AEO Programme (Part 1 - AEO T1)

Navigating international trade efficiently requires trust and credibility, and that's where the Authorized Economic Operator (AEO) T1 status comes in. Designed to streamline customs procedures and enhance supply chain security, AEO T1 offers businesses key advantages, including faster clearances and reduced compliance burdens. But what exactly does it take to obtain this certification, and how can it benefit your business? Let’s break it down.

What is Authorised Economic Operator (AEO) Programme

The Authorised Economic Operator (AEO) program helps Customs administrations identify trusted, compliant and reliable businesses and offer them streamlined customs processing. It enables Customs to concentrate efforts on higher-risk businesses, improving control and security across international trade. This programme not only certifies business to enhances security but to also provide rewards to reliable operators and businesses with benefits like faster clearances and reduced inspections. 

Is it mandatory for businesses in India to get certified under the AEO Programme?

The AEO scheme is entirely optional. Choosing to apply for AEO status is a commercial call, based on a company’s role in the supply chain and its interest in the benefits that come with certification.

How is the AEO Programme structured?

The AEO program for importers and exporters is structured in three tier certifications—AEO-T1, AEO-T2, and AEO-T3, each offering progressively greater benefits and requiring higher levels of compliance. Additionally, there is a single-tier AEO certification, AEO-LO, specifically designed for logistics providers, custodians or terminal operators, customs brokers, and warehouse operators.

What is the validity period for the AEO certifications?

The validity of AEO certificate is three years for AEO-T1 and AEO-T2, and five years for AEO-T3 and AEO-LO.

What is the eligibility for applying for AEO tier 1 certificate?

The entity applying should be: (a) Established in India; b) Business should be involved in Customs related activity; c) Should have dealt with minimum 25 Customs documents (either Bill of Entry or Shipping Bill) in the last fiscal year; d) Should have been in business activity for last 3 Financial Years; (e) Should be financially Solvent for the last 3 Financial Years; (f) The applicant must not be issued a Show Cause Notice involving ‘fraud, forgery, outright smuggling, clandestine removal of excisable goods or cases where Service Tax has been collected from customers but not deposited to the Government’ during last 3 Financial Years; (g) The applicant should not have defaulted in payment of due Customs duties during the past three years; (h) The applicant must have a robust system for managing commercial and transport record such using GAAP/IFRS-compliant systems for Customs audits, ensuring proper handling of export/import licenses, maintaining secure record-keeping and data protection, training staff to report compliance issues to Customs, implementing strong IT security measures.

What are the benefits of holding a AEO T1 Certificate?

• Faster processing of imports and exports, leading to quicker cargo release.

• Access to Direct Port Delivery (DPD) and Direct Port Entry (DPE) for imports/exports, depending on trade volume.

• Reserved space at Custodian’s premises, where available.

• Bank Guarantee requirement will be reduced to 50% compared to non-AEO importers/exporters, except in certain cases.

• Customs-related investigations will be completed in 6-9 months, if possible.

• Disputes related to Customs, Central Excise, and Service Tax will be resolved within six months, whenever possible.

• Only a biennial onsite post clearance audit (instead of regular transactional checks).

• Notifications about the arrival/departure of vessels carrying consignments.

• 24/7 clearance at sea ports and airports, with no Merchant Overtime Fee (MOT) charges

Can an entity directly apply for AEO T2 certificate?

Yes, an entity can directly apply for AEO T-2 status without having prior T-1 status, provided they meet the eligibility criteria as stated above and submit the mandatory forms as per the procedure prescribed.

Can an existing AEO status holder file application for higher AEO status?

An existing AEO certificate holder can apply for higher AEO status. There is no time limit for filing higher status application except in case of AEO-T3. In case of AEO-T3, either the entity should have had AEO-T2 status continuously for two years or when all its business partners in international supply chain have acquired either AEO-T2 or AEO-LO status.

What are the timelines for processing AEO T1 applications?

In case of AEO T-1 application, if the eligibility conditions and criteria for grant of certificate, are found to have been met to the satisfaction of AEO programme manager, the AEO T-1 certificate shall be granted within 30 days of submission of information/documents.

What is the required mode for filing AEO applications, and what mandatory forms must be submitted?

To apply for AEO-T1 status, the applicant must submit an online application on the website aeoindia.gov.in (AEO Portal) using the prescribed format as per Annexures A-1 and A-2 of CBEC Circular No. 26/2018 dated 10.08.2018.

What is the renewal process for AEO status?

The facility of continuous auto renewal for AEO T1 is available subject to submission of annual self-declaration (attached in the email) to be filed between 1st October to 31st December each year.

Stay tuned for our next blog on AEO T2 and AEO T3!