Customs - Implementation of Authorized Economic Operator (AEO) programme - CBEC issues Guidelines

By Vijay Kumar

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.

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.

Under the programme, a business authorized by the 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 that may be 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.

Possible long-term benefits flowing to different categories of AEO status holders are as under:

(a) Importers :

(i) Reduced examination and inspection with AEO status holder being given higher facilitation than that available to ACP Clients.

(ii) Acceptance of pre-arrival import declarations.

(b) Exporters:

(i) Reduced examination and inspection.

(ii) Acceptance of export declarations without bringing goods into Customs area.

(c) Warehouse Owners:

(i) Faster approvals for a new warehouse.

(ii) Reduced audit.

(d) Custom House Agents:

Acceptance of pre-arrival import declarations for client importers.

(e) Logistics Providers (Carriers / Forwarders / etc.):

(i) Transit of goods without case by case permissions.

(ii) Transit of goods without Customs escort.

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

As DGICCE is assigned the work of implementation of the AEO programme, Board desires that process of inviting application, processing of the same, validation and certification shall be done as envisaged in the programme, as per the following time lines:

Board wants all Commissioners to issue a suitable Public Notice and a standing order for guidance of trade and staff.

Please see also DDT 1500 – 03.12.2010.

CBEC Circular No.37/2011-Cus., Dated: August 23, 2011 and Annexure to Circular No. 37