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TMI BlogAuthorized Economic Operator (AEO) programme for implementation — Revised Guidelines.X X X X Extracts X X X X X X X X Extracts X X X X ..... he Pilot AEO Programme, which has since been completed. 2. Based upon the results of the Pilots, DGICCE, the nodal agency for AEO Programme, suggested certain improvements and identified certain issues requiring a review. Accordingly, Board has examined the suggestions and approved the following major changes in the AEO Programme. (i) Inclusion of stringent requirements in regard to Business partner security, procedural security, etc. (ii) Inclusion of authorised couriers and custodians 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 furnishing 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 carry ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e required under Handling of Cargo in Customs Area Regulations 2009. (b) AEO Custodians shall also be given the facility of extension of approval under regulation 10(2) of the Handling of cargo in Customs Area Regulation 2009 for longer period of ten years at a time. E. For Customs House Agents: (a) AEO Customs House Agents shall, under Regulation 11 of Customs House Agents 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 to 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 e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng 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 partner. 1.3 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. 2. Benefits of an AEO Programme: 2.1 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 an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll also be given a facility of extension of approval under regulation 10(2) of the 'Handling of cargo in Customs Area Regulation 2009 'for longer period provided that AEO Customs house agent has valid authorisation. In case of AEO Custodians the approval shall be extended for a period of ten years at a time in terms of regulation 10(2) of Handling of cargo in Customs Area Regulations 2009. E. Customs House Agents: (a) AEO Customs House Agents shall, under Regulation 11 of CHALR 2004 be given benefit of extended validity period of licenses granted under regulation 9 of the CHALR 2004. The Licence granted under regulation 9 shall be valid till validity of their AEO authorization. Further fee for renewal of a licence under sub regulation (2) of regulation 11 shall be exempt. F. Warehouse Operators: (a) AEO warehouse operators shall be 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 to be warehoused. (c) In case of goods not likely to deteriorate, the Chief Commissioner of Customs may grant extension upto a pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fer similar status on its client importers / exporters who will need to apply separately for that status. 5. How to apply for AEO status? 5.1 An applicant for grant of AEO status should submit the following: (i) Application for Authorized Economic Operator (AEO) Status(Annex - A) (ii) Security plan (Annex - B) (iii) Process map (Annex - C) (iv) Site plan (Annex - D) (v) Self-Assessment Form (Annex - E) 5.2 The application should be sent to the AEO Programme Manager, Directorate General of Inspection, Customs & Central Excise, 'D' Block, I.P. Bhawan, I.P. Estate, New Delhi - 110002. 5.3. The AEO Programme Manager will be the Additional Director General (Inspection), Directorate General of Inspection, Customs & Central Excise, 'D' Block, I.P. Bhawan, I.P. Estate, New Delhi - 110002 and the AEO Programme Team will comprise the officers from the Directorate General of Inspection and its regional offices. 5.4 Each application will be acknowledged and recorded in an AEO Programme database. 6. Return of application: 6.1 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 10. Legal Compliance: 10.1 An applicant must meet certain conditions and ensure compliance with the criteria of grant of AEO status. Thus, an AEO Programme Team will examine applicant's record of compliance over the last three years preceding the date of applicant's application to ensure adherence to Customs, Central Excise and Service Tax laws as well as allied laws that are administered by the Department. Major violations in respect of any other fiscal law such as relating to Income/Corporate Tax will also be taken into account to confirm the compliance level of the applicant. 10.2 Normally, 'technical' or procedural errors, if any, made by an applicant over the past three years in relation to Customs, Central Excise and Service Tax laws that have no significant impact on the revenue or compliance record may not be considered a disqualification for grant of AEO status. This approach would extend to the various allied laws that are administered by the Department. These 'technical' or procedural errors may include the following: (i) Any errors that have been voluntarily disclosed; (ii) Any decisions which have been overturned by Courts/Tribunal or departmental review; (iii) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the handling of licences, authorizations and documents connected to export/import. (vi) Satisfactory procedures to archive and retrieve records and information, and also for protection against the loss of information. (vii) Ensure that employees are made aware of the need to inform the Customs authorities whenever compliance difficulties are discovered and establish suitable contacts for this. (viii) Satisfactory procedures for verifying the accuracy of Customs declarations. (ix) Appropriate information technology security to protect against unauthorized intrusion. 12. Financial solvency 12.1 An applicant must be 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. Thus, the applicant should not be listed currently as insolvent, 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 fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SO 17712 shall be used. However in case of maritime containerized cargo only PAS / ISO 17712 seals shall be used. (d) The integrity of container seals should be checked and appropriate procedure should exist for the fixing of seals. (e) Only designated personnel should distribute container seals and safeguard their appropriate and legitimate use. (f) When appropriate to the type of cargo container used, a seven-point inspection process is recommended: Front wall, Left side, Right side, Floor, Ceiling/Roof, Inside/outside doors, Outside/undercarriage. (g) Appropriate procedures should be laid down on measures to be taken when an unauthorized access or tampering is discovered. (h) It should not be possible to deliver goods to an unsupervised area. (i) Goods should be uniformly marked or stored in designated areas and procedures should exist to weigh / tally them and compare 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. (i) Security measure ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... loading point/trailer pickup and the delivery destinations. (g) ensure that drivers must notify the dispatcher of any route delays due to weather, traffic and/or rerouting. (h) ensure that the management of transporters must perform a documented, periodic, and random verification process to ensure the logs are maintained and conveyance tracking and monitoring procedures are being followed and enforced. 13.6 Premises Security: In order to ensure premises security following measures steps should be taken. a) Buildings must be secure against unlawful entry. b) External and internal windows, gates and fences must be secured with locking devices or alternative access monitoring or control measures. c) Management or security personnel must control the issuance of locks and keys. d) Adequate internal and external lighting must 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. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... documents demonstrating their compliance with security criteria: (a) Contractual document (b) A completed self-assessment security questionnaire from the applicant. (c) A written statement from the business partner demonstrating their compliance with AEO security criteria. (d) Senior business partner officer attesting to compliance. (e) Documents from the business partners demonstrating their compliance with and equivalent and accredited security program administered by a foreign Customs authority. (iv) Periodic reviews of business partner's processes and facilities must be conducted based on risk, and must maintain the security standards required by the applicant. 13.9 Security Training and Threat Awareness (i) The applicant should ensure that: (a) A threat awareness program 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) npecific training is offered to assist employees in maintaining cargo integrity, recognizing internal conspiracies and protecting access controls. (ii) Supply chain securi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of applicant are run in a similar way by standard systems of record keeping and security etc. there will be no need for the AEO Programme Team to audit all of them. However, if the business of the applicant covers a range of activities or different sites have different method of operating, then it may be necessary for more visits to be made. 14.9 The duration of visit/verification would depend on the size of business, number of sites, how they operate etc. The AEO Programme Team will give the applicant an estimate of time required, though this may have to be amended once the audit has commenced. 14.10 On completion of verification, the AEO Programme Team will prepare their report and make a recommendation to the AEO Programme Manager. The contents 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 requi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appropriate standards. 16.2. The holder of a Certificate of AEO Status is required to notify any significant change in business and processes this may affect the AEO status to the AEO Programme Team. These changes may include the following: (i) Change to the legal entity. (ii) Change of business name and/or address. (iii) Change in the nature of business i.e. manufacturer / exporter etc. (iv) Changes to accounting and computer systems. (v) Changes to the senior personnel responsible for Customs matters. (vi) Addition or deletion of locations or branches involved in international supply chain. 16.3. The AEO status holder should notify the AEO Programme Team as soon as the change is known 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. 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 appropri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l. (c) Where the AEO status holder requests the authorization be revoked. 19.2. Prior to any decision to revoke authorization, the applicant will be contacted. Any decision taken in this regard will be subject to right of appeal of applicant. Revocation is applied from the day following the authorization holder being notified. 19.3. In case the authorization is revoked, the applicant will not be entitled to reapply for another certificate for a period of three years from the date of revocation. 20. Right to Appeal: 20.1. In case the Certificate of AEO Status is suspended / revoked, the AEO status holder can, within thirty days of the decision, file 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. ************* 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. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ures (e.g. CCTV, electronic access gates). * Visitor, contractor and company personnel parking areas. * Perimeter fences with description (e.g. 2-metre high security fence). * Areas used for container storage. ******************************* Annexure - E SELF-ASSESSMENT FORM (A) Legal Compliance 1 Compliance Yes No Remarks (a) Whether any violation in respect of any provisions of Customs, Central Excise and Service Tax laws as well as allied laws that are administered by the Department has been committed in last three years preceding the date of application? If yes, please indicate the type of violation and action taken against the applicant in 'Remarks' column. (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) Fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he clearing of cargo, is legible, complete, accurate and protected against the exchange, loss of introduction of erroneous information. (c) Whether procedures are 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. (d) Whether procedures are in place to ensure that- (a)Import/Export cargo are reconciled against the information on the bill of lading. (b) The weights, labels, marks and piece count of the import/export cargo are accurately indicated. (c) Import/export cargo are verified against purchase / delivery orders. (d) Drivers delivering or receiving cargo are positively identified before cargo is received or released. (e) Whether all shortages, overages, and other significant discrepancies or anomalies must be resolved and/or investigated appropriately. (E) Conveyance Security 3.3 Conveyance Security Yes No Remarks (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 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inspected for integrity and damage? (o) Whether the number of gates is kept to the minimum necessary for proper access and safety? (p) Whether private passenger vehicles are prohibited from parking in or adjacent to cargo handling and storage areas? (G) Personnel Security 3.5 Personnel security: Yes No Remarks (a) Whether all reasonable precautions have been taken when recruiting new staff to verify that they are not previously convicted of security-related, Customs or other criminal offences? (b) Whether periodic background checks are conducted on employees working in security sensitive positions? (c) Whether employee identification procedures require all employees to carry proper identification that uniquely identifies the employee and organisation? (d) 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 procedure to expeditiously remove identification and access to premises and information for employees whose employment is terminated is in place? 3.5 Whether a system exists to encourage other conc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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