Updating some earlier schemes

CBEC has decided to merge the Accredited Clients Programme and Authorised Economic Operator scheme into a new 3-tier programme

The Central Board of Excise and Customs (CBEC) has decided to merge the Accredited Clients Programme (ACP) and Authorised Economic Operator (AEO) scheme into a new three-tier programme.

The idea is to provide more benefits to entities, which have demonstrated strong internal control systems and willingness to comply with various laws administered by CBEC. The Board has put up the revised scheme, also termed AEO, by way of a draft circular on its website and called for suggestions from all stakeholders.

ACP was introduced in 2005. The object was assured facilitation to importers demonstrating a capacity and willingness to comply with the laws the Customs department is required to implement. Later, exporters got included and the eligibility criteria was progressively liberalised. Even so, only 372 parties have registered under ACP so far; 16 more applications are pending.

AEO programme was introduced in 2011. The idea was to ensure security in the global supply chain from the point of origin. That is, from the point of export to import in the receiving country, keeping in view national requirements of the respective administrations. So far, only 30 entities have registered under this.

The draft circular lists several prominent features of the new programme. Notable among these are a focus on small and medium scale entities (any entity handling 25 import or export documents annually can become part of this programme), provision of deferred payment of duties (delinking duty payment and Customs clearance), direct port entry for factory-stuffed containers meant for export by manufacturers or star trading houses and direct port delivery of imports to ensure just-in-time inventory management by manufacturers (clearance from wharf to warehouse).

The three-tier scheme envisages one-tier and three-tier recognition for importers and exporters. And, two-tier recognition for importers, exporters, logistics service providers, custodians or terminal operators, Customs brokers and warehouse operators. With different criteria for recognition and different levels of facilitations for entities in each tier.

CBEC expects an applicant for new AEO status to have appropriate internal controls and measures to ensure safety and security of the business and supply chain, in addition to any specific legal requirements applicable to the business. The security and safety standards to be met have been detailed.

The refreshing part of the draft circular is its recognition that any applicant's infringement of law may be of negligible importance when compared with the volume of its operations. If the ratio of disputed duty demanded or drawback demanded or sought to be denied is less than five per cent in all the showcause notices issued under the Customs Act during the past three financial years, to the total duty paid and drawback claimed during the said period, he can still get AEO status.

There is a stipulation that the applicant should not have been issued any showcause notice in the past three financial years involving fraud, forgery, outright smuggling and clandestine removal of excisable goods or cases where service tax has been collected from customers but not deposited to the government. Or where prosecution has been launched or is being contemplated against the applicant or its senior management.

This condition might keep wayward entities out of the new AEO programme.
E-mail: tncrajagopalan@gmail.com