AEO Certification

  • Overview
  • Benefits
  • Types
  • Document Required
  • Fees And Timeliness
  • FAQs

how it works

AEO aims to enhance International Supply Chain Security and facilitate movement of legitimate goods. AEO facilitation scheme for ease of doing business to various players in the International Supply Chain. The holder of the AEO certificate is entitled to privilege, benefits, exemption and relaxation on account of Imports and Exports.

Overview of AEO Certification:

The Authorized Economic Operator (AEO) program, initiated by Indian Customs department aims to facilitate trade and strengthen the security of the global supply chain. It aligns with the World Customs Organization (WCO) SAFE Framework of Standards and offers businesses involved in International Trade such as Importers and Exporters various benefits including expedited customs processing. In exchange, businesses must meet stringent compliance, safety and security requirements. The program provides a three-tier certification system for Exporters and Importers, comprising AEO T1, AEO T2 and AEO T3 with AEO T3 being the highest level of accreditation. Each tier offers increasing levels of facilitation to status holders.

The Key benefit of AEO is Mutual Recognition Agreements (MRAs). These agreements serve as the International extension and connecting link between the domestic AEO programs of various countries. MRAs acts as an equalizer that harmonize the minor differences to allow for seamless facilitation in terms of benefits and processes for movement of goods across borders for the domestic AEO accredited entities. Mutual recognition of AEOs is a major element of the WCO SAFE framework to strengthen end-to-end security of supply chain and to multiply benefits for traders at a global level.

Under MRAs, two customs administrations agree to:

  1. To recognize the AEO issued by other countries.
  2. To provide reciprocal benefits to AEOs of the other countries entity.

Indian Customs has collaborated with several foreign customs administrations to align with their Authorized Economic Operator Programs, which effectively allows Indian Customs to Internationalize the core principles of the program and provide benefits to Indian trade at the International level.

The benefits of Mutual Recognition Agreements (MRAs)

  1. Lower Risk Score:
    All the AEO certified companies and customs authorities are trusted members of the trade community as they have passed the verified security standards. This makes the AEO Exporters and Importers get a lower risk score from partner customs, leading to fewer checks pointers during Import process.
  2. Better Risk Assessment:
    AEO certification from one country is recognized by the other, this helps the customs to assess risk more effectively and quickly.
  3. Less Repetition of Checks:
    The AEO traders are not required to go through multiple security checks in different countries. Once a company is validated by it’s home customs authority that validation is accepted by other partner countries, reducing extra work.
  4. Common Security Standards:
    MRAs ensure countries follow similar security standards. If a company meets the security rules in one country, it also meets the rules in other MRA partner countries. This makes it easier for businesses to follow and document security practices.
  5. More Transparency:
    MRAs create clear and consistent rules for security checks, making trade processes more open and trustworthy.

Key Features and Benefits of AEO Certification:​​​

  1. Self-declaration of SION: Self-declaration of SION under Para 4.07A of FTP 2015-20 for AEO Exporters in cases where SION is not notified.
  2. Direct Port Delivery: Inclusion of Direct Port Delivery of Imports to ensure just-in-time inventory management by manufacturers – clearance from wharf to warehouse for AEOs.
  3. Direct Port Entry: Inclusion of Direct Port Entry for factory stuffed containers meant for Export by AEOs.
  4. Deferred Payment: Provision of Deferred Payment of duties, delinking duty payment and Customs clearance for AEOs.
  5. Mutual Recognition Agreements: Benefits of Mutual Recognition Agreements with other Customs Administrations for AEOs.
  6. Fast Tracking: The adjudications are fast tracked, and refunds processes are also faster for IGST and disbursal of drawback.

 

Categories of AEO Certification:

The program offers different levels of certification based on the role of entity in the supply chain and it’s compliance history:

  • AEO-T1: For businesses meeting basic compliance standards and seeking entry-level certification.
  • AEO-T2: Provides additional benefits with stricter customs and security requirements.
  • AEO-T3: The highest certification, offering maximum benefits to businesses with a long history of compliance.

Who can apply for AEO status?

Any business entity that is part of the International Supply Chain; involved in the cross- border movement of goods and required to fulfill obligations under the Customs law in India, only can apply for AEO status. These may include Exporters, Importers, Logistic Providers (e.g. carriers, airlines, freight forwarders, etc.), Custodians or Terminal Operators, Customs House Agents and Warehouse Owners, Port Operators, Authorized Couriers, Stevedores etc. The list is not exhaustive.

Benefits associated with AEO Tiers:

a) Recognition worldwide as safe, secure and compliant business partners in International Trade and access to trade facilitation by foreign customs administrations under Mutual Recognition Agreements (MRA).

b) Facility of Direct Port Delivery (DPD) for import containers and Direct Port Entry (DPE) for export containers, ensuring faster cargo clearance.

c) Waiver of full or part of the Bank Guarantee requirements and Merchant Overtime Fees (MOT).

d) Deferred Payment of Duties, improving cash flow management for certified businesses.

e) Waiver from Transactional Post Clearance Audit (PCA). Instead, Onsite PCA is provided based on risk assessment of AEOs.

f) Waiver of Solvency Certification for Customs Brokers.

g) Lower Risk Scores in customs risk management systems, resulting in reduced inspections and faster clearances.

h) Faster disbursal of drawback amounts, streamlined through Circular 18/2017-Customs dated 29th May 2017.

i) Fast-tracking of refunds and adjudications, ensuring quicker resolution of claims.

j) Acceptance of Self-Certified Copies of FTA/PTA origin certificates and other documents required for customs clearance.

k) Recognition by Partner Government Agencies (PGAs) and other stakeholders under the AEO program, facilitating smoother cross-agency clearances.

 

AEO-Eligibility Criteria for an entity:

  1. Minimum Document Handling:
    The entity must have managed at least 25 shipping bills (S/B) or Bills of Entry during the last financial year. This ensures the applicant has a consistent track record of International trade activity and experience in handling customs documentation.
  2. Involvement in Customs-Related Work:
    The entity should be actively involved in customs-related activities such as filing Import/Export declarations, customs clearance, and compliance with customs regulations. This ensures familiarity with customs procedures and adherence to legal trade practices.
  3. Part of the International Supply Chain:
    The applicant must be a part of the global supply chain directly involved in the movement of goods across borders. This includes Manufacturers, Importers, Exporters, Logistics Providers and Warehouse Operators who contribute to the secure and efficient flow of goods internationally.
  4. Legal Entity Requirement:
    AEO certification is granted only to a single legal entity and not to a group of companies. Each company within a group must apply individually ensuring that the certification process focuses on the specific compliance standards of a single entity rather than a corporate group as a whole.
  5. Minimum Business Activity Duration:
    The entity should have been engaged in business activities for at least three financial years. However, this requirement can be waived in exceptional cases where the applicant demonstrates significant compliance and security standards despite a shorter operational history.

Validity Period of AEO Status:

The validity of the AEO certificate varies depending on the certification tier:

  1. AEO-T1: The validity of the AEO-T1 certificate is three years from the date of issuance.
  2. AEO-T2: The validity of the AEO-T2 certificate is also three years from the date of issuance.
  3. AEO-T3: The validity of the AEO-T3 certificate extends up to five years from the date of issuance due to it’s higher compliance standards.

Renewal:

The AEO status is renewed against application for the same made before

lapse of their validity as stated below:

  1. AEO-T1 -30 days.
  2. AEO-T2 -60 days.
  3. AEO-T3 -90 days.

Fees:

For a customized and attractive quotation, please contact with your product details to Rekha Atri (+91 98118 03136) or Manju Laur (+91 9711994042).

Frequently Asked Questions

An AEO is a business entity involved in international movement of goods requiring compliance with provisions of the national Customs law and is approved by or on behalf of national administration in compliance with World Customs Organization (WCO) or equivalent supply chain security standards. The security standards are detailed in World Customs Organisation Safe framework of standards [WCO SAFE FOS], which is the basis of the Indian AEO programme.

The AEO programme enables Customs administration to identify the safe and compliant business entity in order to provide them a higher degree of assured facilitation. This segmentation approach enables Customs resources to focus on less or non-compliant or risky businesses for control. Thus, the aim of AEO programme is to secure the international supply chain by granting recognition to reliable operators and encouraging best practices at all levels in the international supply chain. Through this programme, the Customs shares its responsibility with the businesses, while at the same time rewarding them with a number of additional benefits.

The genesis of AEO scheme dates back to September 11, 2001 event in US which made all the governments to realise that the supply chain itself could be used for terror activities and a need was felt to make the supply chain secure. Since the supply chain is controlled by the trade, the Customs administration is partnering the trade in order to secure the supply chain. The US started CT-PAT (Customs Trade – Partnership against terror-ism) programme. Later WCO adopted SAFE Framework of Standards in 2005 in order to secure and facilitate the trade. The SAFE frame-work has three pillars comprising of Customs to Customs partnership, Customs to Business partnership and Customs to other Govt. stake holders. AEO programme is the core part of Pillar-II i.e. - Customs to Business partnership.

The SAFE FOS sets forth criteria by which businesses in supply chain can obtain authorised status as a secure partner. The criteria are incorporated in CBEC Circular No. 28/2012 dated 16.11.2012. Thereafter a Revised AEO Pro- gram was launched vide Circular No. 33/2016-Customs dated 22.07.2016 as amended by Circular No. 03/2018 dated 17.02.2018, 26/2018 dated10.08.2018 and Circular No. 51/2018 dated 07.12.2018.

The AEO Programme was introduced as pilot project in 2011 vide Circular No. 37/2011- Customs dated 23rd August, 2011. The same was amended and the revised final AEO programme was introduced vide Circular No. 28/2012 dated 16.11.2012. With international developments such as Trade Facilitation Agreement (TFA) on securing and facilitating the International Trade and focus of Government of India on Ease of Doing Business, a comprehensive, unified trade facilitation initiative was launched by merging the existing Accredited Client Programme (ACP) and the ongoing AEO scheme of 2012 in the form of re-vised AEO Programme vide Circular No. 33/2016-Customs dated 22nd July, 2016. The ACP scheme was abolished by rescinding the Circular No. 42/2005-Customs dated 24.11.2005. Further simplification for financial solvency and decentralisation of AEO application processing was done vide Circular No. 03/2018 dated. 17.01.2018. The application process for AEO-T1 accreditation was further simplified to two Annexures form only by Circular No. 26/2018 dated 10.08.2018 from five Annexure form as was stipulated in Circular No. 33/2016 dated 22.07.2016. Web based On-line application filing and processing for AEO-T1 status started from December 2018 vide Circular 51/2018 dated 07.12.2018.

The AEO programme has the following objectives: • To provide business entities with an internationally recognized certification; • To recognize business entities as “secure and reliable” trading partners; • To incentivize business entities through defined benefits that translate into savings in time and cost; Ability to demonstrate compliance with security standards when contracting to supply overseas importers / exporters; • Enhanced border clearance privileges in Mutual Recognition Agreement (MRA) partner countries; • Minimal security related dis-ruption to flow of cargo; • Reduction in dwell time and related costs; and • Customs advice / assistance if trade faces unexpected issues with Customs of countries with which India has MRAs.

No. The AEO scheme is purely an optional scheme. Applying for AEO status is a business decision de-pending on the role of the business entity in the supply chain and its willingness to acquire the benefit flowing by acquiring AEO status.

There is a three-tier programme or importers and exporters i.e. AEO-T1, AEO-T2 and AEO-T3 in the increasing degree of benefits accorded and compliance requirements. Furthermore, there is single Tier AEO Programme for Logistics Providers, Custodians or Terminal Operators, Customs Brokers and Warehouse Operators who are granted AEO-LO certificate.

The validity of AEO certificate is three years for AEO-T1 and AEO-T2, and five years for AEO-T3 and AEO-LO.

Yes, it is valid at all Customs stations in India. In other words, an AEO status holder shall get the AEO benefits at all Customs ports/ airports/ Land Customs stations.

Mutual Recognition Arrangements/ Agreements (MRA) are bilateral understandings between two Customs Administrations which allow one business partnership program to recognize the AEO validations of the other country's program and extend reciprocal benefits to each other's AEO. The benefits are generally in nature of enhanced system-based facilitatton & reduced Interdiction, lower risk score for Indian exporter's consignments at foreign port.

The AEO LO status will only be valid and applicable for the applicant and not for his importers or exporters. They need to apply separately for AEO status.

There is no time limit for filing higher status application except in case of AEO-T3. In case of AEO-T3, either the entity should have had AEO-T2 status continuously for two years or when all its business partners in international supply chain have acquired either AEO-T2 or AEO-LO status.
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