Explained : India's Authorized Economic Operators Web Application

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India's Authorized Economic Operators Web Application enables Customs administration to identify the safe and compliant business entity in order to provide them a higher degree of assured facilitation

New Delhi (ABC Live India): Central Board of Indirect Taxes & Customs (CBIC) Chairman Shri M. Ajit Kumar here today launched the online filing of Authorised Economic Operators (AEO) T2 and T3 applications. 

As per the information issued by the ministry of finance, the AEO web application is accessible at URL www.aeoindia.gov.in. The new version (V 2.0) of the web application is designed to ensure continuously real-time and digital monitoring of physically filed AEO T2 and AEO T3 applications for timely intervention and expedience.

Who are Authorised Economic Operators?

An AEO is a business entity involved in the 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.

What is the AEO programme?

The AEO programme enables Customs administration to identify the safe and compliant business entity in order to provide them with 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 the 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.

What is the background of AEO Scheme of the WCO?

The genesis of the AEO scheme dates back to September 11, 2001 event in the US which made all the governments 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. stakeholders. AEO programme is the core part of Pillar-II i.e. - Customs to Business partnership.

How has the SAFE framework of Standards (FoS) been implemented in India?

The SAFE  FoS sets forth criteria by which businesses in the 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

What is the history of the AEO programme in India?

The AEO Programme was introduced as a 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 the 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 Circular No. 42/2005-Customs dated 24.11.2005. Further simplification for financial solvency and decentralisation of AEO application pro<!--[if !supportFootnotes]-->[1]<!--[endif]-->cessing was done vide Circular No. 03/2018 dated. 17.01.2018.

The application process for AEO-T1 accreditation was further simplified to two Annexure forms only by Circular No. 26/2018 dated 10.08.2018 from five Annexure forms as was stipulated in Circular No. 33/2016 dated 22.07.2016. Web-based Online application filing and processing for AEO-T1 status started from December 2018 vide Circular 51/2018 dated 07.12.2018.

What is the aim of the Indian Customs AEO Programme?

The AEO programme has the following objectives:

To provide business entities with an internationally recognized certification;

To recognize business entities as “secure and reliable” trading partners;

To incentivize business entities through defined benefits that translate into savings in time and cost; Secure supply chain from point of export to import;

Ability to demonstrate compliance with security standards when contracting to supply overseas importers / exporters;

Enhanced border clearance privileges in Mutual Recognition Agreement (MRA) partner countries;

Minimal security-related disruption to the flow of cargo;

 Reduction in dwell time and related costs; and

Customs advice/assistance if trade faces unexpected issues with Customs of countries with which India has MRAs.

Is AEO mandatory for businesses involved in the supply chain?

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.

What is the structure of Indian AEO programme?

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 a single Tier AEO Programme for Logistics Providers, Custodians or Terminal Operators, Customs Brokers and Warehouse Operators who are granted AEO-LO certificate.

What is the validity period of AEO status?

The validity of the AEO certificate is three years for AEO-T1 and AEO-T2, and five years for AEO-T3 and AEO LO.

Whether AEO certificate is valid at all Customs stations across India?

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.

What are the benefits of AEO status?

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:

a) Recognition worldwide as safe, secure and compliant business partners in international trade and get trade facilitation by a foreign Customs administration with whom India enters into a Mutual Recognition Agreement/Arrangement;

b) Facility of Direct Port Delivery (DPD) of their import Containers and/ or Direct Port Entry (DPE) of their Export Containers;

c) Waiver of full or part of the Bank Guarantee requirements, Waiver of Merchant overtime fees;

d) Deferred payment of duties;

e) Waiver from transactional PCA. Instead, Onsite PCA has been provided; the selection of the same shall be based on risk assessment of AEOs;

 f) Waiver of solvency certification for Customs Brokers;

g) A lower risk score in risk analysis systems when profiling;

 h) Faster disbursal of drawback amount through pro - cess eased out vide Circular 18/2017 Customs dated 29.05.2017;

i) Fast-tracking of refunds and adjudications;

j) Self-certified copies of FTA / PTA origin related or any other certificates required for clear[1]ance would be accepted

 k) Recognition by Partner Government Agencies and other Stakeholders as part of the AEO programme

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