AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
Authorized Economic Operator (AEO) programme for implementation
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....ans 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 fumishing 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 17712 may be used. However in case of maritime containerized cargo only PAS / ISO 17712 seals shall be used. The officers carrying out validations under AEO Programme should carefully ascertain this aspect. 3. The Central Board of Excise & Customs, New Delhi (Board) also decided that the benefits to various types of approved AEOs would be as under: A. For Importers: (a.) AEO importers would be entitled to facilitation levels that are higher than that for an ACP importer. (b.)AEO importers shall be given the benefits of furnishing of reduced bank guarantee, wherever applicable, not exceed....
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....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 respect of individual consignments of sensitive goods Ito be warehoused. Board Circular No 99/95-Cus. dated 20.09.1995 shall be modified to this extent. (c) In case of goods which are not likely to deteriorate, the warehousing period under section 61 of the Customs Act, 1962 may be extended by Commissioner of Customs, for a period not exceeding six months and by the Chief Commissioner of Customs for such period as he may deem fit. Board Circular No. 47/2002-Cus., dated 29.7.2002 prescribes that the Chief Commissioner at a time may not grant extension to the warehousing period beyond 3 months and in certain exceptional circumstances not beyond s....
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....Customs as an AEO can enjoy benefits flowing from being a more compliant and secure company as well as favourable consideration in any Customs proceedings coupled with better relations with Customs. AEO status will also ensure a low risk score is incorporated into Customs 'Risk Management System' (RMS) and used to determine the frequency of Customs physical and documentary checks. The benefits may also include simplified Customs procedure, declarations, etc. besides faster Customs clearance of consignments of/for AEO status holders. For the present, the following benefits will accrue to AEO status holders: 2.2 A. Importers: (a) (b) For AEO importers the facilitation shall be higher than for an ACP importer. AEO importers may be given benefit of reduce bank guarantee wherever applicable. In any case, the amount of bank guarantee shall not exceed 5% of the bond amount. B. Exporters: (a) AEO exporters shall be given benefits of reduced percentage of examination. At present the examination of export consignment is governed by Board Circular No. 6/2002-Cus dated 23.01.2002. In cases where normal examination percentage is prescribed as 10%, for AEO exporter....
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....nd secure company as well as favourable consideration in any Customs proceedings coupled with better relations with Customs. AEO status will also ensure a low risk score is incorporated into Customs ‘Risk Management System' (RMS) and used to determine the frequency of Customs physical and documentary checks. The benefits may also include simplified Customs procedure, declarations, etc. besides faster Customs clearance of consignments of/for AEO status holders. 2.2 A. (a) For the present, the following benefits will accrue to AEO status holders: Importers: For AEO importers the facilitation shall be higher than for an ACP importer. (b) AEO importers may be given benefit of reduce bank guarantee wherever applicable. In any case, the amount of bank guarantee shall not exceed 5% of the bond amount. B. Exporters: (a) AEO exporters shall be given benefits of reduced percentage of examination. At present the examination of export consignment is governed by Board Circular No. 6/2002-Cus dated 23.01.2002. In cases where normal examination percentage is prescribed as 10%, for AEO exporters this percentage shall be 5%. In cases of export under claim of drawback / Re....
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....c) In case of goods not likely to deteriorate, the Chief Commissioner of Customs may grant extension upto a period of six months at a time in deserving cases. 3. Criteria for considering application for grant of AEO status: (i) Appropriate record of compliance of Customs and other relevant laws; (ii) Satisfactory system of managing commercial and, where appropriate, transport records; (iii) Proven financial solvency; and (iv) Maintenance of approved security and safety standards. 5 4. 4.1 Who can apply for AEO status? 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 include manufactures, exporters, importers, logistic providers, carriers (airlines etc.), freight forwarders, and Customs House Agents. Others who may qualify include port operators, authorized couriers, stevedores. The list is not exhaustive. 4.2 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 the like categories of businesses will not be eligible for AEO s....
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....: If application is incomplete or deficient, the applicant will be suitably informed within 30 days of the receipt. 6.2 AEO Programme Manager will not process the following applications until these are rectified, as indicated: (a) information. (b) Which is incomplete This may be resubmitted with the complete Where the application has not been made by a legal person - This can only be resubmitted by the concerned legal entity. (c) - contact Where no responsible person is nominated – This can only be resubmitted when the applicant nominates a responsible person who will be the point of for the AEO Programme. (d) Where the applicant is subject to bankruptcy proceedings at the time the application is made: This may be resubmitted when the applicant becomes solvent. (e) Where a previously granted AEO status has been revoked -This may not be resubmitted until three years after the date of revocation. 7. 7.1 Processing of application: 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) (ii) Able to establish a record of compliance with C....
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....partment. These 'technical' or procedural errors may include the following: Any errors that have been voluntarily disclosed; Any decisions which have been overturned by Courts/Tribunal or departmental (i) (ii) review; (iii) Any decisions currently under review; and (iv) Where a penalty is imposed for a minor irregularity. 10.3. The company should have business activities for at least three years from the date of application. 10.4 AEO Programme Manager will assess whether a serious infringement or repeat infringements of Customs, Central Excise and Service Tax laws has been committed by any of the following persons: (i) the applicant, and, (ii) any other responsible person involved in the running of the business. 10.5 An applicant will also need to demonstrate that he has: (i) procedures in place to identify and disclose any irregularities or errors to the Customs authorities or, where appropriate, other regulatory bodies. (ii) identified. taken appropriate remedial action when irregularities or errors are 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 t....
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....lvent, or in liquidation or bankruptcy and should not have an outstanding claim against any guarantee in the last three years. Further, the applicant should not have delayed in payment of due taxes. Only uncontested and undisputed claims will be treated as outstanding claims for the purpose of this Para. 12.2 AEO Programme Team will rely on the applicants annual accounts due in the last three years to establish solvency. In particular, the following will be taken into account: (i) Where required, the accounts have been filed with Registrar of Companies within the time limits laid down by law. (ii) Where applicable, audit qualifications or comments in the annual accounts about the continuation of the business as a going concern. Any contingent liabilities or provisions. (iv) Net current assets are positive. (v) Net assets position and the extent of intangible assets. 12.3 It is recognized that in some circumstances it may be normal practice for a company to have negative net assets. For example, a company may be set up by a parent company for research and development purposes when the liabilities are funded by a loan from the parent or from a financial instituti....
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....are them against transport documents, purchase/sales orders and Customs papers. (j) Internal control procedures should exist when discrepancies and/or irregularities are discovered. 13.4 Procedural Security In order to ensure procedural security following measures / steps should be taken. 10 (i) Security measures should be in place to ensure the integrity and security of supply processes relevant to the transportation, handling, and storage of cargo in the chain. (ii) Proper documentation management procedure should be in place to ensure that all documentation used in the clearing of cargo is legible, complete, accurate and protected against the exchange, loss of introduction of erroneous information. (iii) Procedure should be in place to ensure that information received from business partners is reported accurately and timely as well as declared in the time limit regulated by Customs. (iv) Procedure should be in place to ensure that: (a) (b) Import/Export cargo are reconciled against the information on the bill of lading. The weights, labels, marks and piece count of the import/export cargo are accurately indicated. (c) Import/export cargo are verified aga....
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....st be provided especially for entrances and exits, cargo handling and storage areas, fence lines and parking areas. e) 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. f) Only properly identified and authorized persons, vehicles and goods may be permitted access. Access to document or cargo storage areas may be restricted. g) h) There should be appropriate security systems for theft and/or access control. i) Restricted areas should be clearly identified. j) integrity of structures and systems must be periodically inspected. k) Perimeter fencing should enclose the areas around cargo handling and storage facilities. 1) Interior fencing within a cargo handling structure should be used to segregate domestic, international, high value and hazardous cargo. n) m) All fencing must be regularly inspected for integrity and damage. The number of gates should be kept to the minimum necessary for proper access and safety. Private passenger vehicles should be prohibited from par....
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....rogram is established and maintained for employees to foster awareness of the threat at each point in the supply chain. (b) Employees are aware of the procedures the company has in place to address a situation and how to report it. (c) Specific training is offered to assist employees in maintaining cargo integrity, recognizing internal conspiracies and protecting access controls. (ii) Supply chain security training of employees must include the following items: (a) Security policy of the company. (b) Potential risk to internal security of the company. (c) Maintaining cargo security. (d) Access control measures of the company. (e) Identifying and reporting suspicious cargo and personnel. (f) Conveyance management and cargo security for conveyance management personnel. 13 (iii) Educational methods of security training and keeping records of security training for the checks conducted by the Customs are established. 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-certifica....
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....ents of report and recommendation can be seen by applicant who will get the opportunity to sign the same, but this will not be a mandatory requirement. 14.11 Where the application is not accepted after the AEO verification, the applicant will be informed suitably within 60 days and advised of the criteria that have not been met and give the applicant time to adapt procedures to remedy the deficiency. If applicant is unable to make the required changes within the specified time limits, the 14 AEO Programme Manager will issue a decision to reject applicant's AEO application, explaining the reasons for rejection. This decision will be subject to the applicant's 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. Certifica....
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.... or, at least within 14 days of the change taking place. 16.4. If the legal entity changes, the AEO status holder needs to reapply for AEO in the name of new legal entity. 15 16.5. If the AEO status holder makes Customs related errors, they must be reported to the local Customs officers as well as the AEO Programme Team. Errors that are voluntarily disclosed will not impact the AEO status provided that the AEO status holder has: (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. Thus, it is recommended that the AEO status holder should continue to re-assess it's 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) Where there is a reasonable belief that an act has been perpetra....
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....an appeal before the Director General of Inspection, New Delhi for review of the said order. The Director General of Inspection, after considering the case of the applicant, shall dispose of the appeal within a period of thirty days. ******* 17 Dated: Annexure-A APPLICATION FORM FOR GRANT OF AEO STATUS Name of Company / Economic Operator: 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. include site address, phone number and contact Please 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: * Contact person will be a senior management official who will be nodal contact point and responsible to the C....
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.... procedures are in place to and disclose any identify 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? Yes No Remarks Note: The Self-Assessment can be carried out by the applicant themselves or through a third party having expertise. (B) Financial Solvency 2 Issues (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? Yes No Remarks 20 20 Yes No Remarks (C) Cargo Security 3.1 Cargo Security: (a) Whethe....
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....ved or released. (e) Whether all shortages, overages, and other significant discrepancies or anomalies must be resolved and/or investigated appropriately. Yes No Remarks 22 (E) Conveyance Security 3.3 Conveyance Security (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? or (c) Whether there is a system for operators to report actual 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 potential places of concealment of illegal goods on conveyances are regularly inspected, all internal and external compartments and panels, appropriate and secured? as (e) (f) Whether predetermined routes are identified by the dispatcher, and procedures of random route checks along with documenting and verifying the length of time between the loading p....
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.... positions? Whether employee identification procedures require all employees to carry proper identification that uniquely identifies the employee and organisation? Whether procedures to identify, record and deal with unauthorized or unidentified persons, such as photo identification and sign-in registers for visitors etc. have been ensured at all points of entry? (e) Whether 3.5 3.7 3.8 procedure to expeditiously remove identification and access to premises and information for employees whose employment is terminated is in place? exists to Whether system a encourage other concerned business entities/trading partners to assess and enhance supply chain security? Whether the applicant is able to produce documentation showing the safety and security measures and controls put in place for verification by the AEO Programme Team? Whether a self assessment has been carried out by a person with extensive knowledge of the risks and threats applicable to his type of business? 25 25 (H) Business Partner Security 3.6 Business Partner Security (a) Whether applicant have written and verifiable process, including the capability of financial soundne....