The Authorized Economic Operator (AEO)

The Authorized Economic Operator (AEO) Scheme is a program under the guidance of the World Customs Organization (WCO), SAFE Framework of Standards to secure and facilitate trade globally. An AEO (Authorized Economic Operator) is a business entity involved in the international movement of goods requiring compliance with provisions of the National Customs law and is approved by or on behalf of the national administration in compliance with World Customs Organization (WCO) or equivalent supply chain security standards.

The security standards are detailed in the World Customs Organization Safe framework of standards [WCO SAFE FOS], which is the basis of the Indian AEO Registration. There are 3 tiers of certification in the new AEO certification program.

How Many Types of AEO Certification in India?

AEO T1 – It is verified based on document submission only

AEO T2 – Along with T1 Compliance, document verification, and onsite verification is also done

AEO T3 – For AEO T2 owner who has enjoyed the position for 2 years only based on document verification & for AEO (Authorized Economic Operator) T2 holders who have not enjoyed the status or have introduced major business changes, the applicant is subjected to physical verification.

AEO LO – There is document verification and onsite verification which is done considered for logistics providers, custodians or terminal operators, customs brokers, & warehouse operators there

The AEO Certification enables Customs administration to identify the safe and compliant business entity to provide them a higher degree of assured facilitation. This segmentation method enables Customs resources to focus on less non-compliant or risky businesses for control. Thus, the AEO certification intends to secure the international supply chain by permitting recognition to trustworthy operators and encouraging best practices at all levels in the international supply chain. Through this program, the Customs shares its responsibility with the businesses, while at the same time rewarding them with numerous additional benefits listed below:

• • Recognized worldwide as safe, secure, and compliant business partners in international trade and get trade facilitation by a foreign Customs administration with whom India enters into a Mutual Recognition Agreement/Arrangement.
• • The Facility of Direct Port Delivery (DPD) of their import Containers and/ or Direct Port Entry (DPE) of their Export Containers.
• • Remission of complete or partial the Bank agreement requirements, Waiver of Merchant overtime fees.
• • Deferred payment of duties.
• • Waiver from transactional PCA.
• • Faster disbursement of duty drawback amount through procedure eased out vide Circular 18/2017 Customs dated 29.05.2017.
• • Promoting timely refunds and settlements.
• • Self-certified copies of FTA / PTA origin related or any other certificates required for clearance would be acknowledged.
• • Recognition by Partner Government Agencies and other stakeholders as part of the AEO Registration.

Benefits of AEO Certification in India

• • Self-declaration of Standard Input Output Norms (SION) is included under Para 4.07A of FTP 2015-20 for the AEO Exporters where the SION is not notified.
• • Addition of the Direct Port Delivery of the imports safeguards timely inventory management by the manufacturers wanting to seek clearance from the wharf to the warehouse for AEO Certification T1, T2, and T3.
• • Addition of the Direct Port Entry for the factory stuffed containers meant for export by AEOs.
• • Provision of deferred payment in customs duties. It guarantees delinking duty payment and customs clearance for AEO T2 and AEO T3.
• • Mutual Recognition Agreements (MRA) with Customs Administrations for AEO T2 and AEO T3. MRA functions as an equalizer to complement the minor differences to safeguard seamless facilitation of benefits for the movement of goods across borders for the domestic AEO-accredited entities.
• • Fast-tracking of adjudications and refunds, including disbursal of drawbacks and IGST refunds.
• • Eligibility of AEO Registration in India
• • The Company must have handled a minimum of 25 documents (Shipping Bills or Bills of Entry) in the last Financial Year.
• • The Company should have experience in Customs related work.
• • The Company must be a part of the international supply chain.
• • The Company must have had business activity in the last three Financial Years.

Note: Businesses that are not involved in customs-related work will not be eligible to apply for AEO registration as banks, NBFCs, insurance companies, etc.

How Cargo people canhelp in getting AEO Certificate in India?

A Starting point for an AEO certification process is the document and standard operating procedures (SOP) for safety and security plans, and the process map for the movement of goods in international trade. We can help in documenting the process of international trade in the form of SOPs as the first step toward an organizational effort to formalize an AEO Registration.

We follow end to end approach for obtaining AEO Certification Status right from the planning and readiness assessment stage till getting the final approval of AEO Registration status in the following ways:

• • Analyzing the existing level of security standards and other required areas for gaining AEO License status
• • Assistance in preparations of SOPs and establishing the Standards required for AEO Registration
• • Assistance in organizing the information and documents for filing the AEO License application
• • Preparation, filing of the application, and providing support from time to time are required by AEO License Authorities
• • Independent internal review to check the Security Standards and compliance level with other requirements for AEO Registration and propose improvement areas before physical verification by AEO Certification Authorities
• • Support during physical verification by AEO Registration Authorities
• • Following up with AEO Authorities till done the AEO certification
• • Assistance in Compliance with AEO Registration Status Requirements.