Circular No. 54/2020-Customs
F.No. D-20/DIC/NCTF(NTFAP)/29/2017
Government of India
Ministry of Finance
Department of Revenue
Central Board of Indirect Taxation & Customs
Directorate of International Customs
New Delhi, dated the 15" December, 2020
All Pr. Chief/Chief Commissioners of Customs/Prev./Central Tax,
All Pr. Commissioners/Commissioners of Customs/Prev./Central Tax,
All Pr. Directors General/Directors General under CBIC,
All Pr. ADG/ADG under CBIC
Madam/Sir,
Subject: Special measures to facilitate MSME for AEO T1 & T2 accreditation- reg.
Please refer to the CBEC Circular No. 33/2016 dated 22.07.2016 as amended, hereinafter
referred to as the "Master Circular" regarding the Authorised Economic Operator (AEO) programme.
Para 3.1.9 of the Master Circular states that "Jn particular, the AEO Programme Manager shall take
into account the possible difficulties for MSMEs in meeting with these eligibility conditions and
criteria under paras 3.3 and 3.5 with a view to make the above AEO certificates more available to
MSMEs."
2. In line with the Prime Minister’s Aatma Nirbhar Bharat Abhiyaan to support MSMEs against
the challenges of the COVID-19 pandemic, CBIC has examined the difficulties faced by MSMEs
while applying for AEO accreditation. Accordingly, the Board has decided to relax the entire gamut
of compliance and security requirements for MSMEs. The relaxation has been carried out to ensure
that the MSMEs are facilitated through rationalized compliance requirements (MSME Annexure | &
2) and minimum but effective security requirements (MSME Annexure 3).
3. Accordingly, the Board has decided to facilitate MSMEs by further relaxing the current
accreditation
process and reducing the compliance burden for their AEO accreditation. The procedural
modifications/relaxations for AEO accreditation of MSMEs are as under:
i. The eligibility requirement of handling a minimum of 25 documents during the last financial
year has been relaxed to 10 documents, subject to handling at least 5 documents in each half-
year period of the preceding financial year (Ref.: Para 3.1.7 of the Master Circular).
ii. The requirement for the applicant to have "business activities for at least three financial
years preceding the date of application" has been relaxed to two financial years. (Ref.: Para
3.1.6 of the Master Circular).
iii. The qualifying period for legal and financial compliance has been reduced from ‘the last
three financial years’ to ‘the last two financial years’. (Ref.: Paras 3.2 & 3.4 of the Master
Circular).
iv. For AEO TI and T2 accreditation, the present annexures i.e., Annexure A, B, C, D, E.1-E.4
have been supplanted with two annexures viz. MSME Annexure | and 2. Similar
rationalized annexures | and 2 are presently being utilized for AEO TI accreditation only in
accordance with the CBIC Circular No. 26/2018-Customs dated 10.08.2018.
v. For AEO 72 certification, the present annexures i.e., Annexure E.5.1-E.5.7 for physical
verification have been rationalized to a single annexure viz. MSME Annexure 3. The
rationalization has been carried out to ensure that the security requirements for an MSME are
objective and cover the minimum verifiable security criteria. (Ref.: Para 3.5 of the Master
Circular).
vi. The time limit for processing of MSME AEO T1 & AEO T2 application has been reduced to
fifteen working days (presently one month) and three months (presently six months)
respectively after the submission of complete documents for priority processing by customs
zones.
vii. The benefit of relaxation in furnishing of Bank Guarantee for AEOs has been further relaxed
to 25% from 50% and 10% from 25% of that required to be furnished by an
importer/exporter who is not an AEO certificate holder, for MSME AEO T1 and MSME
AEO T2 entities respectively (Ref.: Para 3.5 of the Master Circular).
4. The aforestated relaxations shall apply only to an applicant who has a valid MSME certificate
from the line-Ministry. Further, the approved MSME must ensure their continuous MSME status
during the validity of its AEO certification, if granted.
5: Thus, the AEO accreditation for MSMEs now requires submission of only two annexures for
AEO TI and three annexures for AEO T2 applicants respectively. The two common annexures for
AEO TI and AEO T2 are: MSME Annexure | (General Compliance), MSME Annexure 2 (Legal,
Managing Commercial Records, and Financial Solvency Compliance). Further, the third annexure
for AEO T2 is MSME Annexure 3 (Safety and Security Requirements). These annexures have been
designed to fulfil the aspirations of simpler application procedure with reduced documentation
requirement for AEO accreditation of MSMEs.
6. The Board Circular No. 33/2016- Customs dated 22/7/2016 as amended stands modified to
the above extent.
7 Wide publicity may please be given to this Circular by way of issuance of Trade/Public
Notice.
8. Difficulties faced, if any, in the implementation of this Circular may be brought to the notice
of this office.
Yours faithfully,
, gnc
Enclosure: As above. ater 42°
Aled
(Manish Kumar)
Joint Commissioner (DIC)
APPLICATION FORM FOR GRANT OF AEO Ti & T2 STATUS (for MSMEs)
Note:- This form shall apply only to an applicant who has a valid MSME certificate from the line-
Ministry. Further, the approved MSME must ensure their continuous MSME status during the
validity of its AEO certification, if granted. In case of break or revocation of the MSME
status, the same shall be communicated to the Pr. Commissioner, DIC within 30 days, failing
which, the AEO status shall be revoked and the entity shall be considered non-compliant on
account of wilful suppression of information for the next one year from the end of the validity
of its AEO certification.
MSME Annexure — 1 (General Compliance)
The applicant is required to provide information in this prescribed format in terms of Para 3
(iv) of the Circular No. 54/2020 dated 15.12.2020.
S.No. COMPLIANCE PARAMETER DETAILS
1. Name of Company / Economic Operator:
2 Has your AEO application been rejected or your
AEO status been suspended in past? If so, on what
grounds (please enclose the rejection/suspension
letter):
3 (a). | IEC No.:
3 (b). | GSTIN:
3 (c). | MSME Certificate No.:
3 (d). | Company Registration No. (If applicable):
3 (©). | PAN:
(Copy of the above documents to be provided)
4. Address:
4(i). | Number and Street:
4(ii). | Zip Code and City:
(This shall include list of sites, under control, where
import / export goods are handled, e.g. packed /
unpacked / loaded / unloaded / consolidated ete. in
the course of supply to/from international supply
chain)
Please provide Site Plan for all the above sites.
5 (a). | Whether applicant is a manufacturer or trader
5(b). | If applicant is a manufacturer, what are the main
items of manufacturing?
$(c). | The industry sector to which the applicant belongs
(Eg. Auto/ Pharma/ Chemicals & Plastics/ IT/
Metals/ Electronics Goods et al.)
6 (a). | Contact person:*
6 (b). | Designation:
6(c). | Contact Number:
6 (d). | Email address:
7 (a). | Major Items of import and countries (in case of
importer):
7(b). | Major Items of export and countries (in case of
exporter):
8. No. of documents i.e. Bills of Entry or Shipping
Bills filed during last financial year
9. Duration for which the entity has business activities
preceding the date of application (in months):
10. Provide Process Map that should illustrate the flow
of goods and provide sample copy of relevant
record keeping documentation (related to- sales &
purchase orders, inventory management of
warehouse and manufactured goods,
shipping/transport document) to ascertain the
complete trail and flow of goods. It should describe
all the activities/ operations and role of the
applicant and that of other business partners who
are involved in the import-export supply chain in
any manner.
MSME Annexure — 2 (Legal, Managing Commercial Records, and Financial Solvency Compliance)
The applicant is required to provide information in this prescribed format in terms of Para 3
(iv) of the Circular No. 54/2020 dated 15.12.2020.
S.No. COMPLIANCE PARAMETER YES/NO | REMARK
I. Whether there are any cases of infringement of Customs Laws
by any of the following persons over the two financial years
preceding the submission of the application:
(i) the applicant;
(ii) the person responsible in the applicant companyfor
customs matters.
If yes, please indicate the details of the cases.
2. Have you been issued an SCN by Customs or GST (erstwhile
Central Excise and Service Tax) authorities in last two
financial years? If yes, kindly bring out:
1. Brief of the breach including the provision invoked in the
SCN.
2. Whether SCN has been adjudicated? If Yes, bring out the
decision of the order.
3. Whether there is any case against you wherein prosecution
has been launched?
3. Provide the break-up of contingent liability of last two
financial years. If any contingent liability pertains to Customs
or GST(erstwhile Central Excise and Service Tax) provide the
brief of such liability
4 (i). Provide procedures for administering of licence, authorizations
connected to exports/imports
4 (ii). | Provide procedures for administering the commercial records
connected to exports/imports
4 (iii). | Do you deal in goods subject to Anti-dumping duties,
Safeguard duties or Countervailing duties? If yes, please
provide details of the goods
5. Provide procedures for verifying the accuracy of Customs
declarations including procedure in place for the establishment
of Customs Value and tariff classification.
In case any Business Partner/representative is involved in the
above mentioned process/formalities, please provide details of
the representative along with the document that brings out the
responsibility of such representative.
6. Provide in brief the procedure to ensure the protection of your
computerized record system from unauthorized access
7. Provide procedures for backup, recovery, archiving, and
retrieval of your business record:
Please state for how long this data is achieved.
8. Provide the Net-worth along with the audited Audit Report of
your company for last two financial years
9. Provide the Net Current Assets for your company for the last
two financial years. If it is negative, bring out the reason for
the same:
10. Provide details of any insolvency, bankruptcy or liquidation
proceedings taken against your company in last two financial
years. Please give a declaration in this regard duly signed by
CFO or head of Finance department:
Note: The applicant should enclose appropriate documentary evidence in support of the above claims.
MSME Annexure — 3 (Safety and Security Requirements)
(applicable for MSMEs applying for AEO T2 only)
The applicant is required to provide information in this prescribed format in terms of Para 3
(v) of the Circular No. 54/2020 dated 15.12.2020.
S.No. PREMISES SECURITY YES / NO REMARK
Whether the building/premisesis fully secured against unlawful
entry i.e. -
(i) Adequate fencing, lighting, and security of the perimeter is
maintained.
(ii) Adequate procedure for issuance of lock & key by an
authorized personnel is available.
Whether adequate procedures exist to check that only properly
identified
and authorized persons, vehicles and goods are
permitted access?
Whether there are appropriate security systems for -
(i) access control (both into and within the premises).
(ii) monitoring the movements/processes within the premises.
S.No. CARGO SECURITY YES/NO REMARK
Whether goods are uniformly marked or stored in designated
areas only and its integrity maintained by -
(i) restricting access to only properly identified and authorized
persons.
(ii) permanent monitoring and keeping in a safe, locked area.
(iii) adequate monitoring and documentation of movement of
cargo within the premises.
Whether all consignments are secured by the use of any high
security seals/e-seals and whether such seals are being
maintained, distributed and checked by an authorized
personnel of the company and verifiable record of the same is
being maintained?
Whether appropriate procedures exist to -
(i) weigh / tally the goods and compare them against transport
documents, purchase/ sales orders and Customs papers.
(ii) deal with situations when any discrepancies and/or
irregularities are discovered.
S.No. CONVEYANCE SECURITY YES/NO
Whether, to the extent possible, all conveyances used for the
transportation of cargo within the supply chain are -
(i) capable of being effectively secured.
(ii) driven by drivers having proper identification and training.
Whether the seven-point inspection process is carried out in
respect of containers before stuffing of cargo therein. Also,
whether potential places of concealment of illegal goods on
conveyances are regularly inspected. (preferably under camera
or verifiable record of the same is maintained)?
Whether the transporters -
(i) maintain training record with respect to drivers employed.
(ii) maintain the conveyance integrity while it is en-route
transporting cargo (by utilizing a tracking and monitoring
device or activity log/records)
(iii) notify - any route delays / rerouting or any suspicious
incident to the designated department of the applicant company
as well as to maintain records of these reports.
S.No. PERSONNEL SECURITY YES/NO | REMARK
1 Whether all reasonable precautions are taken and background
verification is done while recruiting new staff to verify that
they are not previously convicted of security-related, Customs
or other criminal offences?
2 Whether adequate procedures are in place -
(i) for employee identification that require all employees to
carry proper identification that uniquely identifies the
employee and organization.
(ii) to identify, record and deal with unauthorized or
unidentified persons.
Whether procedures are in place to expeditiously remove
identification and access to premises and information for
employees whose employment is terminated?
we
S.No. BUSINESS PARTNER SECURITY YES/NO | REMARK
1 Whether the applicant has an adequate vendor/business partner
selection policy? _
2 Whether the applicant has documented proof of scope of
services being rendered by the vendor/business partner,
incorporating as to whether they meet relevant AEO equivalent
security criteria?
3 Whether a system is in place for periodic review/appraisal of
business partner’s processes and facilities (based on risk
assessment for maintenance of security standards by the
business partners)?
S.No. | SECURITY TRAINING AND THREAT AWARENESS YES/NO | REMARK
1 Whether the applicant has established and maintained -
(i) a threat awareness program to foster awareness of any
threat at any point in the supply chain.
(ii) adequate training programs for relevant employees with
respect various aspects of security (such as premises security,
cargo security, conveyance security and personnel security)
2 Whether employees of the applicant are aware of the
procedures in place to address any situation with respect to
any breach in supply chain and to report/escalate the same?
3 Whether the records of security training are maintained and
are available for verification by the AEO Programme team
and Indian Customs?
Note: The applicant should enclose appropriate documentary evidence in support of the above claims.
