Why should you get an AEO certification today?

Authorized Economic Operator i.e. AEO stands for trade facilitation scheme for ease of doing business in light of international development, holder of this certificate is entitled for privilege, benefits, exemption and relaxation on account of import and export. This certificate is issued for particular period after that to be renewed.

In this Article, we will discuss about why getting AEO certification can benefit you and AEO eligibility criteria along with some examples to explain it’s use-cases.

Preface : A little bit of history

In 5 years (from 2014 to 2019), India jumped from 142^nd rank to 63^rd position in ease of doing business among 190 countries of the world. AEO is one of the key factor that led to this development.

AEO stands for Authorised Economic Operator. AEO is based on WCO’s (World Customs Organisation) Safe Framework of Standards (FoS) introduced by Indian Customs to enable business involved in the international trade to reap the export benefits

# AEO Benefits –

• Secure supply chain from point of export to import which includes DPE (Direct Port Entry) and DPD (Direct Port Delivery).
• Ability to demonstrate compliance with security standards when contracting to supply overseas exporters or importers.
• Enhanced border clearance privileges in Mutual Recognition Agreement (MRA) partner countries.
• Minimal disruption to flow of cargo after a security related disruption.
• Reduction in dwell time and related costs.
• Customs advice/assistance if trade faces unexpected issues with customs of countries with which India have MRA.
• Facility of self-certification to those entities who have demonstrated internal strong control system and compliance with CBEC.
• AEO certified firms/traders are preferred over non – AEO traders/firms in countries outside meaning more recognition to the goods/services exported.
• Faster tracking of refunds and adjudications.
• Paperless declaration with no supporting documents.
• Extension to facilitation to exports in addition to imports.
• Deferred payment duty.
• Self-ratification under Advance Authorisation

# Eligibility critera to fulfill for AEO Certificate –

Let’s see eligibility criterion that any entity has to fulfil for AEO Certificate:

•  Handled 25 documents (S/B & Bills of Entry) in last financial year.
•  Should undertake customs related work.
•  Be a part of international supply chain.
•  AEO can only be given to a legal entity and not group company.
•  Have business activity for three Financial Years (can be waived in deserving cases).

# Certification Tiers

AEO certification comes in a three-tier programme for exporters and importers viz. AEO1, AEO2, AEO3.

However, it is very important to seek help from consultants while applying for AEO certification due to following reasons:

•  A firm should have enough solvency prior to three years of applying for AEO.
•  There should be no defaults by the firm with the customs earlier.
•  The applicants must submit an undertaking regarding its insolvency and a Solvency Certificate issued by the Statutory Auditor of the applicant.