Applicability of AEO Registration (Authorized Economic Operator) on MSME

AEO Registration

The Micro, Small, and Medium Enterprise (MSME) sector is a key contributor to India’s growth and therefore receives multiple benefits and relaxations from the government. When it comes to Authorised Economic Operator (AEO) registration, there are various relaxations extended for the MSME sector. This makes it relatively easier for the MSME sector to satisfy the AEO certification eligibility criteria. Let’s take a look at the applicability of AEO registration for MSMEs.

AEO Registration for MSMEs

Also known as Liberalised MSME AEO package, the Central Board of Indirect Taxes and Customs (CBIC) has launched a special AEO registration scheme through the issue of Circular No. 54/2020 dated 15th December 2020 for the MSME sector. This scheme allows MSMEs to obtain AEO registration with relaxed eligibility criteria. Following are the normal AEO registration eligibility criteria and those applicable to the MSME:

Particulars

Normal AEO Scheme

Liberalized MSME AEO Package

Handling of Documents

The applicant must have handled a minimum of 25 customs clearance documents in the preceding financial year.

The applicant must have handled a minimum of 10 customs clearance documents in the preceding financial year. Further, a minimum of 5 documents must be handled in each half of the financial year.

Business Activities

The applicant must be carrying on the business activity for a minimum period of the last 3 financial years before the date of the application.

The applicant must be carrying on the business activity for a minimum period of the last 2 financial years before the date of the application.

Show Cause Notice

The applicant should not have been issued a show cause notice during the last 3 financial years for the cases involving outright smuggling, forgery, fraud, clandestine removal of goods etc.

The applicant should not have been issued a show cause notice during the last 2 financial years for the cases involving outright smuggling, forgery, fraud, clandestine removal of goods etc.

Financial Solvency

The applicant should be financially solvent during the last 3 financial years before the date of the application

The applicant should be financially solvent during the last 2 financial years before the date of the application

Processing of application

The application for AEO T1 gets processed within 1 month.

The application for AEO T2 gets processed within 6 months.

The application for MSME AEO T1 will get processed within 15 working days.

The application for MSME AEO T2 gets processed within 3 months.

Bank Guarantee Requirements

A specified percentage of bank guarantee is required by the importers and exporters who are not holding AEO certification. Following is the percentage requirement for bank guarantee:

AEO T1: 50%

AEO T2: 25%

AEO T1: 25%

AEO T2: 10%

Following were the major relaxations provided in the case of AEO certification for MSMEs. In case you need any assistance with MSME AEO registration, feel free to contact the ASC Group.
Location: India

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