TaxTMI 
TaxTMI 
Review of entity based facilitation programmes viz. Accredited Client Programme (ACP) and Authorized Economic Operator (AEO) programme — Revised Guidelines
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....r AEO programme, and also enhance the scope of these programmes so as to provide further benefits to the entities who have demonstrated strong internal control system and willingness to comply with the laws administered by the Central Board of Excise and Customs. The prominent features of the new programme are: i. Inclusion of Direct Port Delivery of imports to ensure just-in-time inventory management by manufacturers - clearance from wharf to warehouse ii. Inclusion of Direct Port Entry for factory stuffed containers meant for export by AEOs iii. Special focus on small and medium scale entities - any entity handling 25 import or export documents annually can become part of this programme iv. Provision of Deferred Payment of duties - delinking duty payment and Customs clearance v. Mutual Recognition Agreements with other Customs Administrations vi. Faster disbursal of drawback amount vii. Fast tracking of refunds and adjudications viii. Extension of facilitation to exports in addition to imports ix. Self-certified copies of FTA / PTA origin related or any other certificates required for clearance....
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....ough revenue collection and trade facilitation. With a view to secure the international supply chain, the World Customs Organization had in June 2005 adopted the SAFE Framework of Standards to secure and facilitate global trade. Since then, this unique international instrument has ushered in modern supply chain security standards with the help of a closer partnership between Customs and business in the form of Authorized Economic Operator (AEO) programme, which constitutes one of the three pillars on which SAFE Framework rests.The AEO programme seeks to provide tangible benefits in the form of faster Customs clearances and simplified Customs procedures to those business entities who offer a high degree of security guarantees in respect of their role in the supply chain. The SAFE Framework sets forth the criteria by which businesses in the supply chain can obtain authorized status as a secure partner. Such criteria address issues such as threat assessment, a security plan adapted to the assessed threats, procedural measures to prevent illegitimate goods entering the supply chain, physical security of buildings and premises used as loading or warehousing sites, and security of cargo,....
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....n importers and the exporters, the new programme offers only one tier of certification (i.e. AEO-LO) whereas for the importers and the exporters, there will be three tiers of certification (i.e. AEO-T1, AEO-T2 and AEO-T3). Accordingly, henceforth the AEO Programme Manager may, following an application by an economic operator, issue the following Authorized Economic Operator Certificates (hereinafter referred to as AEO certificates)to which the applicant may be eligible as per the eligibility conditions and criteria laid down under paragraph 3 of this circular: 1.2.1 AEO-T1Certificate - This certificate may be granted only to an importer or to an exporter. For the purpose of this certificate, (i) the Importer/ Exporter should fulfill the criteria mentioned at para 3.1 below; and (ii) All other requirements as stipulated in paragraphs 3.2, 3.3 and 3.4 below shall be considered to have been met if the information and documents submitted by the applicant prove the claims of the applicant to the satisfaction of the AEO Programme Manager. 1.2.2 AEO-T2 Certificate - This certificate may be granted only to an importer or to an exporter For the purpose of this certificate,....
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....alidly shall be granted either AEOT2or AEO-LO Certificate depending upon their category by the AEO Programme Manager within 15 days of issue of this circular, and thereafter, they shall become entitled for benefits in terms of this circular in terms of paragraph 1.5 below. They shall remain AEO-T2 or AEO-LO certificate holders till the validity period mentioned in their AEO certificate issued under Circular 28/2012-Customs dated 16-11-2012. Thereafter, they will have to follow renewal procedure as prescribed in this circular. In the meantime, it shall also be open for them to apply for AEO-T3 certificate, if eligible. 1.4.2 All the existing ACP clients who have been granted ACP status in terms of the erstwhile ACP circulars and who continue to possess such status validly shall be provisionally granted AEOT1 Certificate by the AEO Programme Manager within 15 days of issue of this circular, and thereafter, they shall become entitled for benefits in terms of this circular in terms of paragraph 1.5 below. They shall remain AEO-T1 certificate holders till the validity period mentioned in their ACP renewal /granting letter. Thereafter, they will have to follow renewal procedure as pre....
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.... on their categories would be as mentioned below: 1.5.1 Benefits for AEO-T1: i. They shall be accorded high level of facilitation in imports and export of their consignments, thereby ensuring shorter cargo release time. ii. 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. iii. ID cards to be granted to authorized personnel for hassle free entry to Custom Houses, CFSs and ICDs. iv. Wherever feasible, they will get separate space earmarked in Custodian's premises. v. 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. vi. Investigations, if any, in respect of Customs, Central Excise and Service Tax cases would be complet....
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....e PCA will be conducted once in three years only. xii. They will be given access to their consolidated import/export data through ICEGATE from a date that would be communicated separately. xiii. They will be provided the facility of submitting paperless declarations with no supporting documents in physical form. xiv. 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. xv. 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 a Mutual Recognition Agreement/Arrangement. 1.5.3 Benefits for AEO-T3: The following benefits would be provided over and above the benefits offered in T2: i. They shall be accorded highest l....
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....he System Directory (c) Waiver from fee for renewal of license under sub regulation (2) of regulation 11 of CBLR,2013. 4 Warehouse Operators (a) Faster approval for new warehouses within 7 days of submission of complete documents (b) Waiver of antecedent verification envisaged for grant of license for warehouse under circular 26/2016 (c) Waiver of solvency certificate requirement under circular 24/2016 (d) Waiver of security for obtaining extension in warehousing period under circular 21/2016 (e) Waiver of security required for warehousing of sensitive goods under circular 21/2016 1.5.5 With a view to promote an overall voluntary compliance framework, the selection of AEO's for on-site post clearance audit (OSPCA) in respect of AEO-T1, AEO-T2 and AEO-T3 shall be based on risk assessment. Better and higher compliance level demonstrated by the AEO shall be taken into account for determining the frequency of audit. It is also clarified that AEO's undergoing OSPCA shall not be subjected to routine transactional PCA. Detailed guidelines on risk based OSPCA will be issued subsequently. Section 2 Application for an AEO certificate 2.1 An applicant....
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....nagement, Customs & Central Excise, 'D' Block, I.P. Bhawan, I.P. Estate, New Delhi - 110002. 2.5 The Additional Director General, Directorate General of Performance Management, Customs & Central Excise, 'D' Block, I.P. Bhawan, I.P. Estate, New Delhi - 110002 will be the AEO Programme Manager and AEO Programme Team will comprise officers from the Directorate General of Performance Management and its regional offices. Section 3 Eligibility conditions and criteria for granting the AEO certificate 3.1 Who can apply for AEO certificate? 3.1.1 Anyone involved in the international supply chain that undertakes Customs related activity in India can apply for AEO status irrespective of size of the business. These may include exporters, importers, logistic providers (e.g. carriers, airlines, freight forwarders, etc.), Custodians or Terminal Operators, Customs House Agents and Warehouse Owners. Others who may qualify include port operators, authorized couriers, stevedores. The list is not exhaustive. 3.1.2 Businesses that are not involved in Customs related work / activities will not be entitled to apply. This means that in general, banks, insurance companies, consultants and....
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....count of the specific characteristics of economic operators, in particular of MSMEs, while applying the eligibility conditions and criteria prescribed under paras 3.3 (relating to management of commercial and transport records), and those under paras 3.5 (relating to safety and security) for granting the above AEO Certificates. The AEO Programme Manager shall take into account such factors as the size of the MSMEs, the legal status (e.g. proprietorship, partnership etc), the structure, the key business partners and also the specific economic activity of the economic operator while applying these eligibility conditions and criteria specified under paras 3.3 and 3.5. In particular, the AEO Programme Manager shall take into account the possible difficulties for MSMEs in meeting with these eligibility conditions and criteria under paras 3.3 and 3.5 with a view to make the above AEO certificates more available to MSMEs. The criteria of turnover indicated in MSME Act would be taken into consideration for categorization of entities into Micro, Small and Medium Enterprises. 3.1.10 DG(Systems), CBEC will progressively introduce an ICT based solution, which will not only cater to the mana....
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....g Standards (IFRS) which facilitates audit-based Customs control; ii. Have an administrative set up which corresponds to the type and size of business and which is suitable for the management of the flow of goods, and have internal controls capable of detecting illegal or irregular transactions; iii. Wherever applicable, have satisfactory procedures in place for the handling of licenses and authorizations connected to export/import; iv. Have satisfactory procedures in place for archiving of the company's records and information, and also for protection against the loss of information; v. Ensure that employees are made aware of the need to inform the Customs authorities whenever compliance difficulties are discovered and establish suitable contacts to inform the Customs authorities of such occurrences; vi. Have satisfactory procedures for verifying the accuracy of Customs declarations. vii. Have appropriate information technology security measures to protect the applicant's computer system from unauthorized intrusion and to secure the applicant's documentation. 3.4 Financial solvency An applicant must be financially solvent during the three financial years pr....
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....t cargo are reconciled against the information on the bill of lading. b. The weights, labels, marks and piece count of 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. All shortages, overages, and other significant discrepancies or anomalies must be resolved and/or investigated appropriately. 3.5.3 Premises Security: In order to ensure security of the international supply chain, the applicant must ensure that the buildings to be used in connection with the operations to be covered by the certificate are constructed of materials which resist unlawful entry and provide protection against unlawful intrusion. In addition, the applicant must ensure that appropriate access control measures are in place to prevent unauthorized access to shipping areas, loading places and cargo areas. With this view, following criteria should be fulfilled by the applicant: i. Buildings must be secure against unlawful entry. ii. All gates, fences and windows must be secured with locking devices or alternativ....
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....the security policy manual. v. Only authorized personnel should distribute container seals and safeguard their appropriate and legitimate use. vi. When appropriate to the type of cargo container used, a seven-point inspection process is recommended: Front wall, Left side, Right side, Floor, Ceiling/Roof, Inside/outside doors, Outside/undercarriage. vii. Appropriate procedures should be laid down on measures to be taken when an unauthorized access or tampering is discovered. viii. Goods should be uniformly marked or stored in designated areas and procedures should exist to weigh / tally them and compare them against transport documents, purchase/sales orders and Customs papers. ix. Internal control procedures should exist when discrepancies and/or irregularities are discovered. 3.5.5 Conveyance Security: In order to ensure security of the international supply chain, the applicant must ensure that the conveyances to be used in connection with the operations to be covered by the certificate are handled in a manner which ensures security of the cargo. With this view, the applicant must: i. ensure to the extent possible that all conveyances used for the transport....
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....n and sign-in registers for visitors etc. must be ensured at all points of entry. v. Procedures must be in place to expeditiously remove identification and access to premises and information for employees whose employment is terminated. 3.5.7 Business Partner Security In order to secure the international supply chain, the applicant must have implemented measures to ensure a clear identification of his business partners. With this view, following criteria should be fulfilled by the applicant: 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 applicant must get those business partners' copies of certification. iii. For non-AEO partners, the applicant must get written confirmation of meeting AEO equivalent security criteria. Such business partners must have one of the following written documents demonstrating their compliance with security criteria: a. Contractual document ....
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....nformation. ii. Where the application has not been made by a legal person - This can only be resubmitted by the concerned legal entity. iii. Where no responsible person is nominated as the Point of Contact - This can only be resubmitted when the applicant nominates a responsible person who will be the point of contact for the AEO Programme. iv. Where the applicant is subject to bankruptcy proceedings at the time the application is made - This may be resubmitted when the applicant becomes solvent. v. Where a previously granted AEO status has been revoked -This may not be resubmitted until the period as prescribed in paragraph 5.7.3 has elapsed after the date of revocation. 4.3 Rejection of application: The application shall not be accepted in any of the cases: (i) Where the applicant is not eligible for grant of AEO status, or (ii) 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. 4.4 Processing of application: 4.4.1 On receipt of the complete application and after ensuring that the applicant i....
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....ich are relevant to the customs related activities of the applicant for AEO-T2 or AEOLO status. The examination as well as its results shall be documented by the AEO Programme team. 4.4.5.5 In case several premises of the applicant are run in a similar way by standard systems of record keeping and security etc. there will be no need for the AEO Programme Team to visit all of them. However, if the business of the applicant covers a range of activities or different premises have different method of operating, then it may be necessary for more visits to be made. 4.4.5.6 The duration of visit/verification would depend on the size of business, number of premises, how they operate etc. The AEO Programme Team will give the applicant for AEO-T2 or AEO-LO status an estimate of time required, though this may have to be amended once the verification has commenced. The date(s) for physical verification would be decided by the team in consultation with the applicant. 4.4.5.7 Where appropriate, in addition to the other requirements detailed earlier, the AEO Programme Team may cover the following: (i) Information on Customs matters. (ii) Remedial action taken on previous Customs er....
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....mitted by a holder of AEO-T2 status, who has been continuously enjoying the AEO-T2 status for a period of two years or more, the applicant shall be issued the AEO-T3 certificate within 30 days of submission of the application. However, in case of any significant changes in the business or the processes since the previous physical verification by an AEO Programme Team, the applicant may be subjected to physical verification as may be deemed necessary by the AEO Programme Manager by following the procedures as mentioned in the paragraph 4.4.5, 4.4.6 and 4.4.7 above. 4.4.9 In case an application for grant of AEO-T3 status is submitted by a holder of AEO-T2 status, who has not been continuously enjoying the AEO-T2 status for a period of two years or more, but who satisfies the eligibility condition mentioned at paragraph 1.2.3 (ii), the application will be assigned to a specific AEO Programme Team within 15 days to carry out physical verification of the information and documents submitted in Annexure-F only. The date(s) for physical verification would be decided by the team in consultation with the applicant. Thereafter, the procedures as mentioned in the paragraph 4.4.5, 4.4.6 and ....
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....Status: 5.3.1 After obtaining AEO status, the AEO status holder should maintain their eligibility by adhering to the appropriate standards. 5.3.2 The holder of a Certificate of AEO Status is required to notify any significant change in business and processes which may affect the AEO status to the AEO Programme Team. These changes may include the following: (i) Change to the legal entity. (ii) Change of business name and/or address. (iii) Change in the nature of business i.e. manufacturer / exporter etc. (iv) Changes to accounting and computer systems. (v) Changes to the senior personnel responsible for Customs matters. (vi) Addition or deletion of locations or branches involved in international supply chain. 5.3.3 The AEO status holder should notify the AEO Programme Team as soon as the change is known or, at least within 14 days of the change taking place. 5.3.4. If the legal entity changes, the AEO status holder needs to reapply for AEO in the name of new legal entity. 5.3.5. If the AEO status holder makes Customs related errors, they must be reported to the local "Client Relationship Manager" (CRM) as well as the AEO Programme Team. Errors that a....
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....hin 60 days of suspension, the AEO Programme Manager may restore the AEO status from a date to be notified by him. 5.6.2 Where AEO status had been suspended on account of suspension of the basic license as a Custodian or Custom Broker or Warehouse Operator or as the case may be, and subsequently such suspension of the basic license is revoked by the competent authority, the AEO Programme Manager may consider restoration of AEO status, and if deemed appropriate may restore the AEO status from a date to be notified by him. 5.6.3 Where AEO status had been suspended on account of issue of a show cause notice, and if the ratio of disputed duty demanded or drawback demanded or sought to be denied in SCNs issued under the Customs Act, 1962 during the last three years to the total duty paid and drawback claimed during the said period is not more than ten percent, the AEO Programme Manager may consider restoration of AEO status, and if deemed appropriate may restore the AEO status from a date to be notified by him. 5.6.4 In case an AEO status has been downgraded, it shall be open to the entity to apply again for higher status as and when the eligibility conditions and criterion are....
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.... 5(b). Designation: 5(c). Phone number: 5(d). Mobile No.: 5(e). Fax No.: 5(f). Email address: 6. Company registration No.: (in case of companies registered under the Companies Act, 1956 and / or Limited Liability Partnership Act, 2008) 7. PAN (copy may be provided) 8. List of sites, under control, where import / export goods are handled, e.g. packed / unpacked / loaded / unloaded / consolidated etc. in the course of supply to/from international supply chain. Please include site address, phone number and contact person. (A separate list can be attached) 9(a). Major Items of import (in case of importers): 9(b). Main countries of import (in case of importers): 9(c). Major Items of export (in case of exporters): 9(d). Main countries of export (in case of exporters): 10. Number of import documents filed during the preceding financial year (in case of importers): 11. Number of export documen....
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....cle, rail and pedestrian entrances) with traffic flows. - All buildings identified with access ways (e.g. administration office, export/import storage areas, export/import packing areas, export container movement). - Internal and/or external lighting facilities that contribute to security. - Other security features (e.g. CCTV, electronic access gates). - Visitor, contractor and company personnel parking areas. - Perimeter fences with description (e.g. 2-metre high security fence). - Areas used for container storage. Note: Site plan should be submitted with respect to all the sites of the entity. Annexure - E SELF-ASSESSMENT FORM Annexure - E.1 General Compliance (applicable for grant of AEO-T1, AEO-T2, AEO-T3 and AEO-LO) E.1 Compliance Yes No Remarks Whether having Customs and/ or other Departments' license/ certificate with respect to category of AEO application? Copy of the same may be provided. Whether having other Customs, Central Excise, Service Tax and other Department's licenses/ registration/ certificates? If yes, copies of these ....
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.... please indicate the details of the cases. Further, submit details related to volume of the customs related operations in 'Remarks' column. (b) Whether any SCN has been issued during last three financial years 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. If yes, please indicate the details in 'Remarks' column. (c) Whether there is any case against you wherein prosecution has been launched? If yes, please indicate the details in 'Remarks' column. (d) i. What is the amount of disputed duty demanded or recovery of drawback paid in excess or sought to be denied, in all the SCNs issued under the Customs Act,1962 during the last three financial years? ii. What is the total duty paid and drawback claimed during the preceding three financial years? iii. What is the ratio of the disputed duty amount involved in the Show Cause Notices (SCNs) to the total duty paid/ drawback claimed during th....
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....nbsp; Annexure E.4 Financial Solvency (applicable for grant of AEO-T1, AEO-T2, AEO-T3 and AEO-LO) E.4 Compliance Yes No Remarks Whether the applicant has been financially solvent during the three financial 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) Please attach Balance Sheets for last three Financial Years. Whether, where required, the accounts have been filed with Registrar of Companies within the time limits laid down by law? Whether, where applicable, audit qualifications or comments in the annual accounts about the continuation of the business as a going concern? Whether there are any contingent liabilities or provisions? Whether the net current assets are positive? Whether the entity has been defaulted in payment of due taxes d....
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....ges, and other significant discrepancies or anomalies are resolved and/or investigated appropriately? E.5.2 Premises Security: Yes No Remarks (a) Whether building is fully secured against unlawful entry? (b) Whether all external and internal gates, fences and windows are fully secured with locking devices or alternative access monitoring or control measures? (c) Whether the issuance of locks and keys is controlled by management or authorised personnel only? (d) Whether adequate internal and external lighting have been provided especially for entrances and exits, cargo handling and storage areas, fence lines and parking areas? (e) Whether gates through which vehicles and/or personnel enter/exit have been manned, monitored or otherwise controlled? (f) Whether vehicles accessing restricted areas are parked in approved area and their license plate numbers furnished to Customs upon request? ....
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....ction process is carried out in respect of containers before stuffing of cargo therein? (These seven points include: Front wall, Left side, Right side, Floor, Ceiling/Roof, Inside/outside doors, Outside/undercarriage.) (h) Whether it is possible to deliver goods to an Unsupervised area? (i) Whether appropriate procedures have been laid down on measures to be taken when an unauthorized access or tampering is discovered. (j) Whether goods are uniformly marked or stored in designated areas only? (k) Whether appropriate procedures exist to weigh / tally the goods and compare them against transport documents, purchase/sales orders and Customs papers? (l) Whether internal control procedures exist to deal with situations when any discrepancies and/or irregularities are discovered? E.5.4 Conveyance Security Yes No Remarks (a) Whether, to the extent possible, all conveyances used for the transportation of cargo....
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....c) Whether employee identification procedures require all employees to carry proper identification that uniquely identifies the employee and organisation? (d) Whether procedures are in place to identify, record and deal with unauthorized or unidentified persons, such as photo identification and sign-in registers for visitors etc at all points of entry? (e) Whether procedures are in place to expeditiously remove identification and access to premises and information for employees whose employment is terminated? E.5.6 Business Partner Security Yes No Remarks (a) Whether the applicant has 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 selection of business partners? (b) For AEO business partners, whether the applicant has obtained the copies of their AEO certificate? (c) For non-....