Liberalised MSME AEO Package
Liberalised MSME AEO Package
Central Board of Indirect Taxation & Customs (i.e. CBIC), vide circular no. 54/2020-Customs dated 15th December 2020 and press release dated 7th January 2021, has introduced and promoted the ‘Liberalised MSME AEO Package’. Vide the package, various compliance criteria are relaxed with a view to facilitating Micro, Small & Medium Enterprises (i.e. MSME) for AEO T1 and AEO T2 certification. The present article briefly covers the details of the said ‘Liberalised MSME AEO Package’.
Authorised Economic Operators background and benefits
Authorised Economic Operators (i.e., AEO) is a voluntary programme which enables to enhance the international supply chain security as well as to facilitate the movement of legitimate (authentic) goods.
On the basis of the AEO application and fulfilments of various criteria, AEO certification is divided into three tier certifications, namely, AEO-T1, AEO-T2 and AEO-T3.
Some of the common benefits available to AEO holders are summarized hereunder-
- Direct Port Delivery (i.e., DPD) of import containers.
- Direct Port Export (i.e., DPE) of export containers.
- Issuance of ID cards to the authorized personnel which enables easy entry to Customs Houses, CFS and ICD.
- Investigation and dispute resolution (up to the level of adjudicating authority) would be completed within 6-9 months and 6 months, respectively.
- Paperless declarations without any supporting documents in physical form.
However, it is important to note here that AEO benefits differ as per the type of the status holder (i.e. AEO-T1, AEO-T2 or AEO-T3).
Features of Liberalised MSME AEO package
Eligibility for availing the relaxation benefit under Liberalised MSME AEO package-
The MSME applicant should have a valid MSME certificate from the line-Ministry. Once the AEO approval is granted, MSME should ensure continuous of MSME status during the validity period of AEO certificate so granted.
Relaxations to MSME under Liberalised MSME AEO package-
The following table and points list the facilitates offered to MSME while applying for AEO certification-
| Relevant para number of the circular no. 33/2016 dated 22nd July 2016 | Current compliance for the certification process for AEO | Compliance criteria for MSME under ‘Liberalised MSME AEO package’ |
| Para 3.1.7 | Handling of minimum 25 customs clearance documents (i.e. Bill of Entry or Shipping Bills) in the preceding financial year. |
Handling of minimum 10 customs clearance documents (i.e. Shipping Bills or Bill of Entry) during the preceding financial year. However, handling of minimum 5 such documents is mandatory in each half-year period. |
| Para 3.1.6 | Carrying on business activities for a minimum period of last three financial year prior to the date of application for AEO. | MSME carrying on business activities for a period of last two financial year prior to the date of application will be eligible for AEO. |
| Para 3.2 | No show cause notice should be issued to the applicant during the last three financial year for cases involving forgery, outright, smuggling, fraud, clandestine removal of goods etc. | Show cause notice involving outright, forgery, fraud, smuggling, clandestine removal of goods etc. should not have been received by the MSME during the last two financial year. |
| Para 3.4 | The applicant should be financially solvent during last three financial year from the date of application. | MSME, applying for AEO, should be financially solvent during the last two financial year from the date of application. |
Other relaxations-
- An application for MSME AEO T1 will be processed within a period of fifteen working days (normally it is one month). Whereas, an application for MSME AEO T2 will be processed within three months (currently it is six months).
- A specific percentage of bank guarantee is mandatory for the importer/ exporter not holding AEO certificate. The said requirement is relaxed as under-
| Type of AEO application | Current requirement | New requirement |
| MSME AEO T1 | 50% | 25% |
| MSME AEO T2 | 25% | 10% |
- Relaxation in filing of various annexures-
| Type of AEO application | Current annexures | New annexures to be furnished by MSME |
| AEO T1 and AEO T2 application | Annexure A; Annexure B; Annexure C; Annexure D; Annexure E.1 to Annexure E.4 | MSME Annexure 1 and MSME Annexure 2 |
| AEO T2 application | Annexure E.5.1 to Annexure E.5.7 | MSME Annexure 3 |
