Authorized Economic Operator (AEO) Programme - CBEC's Customs Manual 2023 - Customs

Chapter 34: Authorized Economic Operator (AEO) Programme 1. Background: 1.1 Prior to adoption of the SAFE Framework by WCO in 2005, Customs administration all over the world including India, were already implementing various forms of Customs compliance programmes which focused on traditional areas of Customs requirements, and which can also be considered as trade facilitation programmes, based on the Revised Kyoto Convention s Authorised Persons provisions. In India this programme was known as Accredited Client Programme (ACP). (Notification no. 42/2005-Cus Dated 24.11.2005) which provided facilitation to clients subject to their fulfillment of the prescribed eligibility criteria. As of March 2015, 168 out of 180 WCO members have signed letters of intent committing to implement the SAFE Framework. In India the AEO programme was launched in 2011 on Pilot basis vide circular no. 37/2011-Cus dated 23.08.2011 and rolled out in full fledged manner vide circular no. 28/2012-Cus dated 16.11.2012. In the light of these international developments, as well as in view of the focus of the Government of India on Ease Of Doing Business , Central Board Of Indirect Taxes and Customs has developed a comprehensive unified trade facilitation programme by incorporating the existing ACP scheme and ongoing AEO Programme into a revised AEO Programme vide circular no. 33/2016-Customs dated 22.07.2016 providing additional facilities to the legitimate trade who have demonstrated strong internal control system and willingness to comply with the laws administered by the Central Board of Indirect Taxes and Customs. 1.2 The objective of the revised AEO programme shall continue to remain same as earlier, that 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. 1.3 In 2005 the World Customs Organisation (WCO) adopted the SAFE Framework of Standards to secure and facilitate global trade, which later included 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. 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, freight forwarders and custodians / terminal operators. 1.4 As aforestated, the AEO Programme seeks to secure the global supply chain in partnership with business entities that are fully legally compliant and provide with the Customs the confidence to validate their security features. Therefore, it is imperative that participating entities ensure they fulfill this fundamental requirement. 1.5 Customs organizations all over the world are tasked with the twin challenges of securing the borders from unlawful trade and at the same time facilitating the legitimate trade. Thus in light of the said objectives the AEO program was given strength vide Circular No. 33/2016-Customs dated 22.7.2016(herein after referred to as said Circular ), Circular No. 03/2018 Customs dated 17.01.2018, 26/2018 Customs dated 10.08.2018, 51/2018-Customs dated 07.12.2018, and 54/2020-Customs dated 15.12.2020. 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 sets. 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, means of transport, personnel and information system.