TMI BlogAuthorized Economic Operator (AEO) programme for implementation.X X X X Extracts X X X X X X X X Extracts X X X X ..... uant to guidelines of WCO adopted in SAFE FoS (Framework of Standard) in 2005. Many Customs administrations have already instituted AEO programmes or similar programmes which share a common objective of ensuring security in global supply chain from the point of origin i.e. the point of export to import in the receiving country, keeping in view national requirements of respective administrations. The detailed guidelines on implementation of the AEO programme are appended as Annexure to this Circular. 2. One of the salient features of the AEO programme is that any economic operator such as importer, exporter, logistics provider, Customs House Agent can apply for authorization subject to the criteria that the applicant is: (i) able to establish a record of compliance in respect of Customs and other legal provisions. (ii) able to demonstrate satisfactory systems of managing commercial and, where appropriate, transport records . (iii) financially solvent. (iv) able to demonstrate satisfactory systems in respect of security and safety standards. 3. The AEO programme shall be implemented by the Directora ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ( R. P. Singh ) Director (Customs) Click here for Annexure Authorized Economic Operator (AEO) Programme 1. Introduction 1.1 The global trading system is vulnerable to terrorist exploitation while the international trade is an essential element for economic development. Customs plays a unique role in providing increased security to the global trade while facilitating the legitimate flow of goods. Thus, in 2005 the World Customs Organisation (WCO), an organization of 178 Customs administrations, adopted the SAFE Framework of Standards to secure and facilitate global trade, which includes the concept of an Authorized Economic Operator (AEO) whereby a party engaged in the international movement of goods is approved by Customs as compliant with the supply chain security standards, and given benefits, such as simplified Customs procedures and reduced Customs intervention. The AEO concept is being increasingly adopted by various Customs administrations with the objective of securing the supply chain with resultant be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Appropriate record of compliance of Customs and other relevant laws; (ii) Satisfactory system of managing commercial and, where appropriate, transport records; (iii) Proven financial solvency; and (iv) Maintenance of approved security and safety standards. 4. Who can apply for AEO status? 4.1 Anyone involved in the international supply chain that undertakes Customs related activity in India can apply for AEO status irrespective of the size of the business. These include manufactures, exporters, importers, logistic providers, carriers (airlines, truckers, etc.), freight forwarders, and Customs House Agents. 4.2 Others who may qualify include port operators, authorized couriers, stevedores. The list is not exhaustive. 4.3 Businesses that are not involved in Customs related work / activities will not be entitled to apply. This means that in general banks, insurance companies, consultants and the like categories of businesses will not be eligible for AEO status. 4.4 The application for AEO status will only cover the legal entity of the applicant and will not automatically apply to a gr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6.2 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 subject to bankruptcy proceedings at the time the application is made: This may be resubmitted when the applicant becomes solvent. (e) Where a previously granted AEO status has been revoked: This may not be resubmitted until three years after the date of revocation. 7. Processing of application: 7.1 On receipt of the complete application and after ensuring the applicant is eligible to apply certain validation tests will be carried out to check that applicant is: (i) Able to establish a record of compliance with Customs and other legal provisions . (ii) A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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. 10.3. The company should have business activities for at least three years from the date of application. 10.4 AEO Programme Manager will assess whether a serious infringement or repeat infringements of Customs, Central Excise and Service Tax laws has been committed by any of the following persons: (i) the applicant, and, (ii) any other responsible person involved in the running of the business. 10.5 An applicant will also need to demonstrate that he has: (i) procedures in place to identify and disclose any irregularities or errors to the Customs authorities or, where appropriate, other regulatory bodies. (ii) taken appropriate remedial action when irregularities or errors are identified. 10.6 Once an error has been identified, the applicant is expected to take steps to ensure that they do not happen again or, at least, to ensure that they are imm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would generally be defined as good financial standing that is sufficient to fulfill 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. 12.2 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 concern. (iii) Any contingent liabilities or provisions. (iv) Net current assets are positive. (v) Net assets position and the extent of intangible assets. 12.3 It is recognized that in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted 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. 13.4 Conveyance Security: (a) Ensure, to the extent possible that all conveyances used for the transportation of cargo within the supply chain are capable of being effectively secured. (b) Ensure, to the extent possible that all operators of conveyances used for transport of cargo are trained to maintain the security of the conveyance and the cargo at all times while in its custody. (c) Require operators, to report actual or suspicious incident to designated security department staff of both the AEO Programme Team and Customs, as well as to maintain records of these reports, which should be available to Customs. (d) Consider potential places of concealment of illegal goods on conveyances and ensure these are regularly inspected, and secure all internal and external compartments and panels, as appropriate. Records thereof are to be made and maintained. 13.5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... persons, such as photo identification and sign-in registers for visitors etc. must be ensured at all points of entry. (e) Procedures must expeditiously remove identification and access to premises and information for employees whose employment is terminated. 13.7 If necessary, encourage other concerned business entities/trading partners to assess and enhance supply chain security and, to the extent practical, include this requirement in contractual arrangements. In addition, make this information available to Customs upon request. 13.8 The applicant must be able to produce documentation showing the safety and security measures and controls put in place for verification by the AEO Programme Team. In addition, the AEO Programme Team will need to see practical examples of the systems working. 13.9 A self assessment should be carried out by a person with extensive knowledge of the risks and threats applicable to his type of business. This may be an independent third party or someone within the business but they must be considered competent to carry out the assessment. 14. Pre-certification verification : 14. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... epend 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. 14.10 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. 14.11 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 procedures to remedy the deficiency. If applicant is unable to make the required changes within the specified time limits, the AEO Programme Manager will issue a decision to reject applicant s AEO application, explaining the reasons for rejection. This decision will be subject to the applicant s right of appeal. 14.12 In exceptional cases, the AEO audit verification may be stopped by consensus between the applicant and the AEO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nge 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. 16.3. 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. 16.4. If the legal entity changes, the AEO status holder needs to reapply for AEO in the name of new legal entity. 16.5. If the AEO status holder makes Customs errors, they must be reported to the local Customs officers as well as the AEO Programme Team. Errors that are voluntarily disclosed will not impact the AEO status provided that the AEO status holder has: (a) Examined the reasons for the errors. (b) Taken appropriate remedial action to prevent recurrence. 17. Review of AEO Status: 17.1. The AEO Programme Team will review AEO status periodically to ensure continued adherence to the conditions and standards of grant of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... infringement of Customs law and has no further right to appeal. (c) Where the AEO status holder requests the authorization be revoked. 19.2. 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. 19.3. 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. 20. Right to Appeal: 20.1. 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. ************* Annexure A APPLICATION FORM FOR GRANT OF AEO STATUS Name of Company / Economic Operator: Type of business : ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny. ************************************************************** Annexure - C PROCESS MAP Process map which illustrates the flow of goods and documentation/information from receipt of order to the point of export/delivery/receipt of the product. Annexure - D SITE PLAN The site plan should cover the whole area managed by the company, clearly illustrating the following (if present): The external perimeter of the area, including features such as boundary roads, railway lines, streams/rivers, neighbouring properties. All access points to the site (e.g. vehicle, rail and pedestrian entrances) with traffic flows. All buildings identified with access ways (e.g. administration office, export/import storage areas, export/import packing areas, export container movement). Internal and/or external lighting facilities that contribute to security. Other security features (e.g. CCTV, electronic access gates). Visitor, contractor and company personnel parking areas. Perimeter fences with description (e.g. 2-metre high securit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Yes No Remarks (a) Whether only properly identified and authorised persons have access to the cargo? (b) Whether integrity of cargo has been ensured by permanent monitoring or keeping in a safe, locked area? (c) Whether all seals meet the current PAS / ISO 17712 standards for high security seals? (d) Whether the integrity of container seals has been checked and appropriate procedure exists for the fixing of seals? (e) Whether only designated personnel distribute container seals and safeguard their appropriate and legitimate use? (f) Whether when appropriate to the type of cargo container used, a seven-point inspection process is in place i.e. Front wall, Left side, Right side, Floor, Ceiling/Roof, Inside/outside doors, Outside/undercarriage? (g) Whether appropriate procedures have been laid down on measures to be taken when an unauthorized access or tampering is discovered? ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and/or personnel enter/exit have been manned, monitored or otherwise controlled? (f) Whether vehicles accessing restricted areas are parked in approved area and their license plate numbers furnished to Customs upon request? (g) Whether only properly identified and authorized persons, vehicles and goods are permitted access? (h) Whether access to document or cargo storage areas is restricted? (i) Whether there are appropriate security systems for theft and/or access control? (j) Whether restricted areas have been clearly identified? (k) Whether the integrity of structures and systems is periodically inspected? (l) Whether perimeter fencing exists for enclosing the areas around cargo handling and storage facilities? (m) Whether interior fencing exists within a cargo handling structure to segregate domestic, international, high value and hazardous cargo. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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