• CCI AD FROM 5th April 2021

Extension of the benefits of Accredited Economic Operator (AEO) program to the AEOs

Circular No.: ES/357/2020-21                                                                        6th November, 2020

 

To: Members of the Council

Sub: Extension of the benefits of Accredited Economic Operator (AEO) program to the AEOs

Dear Member,

We would like to inform you that the Council has received a communication from Shri M .G. Thamizh Valavan, Commissioner, Single Window Project, CBIC informing about the extension of the benefits of Accredited Economic Operator (AEO) program to AEOs for issuance of License/Permits/Certificate/Other Authorization (LPCOs) and also for issuing NOCs for live consignments. This program of CBIC is governed by WCO Safe Framework of Standards, 2018 which provides an extended list of benefits (general as well as operator-specific benefits) to AEOs. 

A brief on AEO program is given here below for ready reference-

BACKGROUND:

AEO is a programme under the aegis of the World Customs Organization (WCO) SAFE Framework of Standards to secure and facilitate Global Trade. The programme aims to enhance international supply chain security and facilitate movement of legitimate goods. AEO encompasses various players in the International supply chain. Under this programme an entity engaged in international trade is approved by Customs as compliant with supply chain security standards and granted AEO status & certain associated benefits. India’s AEO Programme is in sync with the commitments made under Article 7.7 of WTO TFA. 

AEO is a voluntary compliance programme. It enables Indian Customs to enhance and streamline cargo security through close cooperation with the principle stakeholders of the international supply chain viz. importers, exporters, logistics providers, custodians or terminal operators, custom brokers and warehouse operators.

 

IMPLEMENTATION:

 

The Indian AEO Programme is implemented vide CBIC’s Circular 33/2016–Customs dated 22.07.2016, as amended & Circular 26/2018- Cus dated 10.08.2018, which provides the statutory framework for the AEO programme. The circular is in line with the WCO’s SAFE Framework. The circular provides for a three-tier AEO Status for Exporters & Importers. The three tiers are AEO T1, AEO T2, AEO T3, where AEO T3 is the highest level of accreditation. All three tiers provide for varying and incrementally increasing level of facilitation to the status holder. There is one more category of AEO- LO that covers all other entities in the supply chain other than the importers & exporters. 

 

The AEO T1 processing was decentralized and rationalized via Circular No. 26/2018- Customs. The present circular has cut down on the Annexure required for AEO T1 certification from earlier 7 to the present 2. The present circular has not just rationalized the AEO T1 processing by taking away redundancy in earlier processing but it has also made more through certain key compliance requirements. For that, the new circular has relied upon the latest SAFE framework 2018 edition and best practices from domestic AEO Programme of different Customs administrations.

 

Apart from the above changes, the new circular has completely decentralised the processing of AEO T1. In the present setup, the AEO T1 file can be approved at the Customs Zonal level. This has completely eliminated the time that was wasted in transit of application from Zonal offices to DIC (AEO HQ).

 

However, the most significant step to ensure transparent, efficient, and seamless processing AEO certification has been the recent launch of AEO Web Application. The AEO Web Application (www.aeoindia.gov.in) is a major move towards the Prime Minister’s initiative of ‘Digital India’. To implement PM’s vision in its complete spirit, CBIC has launched the Web Application for AEO which allows for complete digital processing of AEO T1 applications with no human interface. This digitization process will provide substantial support to AEOs by allowing them to directly file their application at the click of the button, without the need to visit Customs Offices.

 

Present Position:

 

The present position of AEO accredited entities in India are as below (24.9.2020):-

 

AEO T1

3097

AEO T2

564

AEO T3

12

AEO LO

793

TOTAL

4466

 

BENEFITS:

 

Major Benefits of the AEO certification are:

  1. Higher facilitation/ minimal interception by Customs at ports for consignments of AEO entities. 

  2. Self-declaration of SION (Standard Input Output Norms) under Para 4.07A of FTP 2015-20 for AEO T1/T2/T3 Exporters in cases where SION is not notified. This helps Indian exporters to establish nexus between exported finished goods and imported raw materials by simple declaration.

  3. Direct Port Delivery of imported goods, ensuring faster turnaround time, lower dwell time and aid just-in-time inventory management for AEO T1, T2 and T3 entities.

  4. Direct Port Entry for factory stuffed containers meant for export by AEOs T1, T2 AND T3 aiding quick movement of export cargo.

  5. Provision of Deferred Payment of duties – delinking duty payment and Customs clearance for AEO T2 and AEO T3, resulting saving in cost and clearance time.

  6. Benefits of Mutual Recognition Agreements with other Customs Administrations for AEO T2 and AEO T3, which provides reciprocal benefits to each other’s AEO entities.

  7. Priority clearance of import and export consignments with minimal or no delay.

  8. Fast tracking of adjudications and refunds including IGST refunds and disbursal of drawback.

Mutual Recognition Agreements (MRA)

 

Mutual Recognition Agreements are the international face and connecting link of the domestic AEO Programme of various countries. It acts as an equalizer that harmonize the minor difference to allow for seamless facilitation in terms of benefits and processes for movement of goods across borders for the domestic AEO accredited entities. Mutual Recognition of AEOs is a key element of the WCO SAFE Framework to strengthen end-to-end security of supply chains and to multiply benefits for traders at a global level.

 

By mutual recognition of AEOs, two customs administrations agree to:

  • recognise the AEO authorisation issued under the other countries programme and

  • provide reciprocal benefits to AEOs of the other countries AEO entity.

Indian Customs has signed two Mutual Recognition Agreements with the Customs Administrations of South Korea, Hong Kong and Taiwan.. MRA with the United States of America is in the final stage of signing. Further, Indian Customs has already signed a Joint Action Plan (JAP) for AEO MRA with Uganda and UAE. Indian Customs is also in the final stages of finalization of the JAP with Australia and Mexico. JAP acts the broad framework of timeline and actions that needs to be completed in phased manner to conclude an MRA. Lastly, ‘Letter of Intent’ for signing of MRA has already been relayed to 15 major trade partner countries and initial discussions with them are ongoing.

 

For more details, members may kindly visit the website https://www.aeoindia.gov.in/SourceCode/Website/about.html.

 

Members may kindly make a note of the above and become an AEO in order to avail the AEO benefits

Thanking you,

Yours faithfully,

S.BALARAJU
EXECUTIVE DIRECTOR