TaxTMI 
TaxTMI 
Implementation of Authorized Economic Operator (AEO) Programme guidelines
X X X X Extracts X X X X
X X X X Extracts X X X X
.... i.e. the point of export to import in the receiving country, keeping in view national requirements of respective administrations. The detailed guidelines on implementation of the AEO programme are appended as Annexure to the Circular No.- 37/2011 Customs dated 23/08/2011 issued by the CBEC. 2. One of the salient features of the AEO programme is that any economic operator such as importer, exporter, logistics provider, Customs House Agent can apply for authorization subject to the criteria that the applicant is: (i) able to establish a record of compliance in respect of Customs and other legal provisions. (ii) able to demonstrate satisfactory systems of managing commercial and, where appropriate, transport records. (iii) financially solvent. (iv) able to demonstrate satisfactory systems in respect of security and safety standards. 3. The AEO programme shall be implemented by the Directorate General of Inspection (DGICCE) and Additional Director General, DGICCE (HQ),New Delhi will be the AEO Programme Manager. The AEO Programme Manager shall be assisted by a team of officers viz. the AEO Programme Team. 4. The authorization shall normally....
X X X X Extracts X X X X
X X X X Extracts X X X X
....itate global trade, which includes the concept of an Authorized Economic Operator (AEO) whereby a party engaged in the international movement of goods 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 par....
X X X X Extracts X X X X
X X X X Extracts X X X X
....orized couriers, stevedores. The list is not exhaustive. 4.3 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 the like categories of businesses will not be eligible for AEO status. 4.4 The application for AEO status will only cover the legal entity of the applicant and will not automatically apply to a group of companies. 4.5 There is no provision to grant AEO status to specific site, division or branch of legal entity of the applicant. The application must cover all the activities and locations of the legal entity involved in the international trade supply chain and the identified criteria will be applied across all those activities and locations. 4.6 In order to apply for AEO status the applicant must be established in India. For this purpose, the applicant will be asked to provide evidence which may include: (i) (ii) (iii) A certificate of registration issued by the Registrar of Companies. Details of where staff is employed for making supplies of goods and/or services. Proof th....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... of application: 7.1 On receipt of the complete application and after ensuring the applicant is eligible to apply certain validation tests will be carried out to check that applicant is: (i) Able to establish a record of compliance with Customs and other legal provisions. (ii) Able to demonstrate satisfactory systems of managing commercial and, where appropriate, transport records. (iii) Financially solvent. (iv) Able to demonstrate satisfactory systems in respect of security and safety standards. 7.2. Once the application has been accepted, the applicant will be suitably informed of this within 30 days. The application will then be passed to the AEO Programme Team which will by prior appointment visit the applicants premises and carry out an AEO verification and make recommendation to the AEO Programme Manager. 8. Rejection of application: a 8.1 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 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....where appropriate, other regulatory bodies. taken appropriate remedial irregularities or errors are identified. action when 10.6 Once an error has been identified, the applicant is expected to take steps to ensure that they do not happen again or, at least, to ensure that they are immediately remedied if they do arise. Failure to take such steps could count against applicant. 10.7 Besides assessing the compliance of the business itself, the AEO Programme Team may also look at the previous compliance records of the following persons: (i) (ii) (iii) (iv) 10.8 Company Directors; Company Secretary; Advocates directly employed by the applicant; and Employees directly responsible for the import/export of goods. Any errors made by third parties acting on applicants behalf would reflect upon the applicants compliance. Thus, the applicant should make such third parties aware of the standards that he operates to and that systems are in place to immediately identify any problems. 11. Managing commercial and (where appropriate) transport records 11.1 For the purpose of AEO status the applicant must hav....
X X X X Extracts X X X X
X X X X Extracts X X X X
....alifications comments in the annual accounts about continuation of the business as a going concern. Any contingent liabilities or provisions. Net current assets are positive. Net assets position and the extent of intangible assets. or the 12.3 It is recognized that in some circumstances it may be normal practice for a company to have negative net assets. For example, company may be set up by parent company for research and development purposes when the liabilities are funded by a loan from the parent or from a financial institution. In these circumstances, negative net assets will not necessarily be seen as an indicator of insolvency but further evidence of solvency will be required such as a Bank letter or in case of sole proprietor or partnership firms, personal assets. 12.4 If applicant is a newly established business or have just started trading, his financial solvency will be judged on the basis of records and information. This will include the latest: (i) Cash flow figures. (ii) Balance sheet. (iii) 13. 13.1 Profit and loss forecasts approved by directors/partners/sole proprietor. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... be available to Customs. Consider potential places of concealment of illegal goods on conveyances and ensure these are regularly inspected, and secure all internal and external compartments and panels, as appropriate. Records thereof are to be made and maintained. 13.5 (a) (b) Premises Security: Buildings must be secure against unlawful entry. External and internal windows, gates and fences must be secured with locking devices or alternative access monitoring or control measures. (c) (d) (e) (f) (g) (h) (i) (j) (k) (I) (m) (n) Management or security personnel must control the issuance of locks and keys. Adequate internal and external lighting must be provided especially for entrances and exits, cargo handling and storage areas, fence lines and parking areas. Gates through which vehicles and/or personnel enter/exit must be manned, monitored or otherwise controlled. Vehicles accessing restricted areas must be parked in approved area and their license plate numbers furnished to Customs upon request. Only properly identified and authorized persons, vehicles and goods ma....
X X X X Extracts X X X X
X X X X Extracts X X X X
....icable to his type of business. This may be an independent third party or someone within the business but they must be considered competent to carry out the assessment. 14. Pre-certification verification: 14.1. Once the application is accepted and validated by the AEO Programme Manager, within 15 days thereof it will be sent to an AEO Programme Team under intimation to the applicant, for carrying out a pre-certification audit. 14.2. The AEO Programme Team will visit 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 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
...., explaining thereasons for rejection. This decision will be subject to the applicants right of appeal. 14.12 In exceptional cases, the AEO audit verification may be stopped by consensus between the applicant and the AEO Programme Manager in order for the applicant to provide additional information or to permit minor problems to be addressed. The period of stoppage will normally not longer than six months and applicant will be informed in writing of the date when the AEO verification will recommence and the revised date by which applicant can expect a decision 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 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 alongwith an electronic co....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s: (a) Examined the reasons for the errors. (b) Taken appropriate remedial action to prevent recurrence. 17. Review of AEO Status: 17.1. The AEO Programme Team will review AEO status periodically to ensure continued adherence to the conditions and standards of grant of Certificate of AEO Status. Although the Certificate has no expiry date, it will only remain valid for as long as they meet the conditions of certification. Thus, it is recommended that the AEO status holder should continue to re-assess its compliance with the conditions of certification and act upon any identified problems as soon as they arise. To begin with, the frequency of such review will be one year. 18. 18.1 Suspension of AEO Status: The AEO Programme Manager may suspend the Certificate of AEO Status in the following cases: (a) (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 a serious infringement of Customs law. Where non-compliance with the conditions or criteria for the Certificate of AEO Status is detected and no remedial steps have been taken....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ctor General of Inspection, after considering the case of the applicant, shall dispose of the appeal within a period of thirty days. *** **** Annexure A APPLICATION FORM FOR GRANT OF AEO STATUS Name Operator: of Company / Economic Type of business : (i.e. importer / exporter / carriers etc.) Address: (A separate list can be attached for all locations) Contact person: Designation: Phone number: Mobile No.: Fax No.: Email address: * Company registration No.: (in case of companies registered under the Companies Act, 1956 and / or Limited Liability Partnership Act, 2008) PAN: List of sites, under control, where import export goods are packed / unpacked / handled / loaded / unloaded/consolidated. Please include site address, phone number and contact person. (A separate list can be attached) Major Items of import: Main countries of import Major Items of export: Main countries of export: Dated: Signature: Full Name: Position in Company: * Contact person will be a senior management official who will be nodal contact point and responsible to the Customs for ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n taken against the applicant in Remarkscolumn. (b) Whether any penalty has been imposed for violation of provisions of Customs, Central Excise and Service Tax laws? (c) Whether procedures are in place to identify and disclose any irregularities or errors to the Customs authorities or, where appropriate, other regulatory bodies? and (d) Whether appropriate remedial action is taken when irregularities or errors are identified? Note: The Self-Assessment can be carried 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 accoun....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... reports which should be made available to Customs? (d) Whether potential places of concealment of illegal goods on conveyances are regularly inspected, all internal and external compartments and panels, as appropriate and secured? (E) Premises Security 3.3 Premises Security: (a) Whether building is secured against unlawful entry? (b) Whether external and internal windows, gates and fences are secured with locking devices or alternative access monitoring or control measures? (c) Whether management or (d) security personnel control the issuance of locks and keys? Whether adequate internal and external lighting has 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 (f) (g) enter/exit have been manned, monitored or otherwise controlled? Whether vehicles accessing restricted areas are parked in approved area and their license plate numbers furnished to Customs upon request? Whether only properly identified and....