Indian Customs flagship programme – AEO
The AEO is a comprehensive endtoend unified trade facilitation programme, which provides businesses with an internationally recognized quality mark certifying the entities as secure and reliable trading partners
THE MAIN BENEFIT OF THIS INITIATIVE IS THE DIRECT-PORT-DELIVERY OF IMPORTS TO ENSURE JUST-IN-TIME INVENTORY MANAGEMENT BY MANUFACTURERS/IMPORTERS WITH THE CONCEPT OF WHARF-TO-WAREHOUSE CLEARANCE. SIMILARLY, DIRECT-PORT-ENTRY FOR FACTORY STUFFED CONTAINERS MEANT FOR EXPORT BY AEOS IS PART OF THIS SCHEME This revised AEO programme is a comprehensive unified trade facilitation programme, which provides businesses with an internationally recognized quality mark certifying that AEO certified entities are secure and reliable trading partners
The Central Board of Excise and Customs has introduced the revamped Authorized Economic Operator (AEO) programme vide Circular No. 33/2016Cus on 22.07.2016. The earlier ACP scheme and the AEO scheme have now been merged into a combined three tier AEO programme.
The AEO programme first found mention in the Revised Kyoto Convention of World Customs Organization (WCO) and is the part of the ‘SAFE Framework’ of standards of WCO. The new AEO programme, launched in India, offers substantial benefits to importers and exporters and other stakeholders in the supply chain like Customs Brokers, freight forwarders, terminal operators, warehouse keepers, etc. Not only large companies, even small and medium businesses who have demonstrated strong internal control system and willingness to comply with the laws administered by Customs in India are eligible to apply and join this programme.
The main benefit of this initiative is the directportdelivery of imports to ensure justintime inventory management by manufacturers/importers with the concept of wharftowarehouse clearance. Similarly, directportentry for factory stuffed containers meant for export by AEOs is part of this scheme. Differed payment of customs duties – delinking customs clearance with duty payment has been introduced for the first time. This facility will be available to certain class of importers and the rules in this regard have already been notified by CBEC.
The Indian Customs has already signed Mutual Recognition Agreement (MRA) with few countries like Hong Kong and Korea and it is expected that with more AEOs joining this programme in 201617, India can have more MRA’s with other countries to effectively safeguard goods in the supply chain. Also, importers and exporters can speed up the disbursal of drawback amounts, fast track refunds and adjudications, conduct onsite inspection/ examination of goods, go for paperless declarations with no supporting documents, etc.
Over the years, AEO has become a flagship programme for WCO members since it offers an opportunity for customs to share its responsibilities with businesses, while rewarding them with a number of additional benefits. This revised AEO programme is a comprehensive unified trade facilitation programme, which provides businesses with an internationally recognized quality mark certifying that AEO certified entities are secure and reliable trading partners.
THERE ARE THREE CATEGORIES OF AEO IN INDIA: AEO T-1, AEO T-2 and AEO T-3.
A large number of companies have already been migrated from ACP to AEO T1 and existing AEOs have been migrated from AEO T1 to AEO T2. It is expected that in 2016 about 1,000 entities will join the AEO programme in India. AEO can be given only to a legal entity and not the whole group of companies. It is a voluntary programme and an application form has to be submitted to an AEO programme manager in New Delhi. AEO certification is granted after physical verification by the customs team.
There are graded benefits to AEO T1, AEO T2 and AEO T3, which also provides for lesser or no bank guarantee, a customs relationship manager and onsite post clearance audit once in 23 years depending on the AEO status.
For AEO status, the company should be established in India, should have proven compliance with customs and other relevant laws; satisfactory system of managing commercial and/or transport records; have proven financial solvency and should maintain the approved security and safety standards. AEO status cannot be granted to companies against whom cases of fraud, forgery or outright smuggling have been booked and those which have infringements by the applicants that are criminal in nature.
On receipt of the AEO certificate, the entities are obliged to adhere to appropriate standard, should keep on assessing their own companies and should voluntarily disclose to customs in case of errors, etc.
The AEO certificate comes with a validity of 25 years depending on the tier. In serious cases, the AEO status can be suspended and there could also be downgradation on the tier based on the infringements or noncompliance detected.
Since 1995, when the customs introduced the EDI System, heavy reliance was placed on automation for clearance of goods in order to reduce the dwell time and transaction cost. The Customs IT system called ICES 1.5 follows the best IT standards and compliant with ISO 27001 norms. The objective is to promote an overall voluntary compliance framework with value added tax payer services for reducing the dwell time and transaction cost.
The enforcement of cus toms laws continues to be done by using risk management and post clearance audit. All stake holders working with customs should join the AEO programme and contact the AEO programme manager on: aeo.india@icegate.gov.in.