Liberalised Authorised Economic Operator Offered to MSMEs in EXIM Sector

The Indian government with the CBIC has introduced a special package for MSMEs in the EXIM sector labelled as the Liberalised MSME Authorised Economic Operator (AEO) certification.

The liberalised AEO accreditation is aimed to recognise the contribution made by MSMEs towards improving the economy during the times of COVID-19 pandemic. It is a relaxed scheme in continuation with the previous AEO certification programme. 

Under the simplified scheme, MSMEs in the EXIM sector can become an authorised economic operator to avail benefits. These include faster Customs clearance for authorised stakeholders along the international supply chain such as importers, exporters, logistic service providers, custodians, etc. In other words, customs clearance of their consignments would be facilitated with top priority reducing the cargo release time.

The relaxed accreditation programme allows MSMEs who have had a minimum of ten Customs clearance in one year to apply for it. Further, they must have had a clean compliance track and business of at least two financial years instead of the earlier stipulated three financial years. However, the MSME exporter or importer must have a valid MSME certificate from the line-Ministry. Additionally, they must have retained the MSME status during the validity of the AEO certification. 

The maximum time limit to process the application of MSME AEO for Tier 1 and Tier 2 has been reduced to fifteen working days and three months, respectively.

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Other benefits include Direct Port Delivery (DPD) facility for imported containers, Direct Port Entry (DPE) option for export containers, exemption from bank guarantees, priority given for refund, rebate, duty drawback. Further, a Client Relationship Manager (CRM) is allotted at the customs port to facilitate a single point of interaction.

While importers must deposit the customs duty before the clearance of imported goods, an AEO need not do so. Specified AEOs can defer payment of customs duty. Moreover, Tier 2 AEOs who export to certain countries are granted faster processing of the foreign customs authorities’ clearance. A condition imposed here is that such countries must have entered into a Mutual Recognition Agreement with India.

The requirement of submitting documents has been simplified. The Tier 1 AEOs and Tier 2 AEOs can file two and three annexures, instead of multiple annexures earlier stipulated. Under the relaxed guidelines, the Tier 1 AEO must file MSME Annexure 1 (General Compliance) and MSME Annexure 2 (Legal, Managing Commercial Records, and Financial Solvency Compliance). In addition to these two, a Tier 2 AEO must file MSME Annexure 3 (Safety and Security Requirements). Tier 1 covers those importers or exporters who will be granted the accreditation based on only document submission. Whereas, Tier 2 covers those who are given the certificate after an onsite inspection.

The relaxation is a part of the Hon’ble PM’s Aatma Nirbhar Bharat Abhiyan Program to modify the existing CBIC circular No. 33/2016- Customs dated 22nd July 2016. For this purpose, on 15th December 2020, the CBIC notified the circular No. 54/2020 detailing out the scheme. The relaxation will serve all the relevant MSME exporters and importers in ultimately reducing the order-to-cash cycle. It is due to the improvement in logistics and reduction of the period taken for Customs clearance.

For any clarifications/feedback on the topic, please contact the writer at annapoorna.m@cleartax.in

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