Authorized Economic Operator (AEO) Certificate

Circular no. 33/2016-Customs dated 22

nd July, 2016 has merged two facilitation scheme namely ACP (Accredited Client Programme) and AEO (Authorized Economic Operator) into a combined three-tier AEO programme. Under the new AEO programme, the importer and exporter are being issued a certificate based on three-tier certification i.e. AEO-T1, AEO-T2 and AEO-T3, however, economic operator other than importer and exporters are given only one tier certification i.e. AEO-LO. In this article, we look at the various aspects of the Authorized Economic Operator (AEO) Certificate in detail.

Benefits Of AEO-T1 Certificate

The AEO-T1 certificate is granted only to the importer or the exporter on the fulfilment of the required criteria. Following are the list of benefits available to the importer or the exporter if an AEO-T1 certificate has been granted to them –

The main benefit accrued with the AEO-T1 certificate is surety of shorter cargo release time. The consignment of the importer or exporter having AEO-T1 certificate would receive the high level of facilitation in imports and exports.
There would be a grant of separate space, wherever possible, earmarked in the Custodian’s premises.
Facility of direct port delivery (i.e. DPD) would be available in case of import containers based on the volume of their import trade in terms of the number of containers.
Facility of direct port entry (i.e. DPE) would be available in case of export containers based on the volume of their export trade in terms of the number of containers.
ID cards would be allotted to the authorized personnel of AEO-T1 holder in order to facilitate hassle-free entry to Customs House, CFS and ICD.
The person holding AEO-T1 certificate would have the facility to provide 50% less bank guarantee as compared to others. However, it must be noted that the facility of less bank guarantee would not be available in case the competent authority has ordered furnishing of bank guarantee in case of provisional release of seized goods.
Facility of fast completion, within a period of 6 to 9 months, of investigation relating to indirect tax cases would be available. Further even in case of dispute resolution cases would be taken up fast preferably within 6 months.
The AEO-T1 holder will not be subjected to regular transactional PCA (i.e. post-clearance audit). Onsite PCA would be conducted once in two years only.
Facility of 24/7 clearance at all the seaports and airports can be made available. Further, the holder of the AEO-T1 certificate is not required to pay Merchant Overtime Fee.
Arrival and/or departure of the vessel carrying the consignment of AEO-T1 holder would be informed through an e-mail.

Benefits Of AEO-T2 Certificate

The AEO-T2 certificate is granted only to the importer or the exporter on the fulfilment of required criteria. Following are the list of benefits available to the importer or the exporter if the AEO-T2 certificate has been granted to them –

The holder of the AEO-T2 certificate would be given a higher level of facilitation in the import and export of their consignments.
At the time of seal, verification/scrutiny of documents by the customs officers would be waived. Further, consignment would be given out of charge or let export order without any scrutiny.
In case the container of AEO-T2 certificate holder is selected for scanning, the same would be scanned by giving front-line priority treatment.
The Bill of entry or shipping bill if selected by the officer the same would be processed on the priority basis.
AEO-T2 certificate holder will have the facility of self-sealing of export goods without the requirement to seek case to case permission from the authority.
The person holding AEO-T2 certificate would have the facility to provide only 25% of bank guarantee as compared to others. However, it must be noted that the facility of less bank guarantee would not be available in case the competent authority has ordered furnishing of bank guarantee in case of provisional release of seized goods.
They have a facility that they can paste the MRP stickers at their premises.
The AEO-T2 holder will not be subjected to regular transactional PCA (i.e. post-clearance audit). Onsite PCA would be conducted once in three years only.
They have the facility of submitting a paperless declaration and there is no requirement of any supporting documents in physical form.
The refund/rebate relating to indirect taxes of the AEO-T2 certificate holder would be granted within a period of 45 days.
They have the opportunity of trade facilitation by a foreign customs administration with whom India enters into a Mutual Recognition Agreement.
A Client Relationship Manager would be appointed by all the customs houses and they would act as a voice of AEO-T2 holder within the customs in relation to legitimate concerns and issues of AEO.

Benefits Of AEO-T3 Certificate

The AEO-T3 certificate is granted only to the importer or the exporter on the fulfilment of required criteria. Following are the list of benefits available to the importer or the exporter if an AEO-T3 certificate has been granted to them –

The holder of an AEO-T3 certificate would be the given higher level of facilitation in import and export of their consignments, even more than AEO-T2 holder.
AEO-T3 certificate holder will have the facility that their containers will not be selected for scanning except on the basis of specific intelligence. In case the container is selected for scanning, the topmost priority would be given for the same.
Assessing/examination by the Customs officer would be done on the self-certified copy of documents and there will not be need of original documents.
The person holding AEO-T3 certificate are not required to submit any bank guarantee. However, it must be noted that the facility of no bank guarantee would not be available in case the competent authority has ordered furnishing of bank guarantee in case of provisional release of seized goods.
The refund/rebate relating to indirect taxes of the AEO-T3 certificate holder would be granted within a period of 30 days.
On request, they will be provided on-site inspection/examination.

Benefits Of AEO-LO Certificate

The AEO-LO certificate is granted to all the economic operator other than the importer and the exporter on the fulfilment of required criteria. Following are the list of benefits available to the different economic operator if AEO-LO certificate has been granted to them –

Benefits available to Logistic Service Provider

Facility of waiver of bank guarantee in case of trans-shipment of goods under Goods Imported (Conditions of trans-shipment) Regulations, 1995;
Facility of exemption from the permission on case to case basis in case of transi of goods;
Facility of execution of running bond.

Benefits available to Custodians or Terminal Operators

Facility of wavier of bank guarantee under Handling of the cargo in Customs Area Regulations, 2009;
Facility of extension for the period of 10 years for approval of custodians under regulation 10 (2) of the Handling of cargo in Customs Area Regulations, 2009.

Benefits available to Customs Brokers

Facility of waiver of bank guarantee to be furnished under regulation 8 of the CBLR, 2013;
Facility of extension of validity of licenses, till the validity of AEO status, granted under regulation 9 of the CBLR, 2013;
Facility of waiver from the fee for renewal of license required under regulation 11 (2) of CBLR, 2013.

Benefits available to Warehouse Operators

Facility for faster approval of new warehouse within a period of 7 days;
Facility of waiver of antecedent verification envisaged for grant of license for warehouse;
Facility of waiver of solvency certificate;
Facility of waiver of security for obtaining an extension in the warehousing period;
Facility of waiver of security required for warehousing of sensitive goods.

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Frequently Asked Questions

Common questions about Authorized Economic Operator Certificate Benefits.

The AEO program has three tiers: AEO-T1, AEO-T2, and AEO-T3 for importers and exporters, and one tier, AEO-LO, for other economic operators like logistics providers, custodians, customs brokers, and warehouse operators.

Some key benefits of obtaining an AEO-T1 certificate include shorter cargo release time, separate space at custodian premises, direct port delivery/entry based on container volume, authorized personnel ID cards, reduced bank guarantee requirements, faster investigation and dispute resolution, less frequent post-clearance audits, and 24/7 clearance at seaports and airports without merchant overtime fees.

Holders of an AEO-T2 certificate enjoy higher facilitation levels, including waiver of seal verification/document scrutiny, front-line priority for scanning, priority processing of bills of entry/shipping bills, self-sealing of export goods, reduced bank guarantee requirements, ability to paste MRP stickers at premises, paperless declarations, faster refunds/rebates, and appointment of a client relationship manager.

In addition to the benefits of an AEO-T2 certificate, AEO-T3 holders enjoy even higher facilitation levels, such as their containers not being selected for scanning except on specific intelligence, topmost priority for scanning if selected, self-certified document copies accepted, and no requirement for bank guarantees (with some exceptions).

Logistics service providers with an AEO-LO certificate can avail benefits like waiver of bank guarantees for trans-shipment of goods, exemption from case-to-case permission for transit of goods, and execution of running bonds.

Custodians or terminal operators with an AEO-LO certificate can benefit from waiver of bank guarantees under cargo handling regulations, and extension of the approval period for custodians up to 10 years.

Customs brokers with an AEO-LO certificate can avail benefits like waiver of bank guarantees, extension of license validity till the AEO status is valid, and waiver of license renewal fees.

Warehouse operators with an AEO-LO certificate can benefit from faster approval of new warehouses within 7 days, waiver of antecedent verification, solvency certificate, and securities for warehousing periods and sensitive goods.

Yes, AEO-T3 certificate holders receive an even higher level of facilitation than AEO-T2 holders, including exemption from routine container scanning, acceptance of self-certified documents, and no requirement for bank guarantees (with some exceptions).

No, the AEO-T1, AEO-T2, and AEO-T3 certificates are granted only to importers and exporters upon meeting the required criteria. Economic operators other than importers and exporters are eligible for the AEO-LO certificate.