Manual UP ends as NBR enforces mandatory online clearance for bonded warehouses

From the first day of the year, exporters operating bonded warehouses must obtain Utilisation Permission (UP) exclusively through an online system to import raw materials under duty-free facilities, marking a decisive shift in the bonded management regime.

In a media statement issued on Thursday, the National Board of Revenue (NBR) said the Customs Bond Management System (CBMS) has been made mandatory for all bonded warehouse licence holders.

“As a result, from today, the manual application and approval process for UP (Utilisation Permission) has been discontinued,” the revenue authority said.

The NBR had announced a month earlier that the move would take effect from Jan 1 as part of efforts to make the country’s bonded management system “modern, transparent and technology-driven”.

On Dec 1, the authority said services for bonded warehouse licence holders were already being provided online through 24 CBMS modules operated by three customs bond commissionerates under the NBR.

However, usage of the system had “not reached the desired level” as it was not mandatory.

Under the bonded system, export-orientated factories with bonded warehouse licences must obtain UP approval from the relevant customs bond commissionerate—based on coefficients approved by the Duty Exemption and Drawback Office—to import raw materials without paying duties.

Although the UP module was introduced in the CBMS software at the beginning of last year, most firms continued to rely on manual applications until late in the year, the NBR noted.

Taking feedback from users into account, the authority said it has carried out “necessary improvements” and “corrections” to make the online UP process more user-friendly before enforcing mandatory compliance.

The NBR has also issued a circular highlighting the benefits of the digital system. These include faster, more transparent and accountable service delivery; easier, time-saving and cost-effective access to services for bonded firms; automated and transparent accounting through digital input-output data entry; the elimination of manual document submission at bond commissionerates; and a significant reduction in disputes related to bonded operations.

Officers say the move is expected to streamline trade procedures and strengthen oversight of duty-free imports under the bonded warehouse facility.