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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 ..... stration 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 any Customs proceedings coupled with better relations with Customs. AEO status will also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r a period of 10 years at a time in terms of regulation 10(2) of Handling of Cargo in Customs Area 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 financia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Process map (iv) Site plan (v) Self-Assessment Form 4.2 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. 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 sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 9.2 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) 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... larations. (ix) Appropriate information technology security to protect against unauthorized intrusion. 11. Financial solvency: 11.1 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 fulfil 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 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 c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... int 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. 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 erro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d conveyance tracking and monitoring procedures are being followed and enforced. 12.6 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. (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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urity 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. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd security should be available. 13.8 In case several sites 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. 13.9 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. 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 procedur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fter obtaining AEO status, the AEO status holder should maintain their eligibility by adhering to the appropriate standards. 15.2 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. 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 no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al measure to have the suspension withdrawn. (b) Where the AEO status holder has committed serious infringement of Customs law and has no further right to appeal. (c) Where the AEO status holder requests the authorization be revoked. 18.2 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. 18.3 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. 19. Right to Appeal: 19.1 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. [Refer Circular No 28/2012- Cus, dated 16-11-2012, Circular No 21/2015- Cus, dated 19.08.2015] 20. Mutual Recognitio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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