Authorized Economic Operator (AEO)
The AEO is a trade assistance scheme aiming to simplify business, considering international development. An AEO certificate holder is entitled to privilege, benefits, relaxation, and exemption related to their import and export.
What is AEO Certificate?
AEO (Authorised Economic Operator) is a voluntary scheme applicable to all business entities in India involved in the global supply chain. The Customs Department (CBEC) administers this program. The entities have to qualify the pre-determined eligibility criteria of the AEO program to get an AEO Certificate.
AEO Certification India
AEO scheme in India facilitates trade for importers and exporters with AEO certificate, for whom AEO certification in customs pays dividends under the AEO certification benefits. The AEO certification is a part of the World Customs Organization’s (WCO) SAFE Framework of Standards to Secure and Facilitate Global Trade. Various countries are operating AEO programs, some are under development, whereas others have customs compliance programs equivalent to what AEO Certificate in India offers.
Deferred Duty Payment Under Customs
Under the deferred duty scheme, the payment of customs duty of goods after clearance is allowed for goods that obviate payment of duty during clearance. The importers holding AEO certificates are entitled to payment of duty under the deferred payment scheme, i.e., the option of deferred payment is extended to AEO- T2 and AEO-T3 certifications only.
Eligibility criteria for AEO Certificate
Those involved in the global supply chain undertaking activities related to customs in India are eligible for applying under AEO status, irrespective of the size of their business. The list of those who may qualify is inexhaustible, however, exporters, importers, logistic providers (such as carriers, airlines, freight forwarders), custodians or terminal operators, customs house agents, warehouse owners, port operators, authorized couriers, stevedores, are eligible, to name a few.
Benefits of AEO Certificate
The businesses holding the AEO certificates enjoy various benefits through AEO certification in Customs. AEO in Customs facilitates deferred payment of duty, reduced examination and priority treatment, 24*7 clearances, only mandatory intervention for compliant trade, direct delivery of goods from wharf to warehouse, waivers or reduction in bank guarantees, and increased facilitation in comparison to the accredited client program, among other AEO Certificate benefits.
Through the Authorized Economic Operator program, businesses obtain internationally recognized security standards, and promotion of the AEO certificate holder as a secure, reliable, and trustable trading partner. The AEO incentives further convert into savings in time and costs thereby improving competition in business.
Therefore, AEO certificate benefits play a crucial part in the growth and success of the traders involved in the AEO program.
AEO Certification Process
AEO certification in India can be applied online or through a manual application.
- For an online application, the applicant who wants to apply for AEO T1 may go to www.aeoindia.gov.in and attach the essential documents in the application form.
The applicant may apply for any of the three AEO statuses by submitting the manual application in customs.
AEO T1 Certification
The government of India has created an online portal for applying under AEO T1 where the applicant has to fill out two application forms. The procedure to register AEO T2, AEO T3, and AEO-LO is offline.
- Register yourself at the AEO website www.aeoindia.gov.in by filling in the required details on the registration site for creating a user ID and password to log in to the portal for application.
- Afterward, the registered details are verified according to the online IEC (Import-Export Code) on the DGFT portal.
- It is important to register on the AEO portal through your mobile number and email id of the company specified in the IEC.
Online application process for Annexure 1
Going on the Application Form section that is divided into Annexure 1 and Annexure 2, you have to upload the following details/documents:
- Your company’s name
- If the AEO application ever was rejected, then the rejection letter needs to be attached (Select the correct option to the question “has your application ever been rejected?”)
Now enter the IEC and GSTN certificate details. For IEC Certificate you’ll have to enter the IEC certificate and attach the certificate. For the GSTN certificate, you’ll enter the GSTN number and upload the certificate.
Then you have to enter your address with your address type, number, street, state, district/city, zip code, and the site plan needs to be uploaded.
Now you’ll fill in the details mentioning the nature of your business, .e., manufacturer, trader, importer, or exporter. Also, you should mention the details of a point of contact to whom the AEO manager will reach out.
Online application process for Annexure 2
- Here you’ll have to mention cases of violation of customs and related laws along with the violator if any
- If you hold any SCN by customs or GST authorities, justify the reason for it. Mention the decision in the order and launched prosecution if any
- Further, you’ll have to provide the segregation of contingent liability in your audit report for the last three financial years, and some other administration-related details.
After submitting your application, the status of the verification process can be checked through the update verification section. Within 30 days of submission, if all the details and documents clear the eligibility criteria, your AEO Certificate will be issued.
AEO T2 and AEO- LO Certification
- For these certifications, the manual application is done, including verification of documents.
- Time taken for verification would depend on the type of business, i.e., its nature, number of premises, size, etc.
- Status of certification would be informed to the applicant by the AEO program manager.
- If the application isn’t accepted, a certain time will be granted to the applicant for rectifying the criteria that haven’t been fulfilled.
- The application will be rejected if the applicant fails to make necessary changes to the application in the specified time period.
AEO T3 Certification
- For the AEO T3 certificate, the business entity should have utilized AEO T2 status for 2 years at least, before applying for AEO T3.
- The business partners of the business entity must obtain AEO t2 or AEO-LO certificate.
- The AEO T3 certificate will be issued within 30 days of application if the eligibility criteria are fulfilled.
If any change occurs, such as in business operations since previous verification by the AEO program team, the applicant might undergo physical verification if required. If the applicant doesn’t hold an AEO T2 status for at least two years but clears the eligibility criteria, physical verification will be conducted in Annexure F within 15 days.
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After clearing the registration process, the AEO program manager shall send the hard copy of the AEO Certificate along with an electronic copy to the applicant. The certificate will contain an AEO logo representing the status held by the applicant. The AEO status will be activated within a week after the date of issuance. After activation, the applicant will have to mention the provided AEO certification number for their AEO status to be recognized.
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Simply put, an AEO is a company that handles international shipping. By World Customs Organization (WCO) or equivalent supply chain security standards and is certified by or on behalf of the national administration.
Companies who achieve compliance criteria and establish secure supply chains are eligible for AEO benefits such as reduced physical inspections of imported/exported goods, speedier release of shipments, preferential treatment by Customs Authorities, and deferred payment of duties.
Under the auspices of the World Customs Organization (WCO), the SAFE Framework of Standards, Authorized Economic Operators (AEO) program is designed to secure and facilitate international trade. The program’s overarching objective is to strengthen global supply chain security and streamline the transport of lawfully produced commodities. Several links in the global supply chain are included in AEO’s scope.
Once attained, AEO status is permanent; however, HMRC will conduct a site visit every three years to appraise your company.
The application for AEO T1 can be submitted online at https://aeoindia.gov.in/, and all supporting documents can be uploaded at the applicant’s convenience. The applicant must submit a paper application to customs to apply for one of the other three AEO designations.