The Financial Express

Extended warehouse facility for exporters

| Updated: September 20, 2021 11:20:43

Extended warehouse facility for exporters

The National Board of Revenue (NBR) has amended the relevant rules granting the exporters an extended time to avail bonded warehouse facility, as imported raw materials get stuck following external marketing slowdown.

Officials said the board has relaxed rules for export industries across the board so that the businesses could enjoy the facility of duty-free import and warehousing of raw materials smoothly.

Exporters, however, want a year instead of six months in extended period for the facility and also plead for the conditions tagged to the package to be scrapped.

Warehousing period of duty-free products imported under the facility could now be extended following certain conditions under a circular to this effect.

Export and bond division of the customs issued the circular under Section-119A and Section-219B of the Customs Act 1969.

As per the Customs Act, exporters can avail bonding period for keeping duty-free products in warehouse up to 24 months for apparel units, which may vary from industry to industry.

Customs commissioners can allow six more months, if necessary, bending the rule.

The latest circular, signed by second secretary of the customs wing Moshiur Rahman Mondol, empowers the top customs officials to allow extended bonding time with the approval from the revenue board.

It would be valid for all export-oriented industries under bonded- warehouse facility, including those in EPZs, Economic Zone, and Hi-tech Park.

The commissioner of customs or other authorized commissioners can consider applications of exporters, on a case-to-case basis, in case of ensuring compliance with all tagged conditions under the circular.

The conditions for enjoying a flexible period by an exporter include keeping the qualitative standards of the stored raw materials, having capacity to export finished products using the raw materials and having updated audit or renewal.

The circular has been issued addressing some recent problems of exporters who could not export finished products within the bonding period of their raw materials.

Although qualitative standards of raw materials remain unchanged, they are facing complexities in exporting products using the duty-free raw materials.

"For the sake of foreign-currency earning and boosting export trade, the NBR allows the facility under certain conditions," says the circular.

Exporters often face penalties when preventive teams of customs raid their warehouse premises and find duty-free raw materials there which is a violation of customs law, said a senior customs official to explain the dilemma.

A number of large exporting industries, including a large company in an EPZ, faced with such problems when customs raided their warehouse, he added.

Md Hatem, vice president of Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), says it was a demand from apparel exporters for considering the cases of cancellation of export orders by foreign buyers.

"We have requested the NBR to allow the commissioner to approve applications of exporters for extension by a year if they failed to export products in time using the duty-free raw materials," he added.

He, however, said conditions set in the circular on renewal and audit may cause difficulties in availing the facility.

"Due to manpower shortage in customs, bond commissionerate cannot complete auditing in time. Many of the audit applications of apparel exporters remained pending for this reason," he pointed out.

Export-oriented industries having bonded-warehouse licence require completing customs audit every year.

Another condition for obtaining approval from the NBR for allowing extended bonding period may also linger the process, he added.

Commissioners should be empowered to allow extension of bonding period without making the system complex, the apparel maker pleads.

"The NBR should discuss with the private sector before issuing any such circular so that they could reap benefit from it," he says.

Under bonded-warehouse arrangement for storing imported raw materials, an exporter enjoys duty-free import of the raw materials to manufacture finished products and export to other countries.

Local sale of such duty-free products is prohibited-and punishable as per the customs law.

Exporters have to give declarations to the customs authority to import and utilize the duty-free products.

The restrictions on local sale of duty-free products are aimed at ensuring a level playing field for other businesses not enjoying the bonded-warehouse facility of duty waiver.

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