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TMI BlogAuthorized Economic Operator (AEO) ProgrammeX X X X Extracts X X X X X X X X Extracts X X X X ..... ed 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 any Customs proceedings coupled with better relations with Customs. AEO status will also ensure a low risk score is incorpora ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Regulations, 2009. E. Customs Brokers: (a) AEO Customs Brokers shall be given benefit of extended validity period of Customs Broker licenses. The Licence shall be valid till validity of their AEO authorization. Further, the fee for renewal of a licence 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 period of six months at a time in deserving cases. 3. Criteria for considering application for grant of AEO status: 3.1 The following criteria is relevant for the 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. 3.2 Anyone involved in the international supply chain th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xcise, 'D' Block, I.P. Bhawan, I.P. Estate, New Delhi - 110002. The AEO Programme Manager is supported by AEO Programme Team comprises the officers from the Directorate General of Inspection and its regional offices. 4.3 Each application will be acknowledged and recorded in an AEO Programme database. 5. Return of application: 5.1 If application is incomplete or deficient, the applicant will be suitably informed within 30 days of the receipt. 5.2 AEO Programme Manager will not process the following applications until these are rectified, as indicated: (a) Which is incomplete - This may be resubmitted with the complete information. (b) Where the application has not been made by a legal person - This can only be resubmitted by the concerned legal entity. (c) Where no responsible person is nominated - This can only be resubmitted when the applicant nominates a responsible person who will be the point of contact 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 resubmit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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) Any decisions currently under review; and (iv) Where a penalty is imposed for a minor irregularity. 9.3. The company should have business activities for at least 3 years. 9.4 AEO Programme Manager will assess whether a serious infringement or repeat infringements of Customs, Central Excise and Service Tax laws has been committed by (a) the applicant, and (b) any other responsible person involved in the running of the business. 9.5 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) taken appropriate remedial action w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ents 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 for the purpose of this Para. 11.2 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. (iii) Any contingent liabilities or provisions. (iv) Net current assets are positive. (v) Net assets position and the extent of intangible assets. 11.3 It is recognized that in some circumstances a company may have negative net assets. For example, a company may be set up by a parent company for research and development purposes when t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated 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. 12.4 Procedural Security:- In order to ensure procedural security following measures / steps should be taken. (i) Security measures should be in place to ensure the integrity and security of processes relevant to the transportation, handling, and storage of cargo in the supply 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) 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 acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (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. (f) Only properly identified and authorized persons, vehicles and goods may be permitted access. (g) Access to document or cargo storage areas may be restricted. (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 handlin g and storage facilities. (l) Interior fencing within a cargo handling structure should be used to segregate domestic, international, high value and hazardous cargo. (m) All fencing must be regularly inspected for integrity and damage. (n) The number of gates should be kept to the minimum necessary for proper access and safety. ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... licant. 12.9 Security Training and Threat Awareness:- The following measures are relevant for ensuring business partner security: (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) 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. (iii) Educational methods of security training and keeping records of security training for the checks conducted by the Customs are established. 13. Pre-certification verification: 13.1. Once the applica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... udit has commenced. 13.10 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. 13.11 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 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. 13.12 In exceptional cases, the AEO audit verification may be stopped by consensus between the applicant and the AEO Programme Manager to enable the applicant to provide additional information or to address minor problems. The period of stoppage will normally not longer than 6 months and applicant will be informed in writing of the date when th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pply chain. 15.3. 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. 15.4. If the legal entity changes, the AEO status holder needs to reapply for AEO in the name of new legal entity. 15.5. 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; and (b) taken appropriate remedial action to prevent recurrence. 16. Review of AEO Status: 16.1. 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. 17. Suspension of AEO Status: 17.1 The AEO Programme Manager may suspend the Certificate of AEO Status i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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