Govt eases custom compliance, security requirements for MSMEs with relaxed AEO accreditation process

Trade, Import, and Export for MSMEs: Under AEO, a business engaged in international trade is approved by Customs as compliant with supply chain security standards and granted AEO status and certain benefits.

The exports during April-February 2020-21 period stood at USD 255.92 billion.

Trade, Import and Export for MSMEs: The Central Board of Indirect Taxation & Customs (CBIC) in order to promote import and export related ease of doing business among MSMEs with respect to their Authorised Economic Operator (AEO) accreditation has eased the custom compliance and security requirements involved in the process. A circular issued by CBIC’s Directorate of International Customs (DIC) in December 2020, noted that “the relaxation has been carried out to ensure that the MSMEs are facilitated through rationalized compliance requirements and minimum but effective security requirements.” A copy of the circular, signed by DIC Joint Commissioner Manish Kumar, was seen by Financial Express Online.

AEO is a voluntary programme under the aegis of the World Customs Organization (WCO) SAFE Framework of Standards that aims to secure and facilitate global trade by enhancing international supply chain security and facilitating the movement of goods. Under AEO, a business engaged in international trade is approved by Customs as compliant with supply chain security standards and granted AEO status and certain benefits. “It enables Indian Customs to enhance and streamline cargo security through close cooperation with the principle stakeholders of the international supply chain viz. importers, exporters, logistics providers, custodians or terminal operators, custom brokers and warehouse operators,” according to CBIC.

The relaxations made by CBIC, as per the circular issued on December 15, for AEO accreditation for MSMEs included first, relaxing the eligibility requirement of handling a minimum of 25 documents during the last financial year to 10 documents. However, it is subject to handling at least five documents in each half-year period of the preceding financial year. Second, the requirement to have “business activities for at least three financial years preceding the date of application” has been relaxed to two financial years. Third, the qualifying period for legal and financial compliance has been reduced from the “last three financial years” to the last two financial years.

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Also, the time limit for processing of T1 and T2 AEO applications for MSMEs has been reduced to 15 working days from one month and three months from six months respectively. The relaxations will apply to MSMEs who have “a valid MSME certificate from the line-ministry. Further, the approved MSME must ensure their continuous MSME status during the validity of its AEO certification, if granted,” said CBIC.

AEO certification includes multiple tiers including T1 wherein businesses are verified on the basis of document submission only while in T2, onsite verification is also done apart from document verification. AEO certification allows units for direct port delivery of imports to ensure just-in-time inventory management by manufacturers, the inclusion of direct port entry for factory stuffed containers meant for export by AEOs for AEO T1, T2 and T3, the investigation related to AEO status holder is fast-tracked within six-nine months, dispute resolution related to AEO status holder is completed or adjudicated within six months, and more.

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