ANS. An AEO is a business entity involved in international movement of goods requiring compliance with provisions of the national Customs law and is approved by or on behalf of national administration in compliance with World Customs Organization (WCO) or equivalent supply chain security standards.
The security standards are detailed in World Customs Organisation Safe framework of standards [WCO SAFE FoS], which is the basis of the Indian AEO programme.
ANS. The AEO programme enables Customs administration to identify the safe and compliant business entity in order to provide them a higher degree of assured facilitation. This segmentation approach enables Customs resources to focus on less or non-compliant or risky businesses for control.
Thus, the aim of AEO programme is to secure the international supply chain by granting recognition to reliable operators and encouraging best practices at all levels in the international supply chain. Through this programme, the Customs shares its responsibility with the businesses, while at the same time rewarding them with a number of additional benefits.
ANS. The genesis of AEO scheme dates back to September 11, 2001 event in US which made all the governments to realise that the supply chain itself could be used for terror activities and a need was felt to make the supply chain secure. Since the supply chain is controlled by the trade, the Customs administration is partnering the trade in order to secure the supply chain.
The US started CT-PAT (Customs Trade – Partnership against terrorism) programme. Later WCO adopted SAFE Framework of Standards in 2005 in order to secure and facilitate the trade. The SAFE framework has three pillars comprising of Customs to Customs partnership, Customs to Business partnership and Customs to other Govt. stake holders. AEO programme is the core part of Pillar-II i.e. - Customs to Business partnership.
ANS. The SAFE FoS sets forth criteria by which businesses in supply chain can obtain authorised status as a secure partner. The criteria are incorporated in CBEC Circular No. 28/2012 dated 16.11.2012.
Thereafter a Revised AEO Program was launched vide Circular No. 33/2016-Customs dated 22.07.2016 as amended by Circular No. 03/2018 dated 17.02.2018, 26/2018 dated10.08.2018 and Circular No. 51/2018 dated 07.12.2018.
ANS. The AEO Programme was introduced as pilot project in 2011 vide Circular No. 37/2011- Customs dated 23rd August, 2011. The same was amended and the revised final AEO programme was introduced vide Circular No. 28/2012 dated 16.11.2012. With international developments such as Trade Facilitation Agreement (TFA) on securing and facilitating the International Trade and focus of Government of India on Ease of Doing Business, a comprehensive, unified trade facilitation initiative was launched by merging the existing Accredited Client Programme (ACP) and the ongoing AEO scheme of 2012 in the form of revised AEO Programme vide Circular No. 33/2016-Customs dated 22nd July, 2016. The ACP scheme was abolished by rescinding the Circular No. 42/2005-Customs dated 24.11.2005. Further simplification for financial solvency and decentralisation of AEO application processing was done vide Circular No. 03/2018 dated. 17.01.2018. The application process for AEO-T1 accreditation was further simplified to two Annexures form only by Circular No. 26/2018 dated 10.08.2018
from five Annexure form as was stipulated in Circular No. 33/2016 dated 22.07.2016. Web based On-line application filing and processing for AEO-T1 status started from December 2018 vide Circular 51/2018 dated 07.12.2018.
ANS. The AEO programme has the following objectives:
ANS. No. The AEO scheme is purely an optional scheme. Applying for AEO status is a business decision depending on the role of the business entity in the supply chain and its willingness to acquire the benefit flowing by acquiring AEO status.
ANS. There is a three-tier programme for importers and exporters i.e. AEO-T1, AEO-T2 and AEO-T3 in the increasing degree of benefits accorded and compliance requirements. Furthermore, there is single Tier AEO Programme for Logistics Providers, Custodians or Terminal Operators, Customs Brokers and Warehouse Operators who are granted AEO-LO certificate.
ANS. The validity of AEO certificate is three years for AEO-T1 and AEO-T2, and five years for AEO-T3 and AEOLO.
ANS. Yes, it is valid at all Customs stations in India. In other words, an AEO status holder shall get the AEO benefits at all Customs ports/ airports/ Land Customs stations.
ANS. There are a host of benefits for all three categories of AEOs- T1, T2, T3 and LOs. These are listed in paras 1.5.1 to 1.5.4 for AEO T1, T2, T3 and LO respectively of Circular No. 33/2016-Customs dated 22nd July, 2016. Some of the major benefits are listed below:
ANS. Yes, all AEO T1/T2/T3 status holders are entitled for DPD/ DPE facility. However, they have to apply for the Direct Port Delivery permission to the concerned Chief Commissioner and also register themselves with the port authority for DPD facility.
ANS. No. The CBIC Circular No. 38/2016 dt. 22.08.2016 list out the situations where amount of BG is reduced to 50%, 25% and Nil. Further it is not applicable for cases where competent authority orders furnishing of bank guarantee for provisional release of seized goods.
ANS. It is a mechanism for delinking duty payment from Customs clearance. It is based on the principle ‘Clear First-Pay later’. Deferred Payment of Import Duty Rules, 2016 vide notification no 134/2016-Customs (NT) and 135/2016-Customs (NT) both dated 02nd Nov 2016 have been notified and the same have come into effect from 16.11.2016.
The AEO-T2 and AEO-T3 certified importers can avail the benefit of these Rules.
ANS. As per Rule 4 of the Deferred Payment of Import Duty Rules, 2016 an eligible importer who intends to avail the benefit of deferred payment has to intimate his intent to the jurisdictional Principal Commissioner of Customs or the Commissioner of Customs and get registered on the ICEGATE website www.icegate.gov.in.
ANS. As per Notification No. 134/2016 Cus (NT) dated 02.11.2016 as amended by Notification No. 28/2017 –Cus(NT) dated 31.03.2017,the Deferred Payment of Import Duty time lines are as below:
Date of return of BE for payment of Duty
Date of deferred payment of duty
Date of return of BE for payment of Duty B/E from 1-15th day of any month
16th of the month
B/E from 16th-last day of month except March
1st day of the following month
B/E from 16-31 March
NOTE: The duty under deferred payment scheme has to be paid electronically.
ANS. Yes, the facilitation benefits will be available in countries with whom India has signed Mutual Recognition Agreement (MRA). Indian Customs has signed Mutual Recognition Agreement (MRA) with South Korea, Taiwan and Hong Kong Customs to enable trade to get benefits on reciprocal basis.
Ans. Mutual Recognition Arrangements/Agreements (MRA) are bilateral understandings between two Customs Administrations which allow one business partnership program to recognize the AEO validations of the other country’s program and extend reciprocal benefits to each other’s AEO. The benefits are generally in nature of enhanced system-based facilitation & reduced interdiction, lower risk score for Indian exporter’s consignments at foreign port.
ANS. No. The AEO LO status will only be valid and applicable for the applicant and not for his importers or exporters. They need to apply separately for AEO status.
ANS. The application should be sent to the office of the jurisdictional Chief Commissioner of Customs with copy to AEO Programme Manager, Directorate of International Customs or in case of any doubt, to the AEO Programme Manager, Directorate of International Customs, 10th Floor, Tower II, Jeevan Bharti Building, Connaught Place, New Delhi – 110001.
The jurisdictional Chief Commissioner of Customs is the one from where the Importer/Exporter/Logistic operator is doing majority of business in international supply chain. An on-line website (Domain name: aeoindia.gov.in) has been created for filing and processing of AEO-T1 application. The applicant can login to the website and file the AEO- T1 application. A separate FAQ about online filing of application is attached as Annexure-A.
ANS. As of now, the following Chief Commissioner of Customs offices have been designated for processing of AEO application:
ANS. The AEO Cell under the jurisdictional Chief Commissioner of Customs, headed by nodal officer of the rank of Additional /Joint Commissioner is responsible for processing AEO applications as per provisions contained in Circular No. 33/2016-Customs as amended by Circular Nos. 03/2018-Customs, 26/2018 and 51/2018 -Customs. The nodal officer of the jurisdictional Chief Commissioner forwards the processed application of AEO-T2/T3 and AEO-LO with recommendation to programme manager of Indian AEO Programme having office at Delhi for taking final decision on AEO accreditation.
The process of AEO-T1 accreditation has been further simplified and decentralised by Circular No. 26/2018 dt.10.08.2018. Officers in the Rank of Principal Commissioner/Commissioner have been appointed as the Zonal AEO Programme Manager in each Zone headed by Principal Chief Commissioner or Chief Commissioner of Customs and are responsible for final acceptance or rejection of the AEO application.
Thus, the AEO-T1 application is processed by AEO Cell and eligibility thereto is decided at Zonal level only. The
decision is conveyed to Directorate of International Customs for generation of AEO Certificate. Such approved applications are sent online by the zones to DIC Delhi for generation of digitally signed certificate.
ANS. The Principal Commissioner, Directorate of International Customs, having office at 10th floor, Tower-2, Jeevan Bharati Building, Connaught Place, New Delhi-01 is the AEO Programme Manager for Indian AEO programme. For AEO-T1 accreditation, the Zonal AEO Programme Manager is treated as AEO Programme Manager for all purposes.
ANS. Yes, the application can be filed again if grounds on which the application was rejected are no longer valid and the applicant is otherwise eligible for AEO status.
ANS. An applicant for AEO-T1 status is to file application online (Domain name: aeoindia.gov.in) in prescribed proforma along with a Declaration as indicated in Annexure A- 1, Annexure A-2 to CBEC Circular No. 26/2018 dated 10.08.2018. After introduction of web- based module for filing online application vide Circular 51/2018 dt. 07.12.2018, it is mandatory to file online application only.
An applicant for grant of any of the remaining three AEO statuses, namely AEO-T2, AEO-T3 and AEO-LO, should submit the application in the proforma specified in Table below. The application form as specified in the Circular No. 33/2016-Customs contains Ten annexures. However, an applicant is required to fill-in and submit only those annexures which may be applicable to it, as mentioned below:
|S. No.||Annexure||Subject||AEO T2||AEO T3||AEO LO|
|7||Annexure-E3||Managing commercial and (where appropriate) transport records||Yes||Yes||Yes|
|9||Annexure-E5||Safety & Security||Yes||Yes||Yes|
|10||Annexure-F||Business Partner Detail||No||Yes||No|
ANS. An existing AEO certificate holder can apply for higher AEO status. There is no time limit for filing higher status application except in case of AEO-T3. In case of AEO-T3, either the entity should have had AEO-T2 status continuously for two years or when all its business partners in international supply chain have acquired either AEO-T2 or AEO-LO status.
ANS. No. The applicant has to nominate the contact person/ authorised representative from company’s own administration only (Para 2.3 of Circular No. 33/2016-Customs).
ANS. Any business entity that is part of the international supply chain; involved in the cross- border movement of goods and required to fulfil obligations under the Customs law in India, only can apply for AEO status. These may include exporters, importers, logistic providers (e.g. carriers, airlines, freight forwarders, etc.), Custodians or Terminal Operators, Customs House Agents and Warehouse Owners, Port operators, authorized couriers, Stevedores etc. The list is not exhaustive.
ANS. 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
ANS. No. There is no provision to grant AEO status to specific site, division or branch of legal entity of the applicant
ANS. 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.
ANS. No, such economic operator should apply separately for any of the three tier AEO programme of importer/exporter (AEO T1/T2/T3) or single tier AEO LO status.
ANS. Yes, the AEO programme includes MSMEs and the eligibility conditions and criteria for granting AEO status are same regardless of size. The only requirement is that the entity should have handled at least 25 Customs documents in preceding Financial Year.
ANS. The Legal requirement for applying for AEO status, as prescribed in para 3.2 and annexure E.2, to Circular No. 33/2016-Customs dated 22.7.2016.
ANS. The documents /evidence include Certificate of Incorporation, Import- Export Code (IEC), balance sheets for three-years etc.
ANS. In cases where the statute exempts the applicant from statutory audit, the applicant can submit balance sheet certified by both the proprietor/partner/MD and any chartered accountant (CA) stating the profit /loss and net worth for the purpose of AEO application.
ANS. The documents/ evidence required as a proof about the business of a company having its own accounts include cancelled cheque, account statement, audited balance sheets.
ANS. It means that the applicant must have tools in the form of Customised software or manual checks to identify risks and detect error in Customs documents (B/L, invoice and Packing list), for self-assessment of goods imported i.e., proper check of classification, valuation etc and after clearance of goods from Custom control, they must have the process to reconcile the goods with duty paid invoice and packing list. Further they may have documented processes/SOPs/escalation matrix for communicating the error noticed to Customs on real time basis and maintain record of such errors for viewing of their employees so that such mistakes do not recur.
ANS. The ratio is calculated by dividing duty amount involved in SCN issued under the Customs Act divided by total duty paid & drawback claimed during the last three financial years. For example, the amount involved in SCN/disputed demand (includes demand of duty and denial of drawback) is Rs.500/- and total duty paid is Rs.20,000/-, drawback claimed is Rs. 5,000/-, the ratio shall be 500/(20000+5000)*100 = 2%.
claimed more than 10% are not eligible for AEO accreditation?
ANS. Yes. In case the ratio is above 10%, the AEO programme envisages examination of the nature of cases of duty demand. The decision for issue or continuance of AEO status is at the discretion of AEO programme manager based on examination of the Show Cause Notices issued.
Annexure E.3 – Managing Commercial and Transport Records?
ANS. The AEO applicant should:
ANS. Any accounting system consistent with Generally Accepted Accounting Principles (GAAP) / International Financial Reporting Standards (IFRS) which facilitates audit-based Customs control can be adopted. The audited balance sheet by Auditor contains remark about the Accounting system adopted by applicant.
ANS. Generally, the audited financial statement/balance sheet contains comments as to whether administrative set up corresponds to size of business. Other requirements for internal controls are satisfactory organisational setup to handle goods and documents related to same in the international supply chain.
ANS. The applicant must have documented processes/ Standard Operating Procedures (SOPs) for storage and archiving of records and information. The SOP may contain the process of storing with the responsibility of concerned person, period of storing / archiving, process of taking suitable measures like back up for protection against loss of information. If the applicant has outsourced the storage and archiving of records, then the above requirements should be covered in the agreement with the agency storing the records and such agreements should be presented along with the application.
ANS. The applicant may submit their practice /processes of educating/ training their employees on Customs compliances. The process must include procedure to convey compliance difficulties, if any, to the designated Customs officer. The applicant may designate a person in their organisation for above purpose.
ANS. No, there is no format in AEO Circular No. 33/2016-Customs. The only requirement is that the certificate should be for last three financial years (Each year) based on books of accounts and financial statements, tax returns etc.
ANS. The applicant for AEO T-2, T-3 and AEO-LO are required to submit Security plan and documents/evidence in support of fulfilment of requirements for safety and security listed in Annexure E.5.1 to E.5.7.
ANS. The safety and security criteria is listed in Para 3.5 and Annexure E.5.1 to E.5.7 of Circular No.33/2016. It has seven components.
ANS. In addition to submission of documents and fulfillment of requirements prescribed for AEO T-2 applicant, the applicant for AEO T-3 has to submit details prescribed in Annexure F of Circular No. 33/ 2016 dated 22.07.2016. In Annexure F, the applicant has to give details of all his business partner(s) in International Supply chain which includes their accreditation under Indian AEO Programme. The declaration is to be given in format of Annexure “F”. The AEO T3 applicant who are not AEO T-2 certificate holder for last two preceding financial years must have all business partners (CB, Freight forwarder, liner etc) AEO T-2 or AEO-LO certificate holder./p>
ANS. The following documents are required to be submitted along with the application:
ANS. Yes. However, if the company’s written and verifiable policies, processes, procedures, access control and other security policies, training and skill upgradation and compliance with government is same for all locations, the applicant can submit security plan of any one premise which is valid for all its premises used in International Supply Chain.
ANS. The process map should illustrate the flow of goods, documentation/ information from receipt of order to export/ delivery/ receipt of goods. The same has to be separate for each activity such as exports, imports, providing service for logistics operators etc. Hence, Annexure-C shall be for each individual activity of the applicant. The Process-Map must include role of applicant and its business partners in the supply chain.
ANS. Yes, the site plan as prescribed in Annexure D of Circular should be for all locations/sites.
ANS. The following documents are require for general compliance
ANS. The application for AEO accreditation is not processed in following cases:
ANS. The AEO application can be rejected in following two cases:
ANS. In case of AEO T-1 application, if the eligibility conditions and criteria for grant of certificate, as mentioned in Section 3 of Circular No. 33/2016-Customs, are found to have been met to the satisfaction of AEO programme manager, the AEO T-1 certificate shall be granted within 30 days of submission of information/ documents.
The mode of application for AEO T-1 and its processing has been made online since December 2018. In case of AEO T-2 and LO application, on submission of all required information/documents, the applicant is informed about the receipt of the same within 30 days. The application is assigned to AEO team within 15 days to carry out physical verification in consultation with applicant. The AEO programme team visits the premises of applicant within 90 days. The applicant can contact programme manager if visit is not planned within 45 days. The AEO programme team prepares the report and makes recommendation within 60 days of completion of visit. The AEO programme manager informs about AEO T-2/LO status to applicant within 30 days of the recommendation of AEO team. Thus, the total time taken from submission of application till the issuance of the certificate work out to maximum 180 days. In case of AEO T-3 application by an AEO T-2 status holder, the application is assigned to AEO programme team within 15 days. The timelines for further activities are same as in
above para for AEO T-2 and LO certifications.
ANS. For AEO T-2 and AEO LO certification, examination of the criteria laid down under Section 3 of AEO Circular shall be carried out for all the premises which are relevant to the Customs related activities of the applicant for AEO-T2 or AEO-LO status. In case, more than one premises of applicant are run in similar way by standard systems of record keeping and security etc., the AEO programme team can choose to visit any one of such similarly run premises as per the provision contained in Para 18.104.22.168 of AEO Circular. In such situation, the applicant has to make declaration to this effect in the form of Undertaking. However, if the applicant has a range of activities or different premises are run using different methods of operation, the AEO Programme team has to visit those premises.
ANS. The purpose of Physical verification by AEO team is to check whether the claims made in application regarding requirement and fulfilment of criteria as listed in Section 3 of AEO Circular exists or are in place.
The AEO programme team may cover following areas during visit:
The above list is not exhaustive. The team can decide to cover more areas during visit as per the requirements.
ANS. Yes, in exceptional cases the verification process can be stopped with mutual consent. The applicant is given time to submit additional documents and rectify the minor issues. The applicant has to inform AEO team regarding rectification within 6 months so that the verification process recommences. The applicant in such cases will get decision on application by the revised date to be informed by the AEO team.
ANS. The AEO status holder should report Customs related errors and its compliance to the CRM as well as AEO cell of the jurisdictional Chief Commissioner.
ANS. The AEO status is renewed against application for the same made before lapse of their validity as stated below:
AEO status Time limit for submission of application for renewal before lapse of validity
AEO-T1 30 days
AEO-T2 60 days
AEO-T3 90 days
AEO-LO 90 days
The applicant must highlight the changes made from the last application in their renewal application. The AEO Programme Manager will consider the renewal applications by following the procedure adopted while granting the fresh AEO status.
ANS. The AEO status holder must notify AEO cell or the client relationship manager of the jurisdictional chief commissioner in following cases of changes:
ANS. The AEO status holder must notify the changes as soon as it is known or at least within fourteen days of the change taking place.
ANS. The AEO status holder needs to re-apply for the AEO certification in the name of new legal entity. For instance, if a legal entity changes from proprietorship to LLP or Pvt Limited company, then it has to file a fresh application.
ANS. Yes. The AEO team is mandated to review the AEO status periodically to ensure that the AEO client continues to adhere to the condition of AEO accreditation.
ANS. The frequency of review of AEO status are same for AEO T-1 and AEO T-2 i.e., once in three years. The same is five years for AEO T-3 /LO status. However, the Directorate of International Customs, entrusted to implement and monitor AEO Programme in India, can initiate review at any point of time, if there is reason to believe that the conditions of AEO Programme or standard of AEO status have been compromised.
ANS. The AEO Programme Manager may suspend the Certificate of AEO Status in the following cases:
a) Where any non-compliance with the conditions or criteria for the Certificate of AEO Status has been detected
b) In the case of a Custodian or Custom Broker or Warehouse Operator, where the basic license as a Custodian or Custom Broker or Warehouse Operator, as the case may be, has been suspended by the competent authority. There is also provision for downgrading of the status of an AEO-T3 to AEO-T2 or to AEO-T1,or downgrade the status of an AEO-T2 to AEO-T1, in the case of issue of any show cause notice (other than on issue listed in 3.2.1 of the AEO Circular) for contravention of Customs/Central Excise/GST law or suspend the status of the AEO, as deemed appropriate.
WITHDRAWAL/ SUSPENSION/ RESTORATION
The above decision is taken after due examination of the SCN, in consultation with the jurisdictional Commissioner.
ANS. No, there is no provision for appeal under the AEO scheme. However, there is provision of restoration of
suspended/downgraded AEO status.
ANS. The requirements in various situations are as under:
a) In case of non-compliance with the condition of AEO status, if the AEO status holder takes the necessary remedial measures to the satisfaction of the AEO Programme Manager within 60 days of suspension, the AEO Programme Manager may restore the AEO status.
b) In case of suspension on account of some action under Customs Act like issue of SCN, cancellation of Customs Broker’s license etc, an AEO Programme manager may consider restoration of AEO status if the action under the Customs Act is dropped/ suspension of license is revoked.
c) In case AEO status has been suspended/downgraded on account of SCN and if the ratio of disputed duty demanded or drawback demanded or sought to be denied in SCN under Customs Act in the last three years to the total duty paid and drawback claimed is not more than ten percent, the AEO programme manager may consider for restoration of AEO status.
d) In case an AEO status has been downgraded, the entity can apply again for higher status as and when the eligibility conditions and criterion are met by it. Such applications will be treated as a fresh application.
ANS. The Certificate of AEO Status will be revoked in following circumstances:
a) Where the Certificate of AEO Status is already suspended and the AEO holder fails to take the remedial measure within 60 days of withdrawal for the suspension or
b) Where there is a reasonable belief that an act has been perpetrated that is liable to lead to prosecution and /or is linked to an arrest of person under Customs Act, 1962 or
c) A show cause notice has been issued to them 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 or
d) Where the AEO status holder requests the authorization be revoked.
ANS. The AEO-T1 and T2 status holders can re-apply only after a period of one year from the date of revocation. The AEO-T3 and LO status holders can re-apply only after a period of three years from the date of revocation.
ANS. The Customs Administration is bound to extend all the benefits and facilitation measures to AEO status holders listed in the AEO Circular. There is provision for appointment of Client Relationship Manager (CRM) at the level of AC/DC as a single point of interaction with AEO Status holder at the office of each Chief Commissioner of Customs. The appointment of CRM is notified by way of public notice by all jurisdictional Customs station. The CRM is entrusted with the responsibility to attend to the legitimate concerns and issues of AEO clients. The details of CRMs are also provided online at CBIC website.
ANS. All Jurisdictional Client Relationship Manager (CRM) are responsible for:
a)Extending facilitation / benefits listed in the AEO Circular to the AEO status holders.
b)Assisting in filing AEO applications.
c)Assisting in getting procedural and operational issues resolved by co-ordinating with different sections within Customs as well as other stakeholders.
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