TMI BlogAuthorized Economic Operator (AEO) programme for implementation — Revised Guidelines.X X X X Extracts X X X X X X X X Extracts X X X X ..... Accordingly applications were invited for participation in the Pilot AEO Programme, which has since been completed. 2. Based upon the results of the Pilots, DGICCE, the nodal agency for AEO Programme, suggested certain improvements and identified certain issues requiring a review. Accordingly, Board has examined the suggestions and approved the following major changes in the AEO Programme. (i) Inclusion of stringent requirements in regard to Business partner security, procedural security, etc. (ii) Inclusion of authorised couriers and custodians in the AEO Programme. (iii) Automatic disqualification on non-furnishing of the information by the applicant. (iv) Non-requirement of the compliance records of advocates directly employed by the applicant. (v) Outreach of AEO Programme by organizing workshops etc. (vi) The time limit of 90 days should be reckoned from the date of furnishing of complete information. (vii) In regard to security seals, in case it is not possible to procure and use PAS/ISO 17712 seals for air consignments / courier consignments any international seal compatible with standards of PAS/ISO 17712 may be used. However in case of maritime containeriz ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... transfer of cargo without Customs escorts. Board Circular No.8/2011-Customs dated 28.01.2011 stands modified to this extent. D. For Custodians or Terminal Operators (a) AEO Custodians shall be given benefits of waiver of bank Guarantee required under Handling of Cargo in Customs Area Regulations 2009. (b) AEO Custodians shall also be given the facility of extension of approval under regulation 10(2) of the Handling of cargo in Customs Area Regulation 2009 for longer period of ten years at a time. E. For Customs House Agents: (a) AEO Customs House Agents shall, under Regulation 11 of Customs House Agents Licensing Regulations (CHALR) 2004 be given benefit of extended validity period of licenses granted under regulation 9 till the time they hold valid AEO authorizations. (b) Fee for renewal of a licence under sub regulation (2) of regulation 11 of CHALR, 2004 shall be exempt for AEO Custom House Agents. F. For Warehouse Operators: (a) AEO Warehouse Operators are accorded faster approval for new warehouses. (b) AEO Warehouse Operator shall be given benefits of reduced bank guarantee to the extent of 5% of the duty liability in respect of indiv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iant 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 benefits for the trading community. 1.2 Consistent with the SAFE Framework developed by the WCO, the Indian Customs administration has developed an AEO Programme that encompasses various players in the international supply chain such as importers, exporters, warehouse owners, Custom House Agents, cargo forwarders and carriers. The objective of the AEO Programme is to provide businesses with an internationally recognized quality mark which will indicate their secure role in the international supply chain and that their Customs procedures are efficient and compliant. An entity with an AEO status can, therefore, be considered a 'secure' trader and a reliable trading partner. 1.3 As aforestated, the AEO Programme seeks to secure the global supply chain in partnership with business entities that are fully legally compliant and provide with the Customs the confidence to validate their security features. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ontainers wherein Cargo does not require segregation, ramp to ramp or tail to tail transfer of cargo can be affected without Customs escorts. D. Custodians or Terminal Operators: (a) AEO Custodians shall be given benefits of waiver of bank Guarantee under Handling of cargo in Customs Area Regulations 2009. (b) AEO Custodians shall also be given a facility of extension of approval under regulation 10(2) of the Handling of cargo in Customs Area Regulation 2009 for longer period provided that AEO Customs house agent has valid authorisation. In case of AEO Custodians the approval shall be extended for a period of ten years at a time in terms of regulation 10(2) of Handling of cargo in Customs Area Regulations 2009. E. Customs House Agents: (a) AEO Customs House Agents shall, under Regulation 11 of CHALR 2004 be given benefit of extended validity period of licenses granted under regulation 9 of the CHALR 2004. The Licence granted under regulation 9 shall be valid till validity of their AEO authorization. Further fee for renewal of a licence under sub regulation (2) of regulation 11 shall be exempt. F. Warehouse Operators: (a) AEO warehouse opera ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompanies. (ii) Details of where staff is employed for making supplies of goods and/or services. (iii) Proof that the business has its own accounts. 4.7 An AEO status applies only to the legal entity applying for such status in its own capacity and covering its role in the international supply chain. Therefore, AEO status can be granted to a Custom House Agent, but this will not confer similar status on its client importers / exporters who will need to apply separately for that status. 5. How to apply for AEO status? 5.1 An applicant for grant of AEO status should submit the following: (i) Application for Authorized Economic Operator (AEO) Status(Annex - A) (ii) Security plan (Annex B) (iii) Process map (Annex - C) (iv) Site plan (Annex D) (v) Self-Assessment Form (Annex E) 5.2 The application should be sent to the AEO Programme Manager, Directorate General of Inspection, Customs Central Excise, D Block, I.P. Bhawan, I.P. Estate, New Delhi 110002. 5.3. The AEO Programme Manager will be the Additional Director General (Inspection), Directorate General of Inspection, Customs Central Excise, D Block, I.P. Bhawan, I.P. Estate, New Delhi 110002 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... application will be given to the applicant within 30 days of the receipt of the application. 9. Time limit for grant of Certificate of AEO Status: 9.1 Applications meeting the identified criteria will be granted the certificates of AEO status ordinarily within 90 days of receipt of the completed application containing full information. In cases where validation of AEO applications can not be concluded on genuine ground. 10. Legal Compliance: 10.1 An applicant must meet certain conditions and ensure compliance with the criteria of grant of AEO status. Thus, an AEO Programme Team will examine applicant s record of compliance over the last three years preceding the date of applicant s application to ensure adherence to Customs, Central Excise and Service Tax laws as well as allied laws that are administered by the Department. Major violations in respect of any other fiscal law such as relating to Income/Corporate Tax will also be taken into account to confirm the compliance level of the applicant. 10.2 Normally, technical or procedural errors, if any, made by an applicant over the past three years in relation to Customs, Central Excise and Service Tax laws that have n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unting Principles (GAAP) / International Financial Reporting Standards (IFRS) which facilitates audit-based Customs control. (ii) Allowing the AEO Programme Team physical or electronic access to Customs and, where appropriate, transport records. (iii) An administrative set up and documented procedures to control and manage the movement of goods. (iv) Internal controls capable of detecting illegal or irregular transactions. (v) Satisfactory procedures for the handling of licences, authorizations and documents connected to export/import. (vi) Satisfactory procedures to archive and retrieve records and information, and also for protection against the loss of information. (vii) Ensure that employees are made aware of the need to inform the Customs authorities whenever compliance difficulties are discovered and establish suitable contacts for this. (viii) Satisfactory procedures for verifying the accuracy of Customs declarations. (ix) Appropriate information technology security to protect against unauthorized intrusion. 12. Financial solvency 12.1 An applicant must be financially solvent for the three years preceding the date of application. Solvency would generall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o Security following steps should be taken: (a) Only properly identified and authorised persons should have access to the cargo. (b) Integrity of cargo should be ensured by permanent monitoring or keeping in a safe, locked area. (c) All seals must meet the current PAS / ISO 17712 standards for high security seals. In cases it is not possible to procure and use PAS / ISO 17712 seals for air consignments / courier consignments any international seal compatible with standards of PAS / ISO 17712 shall be used. However in case of maritime containerized cargo only PAS / ISO 17712 seals shall be used. (d) The integrity of container seals should be checked and appropriate procedure should exist for the fixing of seals. (e) Only designated personnel should distribute container seals and safeguard their appropriate and legitimate use. (f) When appropriate to the type of cargo container used, a seven-point inspection process is recommended: Front wall, Left side, Right side, Floor, Ceiling/Roof, Inside/outside doors, Outside/undercarriage. (g) Appropriate procedures should be laid down on measures to be taken when an unauthorized access or tampering is discovered. (h) It sho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lment of illegal goods on conveyances and ensure these are regularly inspected, (e) ensure that transporters make sure that conveyance integrity is maintained while the conveyance is en route transporting cargo to export/import points or import/transit containers by utilizing a tracking and monitoring activity log or records. (f) ensure that pre-determined routes are identified by the dispatcher, and procedures must consist of random route checks along with documenting and verifying the length of time between the loading point/trailer pickup and the delivery destinations. (g) ensure that drivers must notify the dispatcher of any route delays due to weather, traffic and/or rerouting. (h) ensure that the management of transporters must perform a documented, periodic, and random verification process to ensure the logs are maintained and conveyance tracking and monitoring procedures are being followed and enforced. 13.6 Premises Security: In order to ensure premises security following measures steps should be taken. a) Buildings must be secure against unlawful entry. b) External and internal windows, gates and fences must be secured with locking devices or alternative acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able process, including the capability of financial soundness and compliance with the safety requirement set by the contracts as well as the capability of detection and correction of safety defects, for the selection of business partners. (ii) For those business partners having AEO certification, the applicant must get those business partners copies of certification. (iii) For non-AEO partners, the applicant must get written confirmation of meeting AEO equivalent security criteria. Such business partners must have one of the following written documents demonstrating their compliance with security criteria: (a) Contractual document (b) A completed self-assessment security questionnaire from the applicant. (c) A written statement from the business partner demonstrating their compliance with AEO security criteria. (d) Senior business partner officer attesting to compliance. (e) Documents from the business partners demonstrating their compliance with and equivalent and accredited security program administered by a foreign Customs authority. (iv) Periodic reviews of business partner s processes and facilities must be conducted based on risk, and must maintain the secur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntrols and procedures. (v) Flow of cargo. (vi) Use of Customs House Agents. (vii) Security of Computers/IT and documents. (viii) Financial solvency. (ix) Safety and security assessment premises, cargo, personnel etc. (x) Logistic processes. (xi) Storage of goods. 14.7 The person who is nominated in the application form as point of contact must ordinarily be available unless unforeseeable situation arises. In addition, individuals responsible for specific business activities such as transport, record keeping and security should also be available. 14.8 In case several sites of applicant are run in a similar way by standard systems of record keeping and security etc. there will be no need for the AEO Programme Team to audit all of them. However, if the business of the applicant covers a range of activities or different sites have different method of operating, then it may be necessary for more visits to be made. 14.9 The duration of visit/verification would depend 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 commenc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te number on all Customs documentation to indicate their AEO Status. 15.4. It is highly recommended that the applicant should keep the Certificate of AEO status at a safe place and not release the Certificate number to anyone unless required to do so for business purposes. Although the AEO status can be advertised by the applicant, the Certificate number should not be part of their advertisement. 15.5. The validity of certificate of AEO status shall be for three years. 16. Maintaining AEO Status: 16.1. After obtaining AEO status, the AEO status holder should maintain their eligibility by adhering to the appropriate standards. 16.2. The holder of a Certificate of AEO Status is required to notify any significant change in business and processes this may affect the AEO status to the AEO Programme Team. These changes may include the following: (i) Change to the legal entity. (ii) Change 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 invo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... who will withdraw the suspension under intimation to the AEO status holder and the AEO Programme Team. 18.5. On suspension of AEO authorization, the intimation of the same shall be communicated to all Customs formations with immediate effect by AEO Programme Team. 19. Revocation of AEO Status: 19.1. In following circumstances, the Certificate of AEO Status will be revoked: (a) Where the Certificate of AEO Status is already suspended and the AEO holder fails to take the remedial measure to have the suspension withdrawn. (b) Where the AEO status holder has committed serious 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... **************** 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 security fence). Areas used for container storage. ******************************* Annexure E SELF-ASSESSMENT FORM (A) Legal Compliance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f 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? (h) Whether it is possible to deliver goods to an unsupervised area? (i) Whether goods have been uniformly marked or stored in designated areas and procedures exist to weigh / tally them and compare them against transport documents, purchase/sales orders and Customs papers? (j) Whether internal control procedures exist when discrepancies and/or irregularities are discovered? (D) Procedural Security 3.2 Procedural Security Yes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oute checks along with documenting and verifying the length of time between the loading point/trailer pickup and the delivery destinations is in place? (f) Whether system of maintaining conveyance and trailer integrity is in place by utilizing a tracking and monitoring activity log or records? (F) Premises Security 3.4 Premises Security: Yes No Remarks (a) Whether building is secured against unlawful entry? (b) Whether external and internal windows, gates and fences are secured with locking devices or alternative access monitoring or control measures? (c) Whether management or security personnel control the issuance of locks and keys? (d) Whether adequate internal and external lighting has been provided especially for entrances and exits, cargo handling and storage areas, fence lines and parking areas? (e) Whether gates through which vehicles and/or personnel enter/exit have been manned, monitored or otherwise controlled? (f) Whether vehicles accessing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Whether a system exists to encourage other concerned business entities/trading partners to assess and enhance supply chain security? 3.7 Whether the applicant is able to produce documentation showing the safety and security measures and controls put in place for verification by the AEO Programme Team? 3.8 Whether a self-assessment has been carried out by a person with extensive knowledge of the risks and threats applicable to his type of business? (H) Business Partner Security 3.6 Business Partner Security Yes No Remarks (a) Whether applicant have written and verifiable process, including the capability of financial soundness and compliance with the safety requirement set by the contracts as well as the capability of detection and correction of safety defects, for the selection of business partners.? (b) Whether applicant has business partners copies of certification for those business partners eligible for AEO certification?. (c) Whether for business partners without AEOS certificate, one of the follow ..... X X X X Extracts X X X X X X X X Extracts X X X X
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