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What is Authorized Economic Operator (AEO)?

AEO is an entity that is involved in the international system of goods seeking recognition through the supplies of national law and customs accepted or on behalf of national authorities in accordance with the World Customs Organization (WCO) or equivalent security standards. The safety principles are set out in detail in the World Customs Organization [WCO SAFE] standards structure, that is the beginning of the Indian AEO program.

Benefits of AEO

There are some benefits listed below: -

1. For importers and exporters green channel behavior.
2. Customs officers proceed next Examine of BEs/SBs if BG (bank guarantee) will be (T1 = 50% AND T2 = 25%) [MSMEs respectively is 25% and 10%] 
3.  Safe and secure business partners around the world to gain trade and profits from foreign cultures.
4.  Direct Port Delivery (DPD) service for its import containers and / or Direct Port Entry (DPE) for its export containers.
5.  Unnecessary payment for services.
6.  Disposal of the full or part of the Bank Guarantee confirming payment.
7. Overcome dangers.
8.  Exemption from PCA transaction.
9. Waiver of solvency certification for Customs Brokers.
10. Low risk level in risk analysis systems when capturing data

Benefits of Direct Port Delivery (DPD)

DPD permits a group of Importers to free cargo directly in 48 hours on the port. If the importer fails to take delivery within this time, the shipment is transferred end-bloc (as a whole) to a pre-designated CFS. The importer then must follow the CFS model, under which cargo delivery takes roughly seven to nine days. It is replacement of the CFS (container freight station) which take delivery three times longer.

Benefits of Direct Port Entry (DPE)

It cuts the delivery time of import cargo by five to seven days. Quicker delivery means faster turnaround of containers for shipping lines. It is facilitating the factories that directly routing from factory to port in 24/7 without handling at any CFS. DPE facility will provide the Let Export Order (LEO) under a single edge without any trouble. A devoted member of CWC and Customs officials will serve Tier-II, Tier-III (AEO) certified EXIM clients.

The Bank Guarantee of T1, T2 and T3

 

 The BG is reduced to 50%, 25% or Nill in different situation like quarrel. Moreover, it is not valid in situation of proficient power orders supplying of bank guarantee for conditional release of detained goods.

           

Financial sound management

 

Financial sound is the tracking of management of your company's financial resources and cash flow. There will be some issues occur if there is not proper tracking of product. Without of FS management, information can be incorrect, decision-making is not perfect, and insignificant problems can become serious problems that put the business itself in risk.

 

Benefits of AEO LO status granted to a Customs Broker 

 

AEO LO status will only be valid and applicable to the applicant and not to importers or exporters. They need to apply separately in the form of AEO. The Advance Authorization Scheme is a system in which imported import will be allowed to be tax-free (after making a standard waste grant) if incorporated according to the product to be exported. Usually, an export duty is set as a prerequisite for the issuance of an Advance Authorization.

 

Factory stuffing and self-sealing

Exporters who have used sealing under the controlled factory stuffing system at their factory premises would automatically be entitled to self-sealing procedures. Self-sealing authorization is valid for export at all customs stations until issued by the Principal Commissioner/Customs Commissioner. Members may be asked to note that exporters who use the factory / storage permit under Central Excise will be entitled to commit and will be required to follow the e-Sealing Radio-frequency identification (RFID) process and must register with the EDI Systems Factory. Self-sealing permission once given by a Principal Commissioner/Commissioner of Customs shall be valid for export at all customs stations.

 

Faster disbursal

 

Faster disbursal of drawback amount through process eased out fast tracking of refunds and adjudications;

Examination of goods to an inland destination under transshipment. - A consignment under transshipment shall not be subject to inspection at the port of entry, except for vehicles, unless—

(a) during scanning, illegal weapons or explosive materials are found

(b) despite a lapse of 72 hours after the delivery of the goods, the goods are not transported to the inland customs station and

(c) there is little relevant details or persuasive reason to conclude that the particulars are grossly unconfirmed.

 

Customs clearance

The process of moving goods through customs so that they may enter or exit the country is customs clearance. A paper supplied to a shipper by customs to prove that customs duty has been paid and that the goods can be exported. Before products may be imported or exported abroad, customs clearance is a mandatory process. If a shipment is cleared, the shipper can have paperwork verifying the payment of customs duties and will process the shipment. Custom clearance facilities will be available at all seaports and airports during any congestion or interruption or surge due to COVID-19 outbreaks due to prevailing conditions.

 

What is deferred payment scheme?

DPS is a legal agreement with the council that imposes on your property a 'legal fee' to protect its interests. You are given a loan using your home as cover, depending on whether you are successful in your application. It does not operate in precisely the same manner as a traditional loan. When you enter the scheme, the council does not send you a set amount of money, but pays a negotiated portion of your weekly bill as long as it is required. It is a technique for delinking Customs clearance payments. It's built on the 'Clear First-Pay Later' rule. This rule is declare on 2016. The certified importers get the benefits of this deferred payment rule.

 

The aim of the Indian Customs AEO Program:-

objectives:

 

A. To give businesses a world-renowned certificate

II. Assuring “safe and reliable” partners

III. Businesses with defined benefits that save time and cost

IV. Purchase protection from shipment is imported

V. Indication of complete safety standards when entering into an agreement with importers/exporters

VI. Enhanced border approval rights in partner countries of the Mutual Recognition Agreement (MRA)

VII. Minor disruptions related to the safety of the flow of goods

VIII. Cultural guidance/support if the trade is facing unexpected problems with Customs countries where India has MRAs.

Appointment of customs

How are the legal concerns and problems of AEO status managers resolved in terms of their benefits and convenience? Ants. The Customs Administration will undertake to extend all benefits and self-help measures to AEO status holders listed in the AEO Circular. There are conditions for the appointment of a Client Relationship Manager (CRM) at AC / DC level as a single point of contact with the AEO status holder in the office of the Chief Commercial Commissioner. CRM appointments are communicated in the form of public information by all those in the tax legal channel. CRM has been given the responsibility to address the concerns and legal issues of AEO customers. CRM details are also provided online on the CBIC website.

 

 

The Special Valuation Branch

 

The SVB is a component of the Indian cultural authorities which investigates the valuation of goods between related organizations during the importation of goods. The SVB has the purpose of directly determining the effect of that relationship on the invoice value of the products imported. The special relationship between the Indian importer and the foreign supplier may have an effect on the importer's transaction price, thus influencing the tax levied on that service. The SVB has the purpose of directly determining the effect of that relationship on the invoice value of the products imported.

 

AEO Methodology

The AEO system allows Customs executives to classify something secure and in line with business, rules to provide them with the highest level of guaranteed service. This downgrade system enables Customs assets to focus on small or risky businesses to control. Therefore, the purpose of the AEO program is to protect international purchases by providing honest employee recognition and promoting best follows at all levels in the international supply chain. Through this program, Customs shares its work with businesses, at the same time rewarding them with many additional benefits.

 

Indian AEO program structure

The three-tier system is available for importers and exporters.

• AEO-T1

• AEO-T2

• AEO-T3

This system is increasingly working to meet the needs provided and compliance. In addition, there is one Tier AEO Program for Logistics Provider, Custodians or Terminal Operators, Customs Brokers, and Warehouse Operators who have been awarded AEO-LO certification.

 

Eligibility criteria for AEO                                                      

AEO certification requirements:

• Shipment in last fiscal year 2019-2020 must be less than 25 for both importer and exporter.
• Companies like Net worth and Net current Asset for last 3 fiscal year must be positive. [MSMEs it’s 2 of fiscal year]

 The eligibility principles and standards for issuing AEO Status has been listed in the Section 3 of the AEO Circular No. 33/2016 January.

An entity must:

1. Settled in India
2. Business should be involved in Customs related activity
3. Should have dealt with minimum 25 Customs documents (either Bill of Entry or Shipping Bill) in the last fiscal year
4. Working with business activity for last 3 Financial Year

 

 

 

Procedure for applying in AEO

First of all, for applying in AEO the entity should meet the requirements that listed above in eligibility criteria in addition, the entity should fill the application form that consist of followings:

1. Applicant of AEO-T1 status is to apply online in prescribed proforma that contains
2. Name/Address of all location/site of applicant.
3. Name/Designation/Email/Mobile/Fax/Phone of central point of contact person.
4. PAN of the applicant.
5. Major items /Country of Import/Export with Tariff Code.
6. Copy of MSME certificate (if any)
7. The papers /proof include Certificate of Integration, Import-Export Code (IEC), balance sheets for three-years.

 

Remaining 3 AEO entities, namely T2, T3 and LO, must send the application according the description listed below in table.

 

Sr.#	Appendix	Subject	T2	T3	LO
1	A	Request form
2	B	Safety plan
3	C	Procedure map
4	D	Location plan
5	E1	General agreement
6	E2	Legal compliance
7	E3	Handling record
8	E4	Economic wealth
9	E5	Safety and security
10	F	Business companions details	X		X

 

 

Export shipment FY 2019-20

 

The statistic shows in 2019, 324.16 billion U.S dollars goods values were exported from India.

Exports in April-September 2020-21 were at $ 125.06 billion, sending a fall of 21.43 percent over the same period last year.

Since March 2020 Sales of India have been declining due to spread of Covid-19 in the country.

In March 2020, exports to India fell by 34.57 percent compared to the same month last year, and in April, the fall had fallen sharply by 60.28 percent.

Exports in April 2020 were USD10.36billion, compared to USD26.07billion in April 2019, indicating fall down (-) 60.28percent.

 

Import shipment FY 2019-20

 

India's imports fell by 19.6% to $30.31 billion in September 2020, decreasing the business deficit to $2.91 billion, compared to $11.67 billion in September 2019.

Compared to $ 248.08 billion over the same period last year, exports between April-September 2020-21 were $ 148.69 billion, dropping by 40.06 percent.

 

 

Here are some statistics that shows trade flow of Export

 

Trade flow	Indic-ator	2019-11	2019-12	2020-01	2020-02	2020-03	2020-04	2020-05
Export	Values US$	25,880, 346,967.00	27,046, 308,644.00	25,773, 126,437.00	27,661, 751,302.00	21,456, 844,668.00	10,271, 376,066.00	19,183, 130,532.00

 

Here are some statistics that shows trade flow of Import

 

 

 

Trade flow	Indicator	2019-11	2019-12	2020-01	2020-02	2020-03	2020-04	2020-05
Import	Values US$	38,109, 660,822.00	38,580, 136,947.00	41,129, 394,600.00	37,497, 919,425.00	31,178, 637,090.00	17,118, 381,509.00	22,201, 412,971.00

 

Micro, Small, and Medium Enterprises:

Micro, Small, and Medium Enterprises stand for MSME. Enterprises are classified into two groups according to the Development MSMED Act of 2006. Doing business - creating or producing products MSME companies must be in business for more than one year in every industry, and their annual profit should be higher than INR 24 Lakhs. KYC records, business registration certificates, and current account statements for the past 6 months include the documents needed for loan eligibility.

In the domestic and international markets, MSME produces and manufactures a wide variety of goods. They also helped to foster the development and growth of the industries of Card, District and Coir. In providing job opportunities in rural areas, MSMEs have played a key role.

As a result of their contribution to production, exports and jobs, MSMEs play a key role in the country's economic development. Eight percent of the country's GDP, 45 percent of manufactured products and 40 percent of national revenues are accounted for by the industry.

 

Challenges in MSME

• Inadequate and timely banking.

• Less money and information.

• Lack of appropriate technology.

• Low production capacity.

• Ineffective marketing strategy.

• Obstacles to modernization and expansion.

• unavailability of skilled personnel at low cost.

Kindly visit 

https://www.aeoindia.gov.in/ to know more...