate Holder. However, this exemption from Bank guarantee would not be applicable in cases where the Competent Authority orders furnishing of Bank Guarantee for provisional release of seized goods.
  • They will be given facility to paste MRP stickers in their premises.
  • They will not be subjected to regular transactional PCA instead of that onsite PCA will be conducted once in three years only.
  • All Custom Houses will appoint a “Client Relationship Manager”(CRM) at the level of Deputy / Assistant Commissioner as a single point of interaction with them. The CRM would act as voice of the AEO within Customs in relation to legitimate concerns and issues of AEO and would assist in getting procedural and operational issues resolved by coordinating with different sections within Customs as well as other stakeholders.

Benefits for AEO-Tier3:

  • They shall be accorded highest level of facilitation, as compared to AEO-T2, in imports and export of their consignments
  • Their containers will not be selected for scanning except on the basis of specific intelligence. Further when any container is selected for scanning, top most priority will be given for scanning.
  • The assessing/examining custom officer will rely on the self-certified copies of documents submitted by them without insisting upon original documents.
  • They would not be required to furnish any Bank Guarantee. However, this exemption from Bank guarantee would not be applicable in cases where the Competent Authority orders furnishing of Bank Guarantee for provisional release of seized goods.
  • An approach based on Risk based interventions, in case of requirements originating from the Acts administered by other Government Agencies/Departments, will be adopted for providing better facilitation in imports and export of their consignments
  • On request, they will be provided on-site inspection /examination.
  • The refund/Rebate of Customs/Central Excise duty and Service Tax would be granted within 30 days of the submission of complete documents.

Our Scope of Work

  • Inspection of your premises and records for analysis of safety procedures relating to export-import, personnel, transport, legal compliance and other requirements as per AEO Programme.
  • Guidance and assistance in up gradation of your records, and security procedures, if required
  • Assistance in preparation of your application for AEO Certificate
  • Submission of your application before the concerned authorities
  • Follow up of your application and in case of any query/objection by the concerned authorities, preparation and submission of suitable reply along with requisite documents after consultation with client
  • Assistance in getting client premises and records verified by Indian Customs team for AEO validation

The C TPAT Programme of US Customs

US Customs has developed a programme called Customs and Trade Partnership against Terrorism or C TPAT. Their officers regularly visit premises of exporters in various countries including India to check if the exporters are compliant with US Customs standards under the C TPAT Programme. The exporters whose premises and other procedures are found not compliant, are required to upgrade the same within a given time. After certification, the consignments sent by exporters to the US are given speedier clearance.

For this purpose, also our team offers its services for guiding entities like manufacturer exporters, and other logistics services providers engaged in export trade so that their premises, procedures, record keeping, etc. are as per required standards of C TPAT Programme. Our team can also arrange for power point presentations, and assisting the export entities to give all clarifications and details to the visiting US Customs teams for their inspections.