TaxTMI 
TaxTMI 
Authorized Economic Operator (AEO) programme for implementation — Revised Guidelines.
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....for a full scale roll out. Accordingly applications were invited for participation in the Pilot AEO Programme, which has since been completed. 2. Based upon the results of the Pilots, DGICCE, the nodal agency for AEO Programme, suggested certain improvements and identified certain issues requiring a review. Accordingly, Board has examined the suggestions and approved the following major changes in the AEO Programme. (i) Inclusion of stringent requirements in regard to Business partner security, procedural security, etc. (ii) Inclusion of authorised couriers and custodians in the AEO Programme. (iii) Automatic disqualification on non-furnishing of the information by the applicant. (iv) Non-requirement of the compliance records of advocates directly employed by the applicant. (v) Outreach of AEO Programme by organizing workshops etc. (vi) The time limit of 90 days should be reckoned from the date of furnishing of complete information. (vii) In regard to security seals, in case it is not possible to procure and use PAS/ISO 17712 seals for air consignments / courier consignments any international seal compatible with standards of PAS/ISO....
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....nsfer of cargo without Customs escorts. Board Circular No.8/2011-Customs dated 28.01.2011 stands modified to this extent. D. For Custodians or Terminal Operators (a) AEO Custodians shall be given benefits of waiver of bank Guarantee required under Handling of Cargo in Customs Area Regulations 2009. (b) AEO Custodians shall also be given the facility of extension of approval under regulation 10(2) of the Handling of cargo in Customs Area Regulation 2009 for longer period of ten years at a time. E. For Customs House Agents: (a) AEO Customs House Agents shall, under Regulation 11 of Customs House Agents Licensing Regulations (CHALR) 2004 be given benefit of extended validity period of licenses granted under regulation 9 till the time they hold valid AEO authorizations. (b) Fee for renewal of a licence under sub regulation (2) of regulation 11 of CHALR, 2004 shall be exempt for AEO Custom House Agents. F. For Warehouse Operators: (a) AEO Warehouse Operators are accorded faster approval for new warehouses. (b) AEO Warehouse Operator shall be given benefits of reduced bank guarantee to the extent of 5% of the duty liability in res....
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....oods is approved by Customs as compliant with the supply chain security standards, and given benefits, such as simplified Customs procedures and reduced Customs intervention. The AEO concept is being increasingly adopted by various Customs administrations with the objective of securing the supply chain with resultant benefits for the trading community. 1.2 Consistent with the "SAFE Framework" developed by the WCO, the Indian Customs administration has developed an AEO Programme that encompasses various players in the international supply chain such as importers, exporters, warehouse owners, Custom House Agents, cargo forwarders and carriers. The objective of the AEO Programme 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. 1.3 As aforestated, the AEO Programme seeks to secure the global supply chain in partnership with business entities that are fully legally compliant and provide with the Customs....
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....se of transit of goods. 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 affected without Customs escorts. D. Custodians or Terminal Operators: (a) AEO Custodians shall be given benefits of waiver of bank Guarantee under Handling of cargo in Customs Area Regulations 2009. (b) AEO Custodians shall also be given a facility of extension of approval under regulation 10(2) of the 'Handling of cargo in Customs Area Regulation 2009 'for longer period provided that AEO Customs house agent has valid authorisation. In case of AEO Custodians the approval shall be extended for a period of ten years at a time in terms of regulation 10(2) of Handling of cargo in Customs Area Regulations 2009. E. Customs House Agents: (a) AEO Customs House Agents shall, under Regulation 11 of CHALR 2004 be given benefit of extended validity period of licenses granted under regulation 9 of the CHALR 2004. The Licence granted under regulation 9 shall be valid till validity of their AEO authorization. Further fee for renewal of a licence u....
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....or AEO status the applicant must be established in India. For this purpose, the applicant will be asked to provide evidence which may include: (i) A certificate of registration issued by the Registrar of Companies. (ii) Details of where staff is employed for making supplies of goods and/or services. (iii) Proof that the business has its own accounts. 4.7 An AEO status applies only to the legal entity applying for such status in its own capacity and covering its role in the international supply chain. Therefore, AEO status can be granted to a Custom House Agent, but this will not confer similar status on its client importers / exporters who will need to apply separately for that status. 5. How to apply for AEO status? 5.1 An applicant for grant of AEO status should submit the following: (i) Application for Authorized Economic Operator (AEO) Status(Annex - A) (ii) Security plan (Annex - B) (iii) Process map (Annex - C) (iv) Site plan (Annex - D) (v) Self-Assessment Form (Annex - E) 5.2 The application should be sent to the AEO Programme Manager, Directorate General of Inspection, Customs & Central Excis....
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.... Applications will be rejected in cases where the applicant is not eligible for grant of AEO status, or has been convicted of a serious criminal offence linked to the economic activity of his business in the past, or in cases where the deficiency noticed in the application cannot be remedied. The information regarding the rejection of such application will be given to the applicant within 30 days of the receipt of the application. 9. Time limit for grant of Certificate of AEO Status: 9.1 Applications meeting the identified criteria will be granted the certificates of AEO status ordinarily within 90 days of receipt of the completed application containing full information. In cases where validation of AEO applications can not be concluded on genuine ground. 10. Legal Compliance: 10.1 An applicant must meet certain conditions and ensure compliance with the criteria of grant of AEO status. Thus, an AEO Programme Team will examine applicant's record of compliance over the last three years preceding the date of applicant's application to ensure adherence to Customs, Central Excise and Service Tax laws as well as allied laws that are administered by the Dep....
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....icant should make such third parties aware of the standards that he operates to and that systems are in place to immediately identify any problem. 11. Managing commercial and (where appropriate) transport records: 11.1 For the purpose of AEO status the applicant must have a satisfactory system of managing commercial and, where appropriate, transport records. Such a system may include the following: (i) An accounting system consistent with Generally Accepted Accounting Principles (GAAP) / International Financial Reporting Standards (IFRS) which facilitates audit-based Customs control. (ii) Allowing the AEO Programme Team physical or electronic access to Customs and, where appropriate, transport records. (iii) An administrative set up and documented procedures to control and manage the movement of goods. (iv) Internal controls capable of detecting illegal or irregular transactions. (v) Satisfactory procedures for the handling of licences, authorizations and documents connected to export/import. (vi) Satisfactory procedures to archive and retrieve records and information, and also for protection against the loss of information....
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....nclude the latest: (i) Cash flow figures (ii) Balance sheet. (iii) Profit and loss forecasts approved by directors/partners/sole proprietor. 13. Safety and security 13.1 Internal controls and measures to secure the safety of applicant's business and his supply chain will be considered in addition to any specific legal requirements that may be applicable to the business. 13.2 In order to satisfy the requirements of AEO status, the applicant will need to ensure security of import/export cargo, conveyances, premises, etc. 13.3 Cargo Security: In order to ensure Cargo Security following steps should be taken: (a) Only properly identified and authorised persons should have access to the cargo. (b) Integrity of cargo should be ensured by permanent monitoring or keeping in a safe, locked area. (c) All seals must meet the current PAS / ISO 17712 standards for high security seals. In cases it is not possible to procure and use PAS / ISO 17712 seals for air consignments / courier consignments any international seal compatible with standards of PAS / ISO 17712 shall be used. However in case of maritime containe....
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....nveyance Security: For conveyance security the applicant seeking authorisation under AEO must: a) ensure, to the extent possible that all conveyances used for the transportation of cargo within the supply chain are capable of being effectively secured. b) ensure, to the extent possible that all operators of conveyances used for transport of cargo are trained to maintain the security of the conveyance and the cargo at all times while in its custody. c) require operators, to report actual or suspicious incident to designated security department staff of both the AEO Programme Team and Customs, as well as to maintain records of these reports, which should be available to Customs. (d) ensure that potential places of concealment of illegal goods on conveyances and ensure these are regularly inspected, (e) ensure that transporters make sure that conveyance integrity is maintained while the conveyance is en route transporting cargo to export/import points or import/transit containers by utilizing a tracking and monitoring activity log or records. (f) ensure that pre-determined routes are identified by the dispatcher, and procedures must consist ....
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....sonable precautions must be taken when recruiting new staff to verify that they are not previously convicted of security-related, Customs or other criminal offences. (b) Periodic background checks must be conducted on employees working in security sensitive positions. (c) Employee identification procedures should require all employees to carry proper identification that uniquely identifies the employee and organization. (d) Procedures to identify, record and deal with unauthorized or unidentified persons, such as photo identification and sign-in registers for visitors etc. must be ensured at all points of entry. (e) Procedures must be in place to expeditiously remove identification and access to premises and information for employees whose employment is terminated. 13.8. Business Partner Security (i) The applicant must have written and verifiable process, including the capability of financial soundness and compliance with the safety requirement set by the contracts as well as the capability of detection and correction of safety defects, for the selection of business partners. (ii) For those business partners having AEO certification, the app....
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....t the business premises and carry out checks to verify the information provided is accurate. Such visit shall be made on a convenient date after consulting the applicant. 14.3. If within 45 days of the date of letter of acceptance of the application, the applicant has not been contacted by the AEO Programme Team than the applicant should contact the AEO Programme Manager immediately. 14.4. The AEO Programme Team will examine the size and nature of business, the record keeping system, and strength of internal control system. 14.5. The applicant should be prepared to answer questions or provide additional information on all aspect of the application to the visiting AEO Programme Team. 14.6. Where appropriate, in addition to the other requirements detailed earlier, the AEO Programme Team will cover the following: (i) Information on Customs matters. (ii) Remedial action taken on previous Customs errors, if any. (iii) Accounting and logistic systems. (iv) Internal controls and procedures. (v) Flow of cargo. (vi) Use of Customs House Agents. (vii) Security of Computers/IT and documents. (viii) Financial solv....
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....on on his application. 15. Certification: 15.1. The AEO Programme Manager will inform the applicant of the outcome of his application, which should ordinarily be done within 90 days of the date on acceptance of the completed application. The period during which the AEO verification is stopped does not count towards the 90 days limit within which the AEO Programme Manager must give the applicant a decision on his application. 15.2. If AEO status is granted, the AEO Programme Manager shall send the Certificate of AEO Status to the applicant in hard copy along with an electronic copy. The Certificate shall bear the 'AEO logo' that may be used where it is appropriate to do so for the business, for example, company stationary, signage on vehicles or other publicity materials. The copyright for the logo is owned by the AEO Programme Manager on behalf of the Indian Customs Administration. 15.3. Once the applicant has received the Certificate of AEO Status, it will be activated within 10 days from the date of issue. Following this period, the applicant should enter the certificate number on all Customs documentation to indicate their AEO Status. 15.4. It is h....
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.... the Certificate of AEO Status in the following cases: (a) Where there is a reasonable belief that an act has been perpetrated that is liable to lead to prosecution and /or is linked to a serious infringement of Customs law. (b) Where non-compliance with the conditions or criteria for the Certificate of AEO Status is detected and no remedial steps have been taken within 30 days thereof. 18.2 Ordinarily, prior to any decision to suspend the authorization, the applicant will be contacted and asked to explain why such action should not be taken. Any decision taken in this regard will be subject to right of appeal of the applicant. 18.3 An AEO can also request the AEO Programme Manager that his authorization be suspended in case he has detected some irregularities and needs some time to correct the situation. In this case, if necessary, this time period can be extended provided that the AEO Programme Team is satisfied that the difficulties cannot be resolved within a reasonable time. 18.4 When the AEO Programme Team is satisfied that the problems affecting certification have been satisfactorily resolved, it will make suitable recommendation to th....
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.... contact person. (A separate list can be attached) Major Items of import: Main countries of import Major Items of export: Main countries of export: Signature: Full Name: Position in Company: Dated: * Contact person will be a senior management official who will be nodal contact point and responsible to the Customs for proper implementation of the AEO Programme. **************************************** Annexure - B SECURITY PLAN The economic operator wishing to participate in the AEO Programme shall submit to Customs a security plan documenting the policies, processes and procedures that it has in place to ensure that goods for export/import are packed at a secure premise/facility, accurately accounted for and transported securely to the point of export/import from the point of origin. The security plan must detail the company's written and verifiable policies, processes, procedures etc., in respect of the following: • Procedural security. • Document security. • Physical security. • Access controls. • Personnel security. ....
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....out by the applicant themselves or through a third party having expertise. (B) Financial Solvency 2 Issues Yes No Remarks (a) Whether the applicant is financially solvent for the three years preceding the date of application? (Solvency would generally be defined as good financial standing that is sufficient to fulfill the commitments of the applicant including ability to pay duties) (b) Whether, where required, the accounts have been filed with Registrar of Companies within the time limits laid down by law? (c) Whether, where applicable, audit qualifications or comments in the annual accounts about the continuation of the business as a going concern? (d) Whether there are any contingent liabilities or provisions? (e) Whether the net current assets are positive? (C) Cargo Security 3.1 Cargo Security: Yes No Remarks (a) Whether only properly identified and authorised persons have access to the cargo? (b) Whether integrity of cargo has been ensured b....
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....the import/export cargo are accurately indicated. (c) Import/export cargo are verified against purchase / delivery orders. (d) Drivers delivering or receiving cargo are positively identified before cargo is received or released. (e) Whether all shortages, overages, and other significant discrepancies or anomalies must be resolved and/or investigated appropriately. (E) Conveyance Security 3.3 Conveyance Security Yes No Remarks (a) Whether all conveyances used for the transportation of cargo within the supply chain are capable of being effectively secured? (b) Whether all operators of conveyances used for transport of cargo are trained to maintain the security of the conveyance and the cargo at all times while in its custody? (c) Whether there is a system for operators to report actual or suspicious incident to designated security department staff of both the AEO Programme Team and Customs as well as to maintain records of these reports which should be made available to Customs? (d) Whether po....
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.... structure to segregate domestic, international, high value and hazardous cargo. (n) Whether all fencing has been regularly inspected for integrity and damage? (o) Whether the number of gates is kept to the minimum necessary for proper access and safety? (p) Whether private passenger vehicles are prohibited from parking in or adjacent to cargo handling and storage areas? (G) Personnel Security 3.5 Personnel security: Yes No Remarks (a) Whether all reasonable precautions have been taken when recruiting new staff to verify that they are not previously convicted of security-related, Customs or other criminal offences? (b) Whether periodic background checks are conducted on employees working in security sensitive positions? (c) Whether employee identification procedures require all employees to carry proper identification that uniquely identifies the employee and organisation? (d) Whether procedures to identify, record and deal with unauthoriz....