Imports across board won't get duty cut

Local manufacturing industries are no longer entitled to enjoy a rate in importing capital machinery and spare parts, meant for the use as raw materials or production inputs, customs officials said.

Currently, all types of capital machinery, as listed in customs gazette, are entitled for enjoying 1.0 per cent duty.

In its latest order, the customs has imposed the restriction as some of the capital machinery and spare parts were being used as raw materials for other industries.

The customs wing of the National Board of Revenue (NBR) issued a fresh Statutory Regulatory Order (SRO) with the new bar, effective from April 24, 2022.

The previous SRO, dated June 3, 2021, has been scrapped and replaced with the new one.

However, the commercial importers will be able to import the capital machinery under concessionary duty rates for sales or transferring to other parties.

Certification of Bangladesh University of Engineering and Technology (BUET) or other institutions is not required for the commercial importers while the local manufacturers will have to submit it for releasing goods.

Customs (Policy) member Md Masud Sadiq said the new SRO has clarified the confusion created over some of the capital machinery and spare parts of industries are also used as raw materials for other industries.

Import duty of raw materials varies from zero per cent to 25 per cent, he added.

The new order has been issued after a long scrutiny as some capital machinery remained stuck in the port for legal complexities, he added.

Officials said the restriction on availing concessionary duty rates on import of capital machinery would help check evasion.

Mr Sadiq said the commercial importers are subject to pay other taxes, including Advance Income Tax and Advance Tax (AT), so the total tax incidence of commercial importers is not equal to local manufacturers.

On certification requirement, he said the commercial importers bring capital machinery for selling or handing over to other parties. So, obtaining certification from the BUET is not relevant for them.

The trade and tariff adviser of the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) Manzur Ahmed found the measures not favourable for industries as per the global trade rules.

"The import taxes should be imposed on products, not on the basis of importers. It should be equal for manufacturing industries and commercial importers," he added.

He considered the existing customs rules on import of capital machinery a complex one as supportive or auxiliary equipment of the machinery are not considered for the concessionary duty.

"I wonder why manufacturing industries are required to furnish BUET's certificate while commercial importers are exempted from the obligation," he added.

The apex chamber has pointed out a number of procedural complexities on capital machinery import in its pre-budget proposals for the upcoming fiscal year, he added.

To enjoy 1.0 per cent import tax, Customs officials said, some of the local industries claim spare parts and capital machinery as their raw materials or inputs for industrial production.

Addressing the practice, the new order has imposed a cap on availing the concessionary duty in such cases as it is also associated with VAT rebate too.

However, the new order has relaxed some provisions extending the time frame for import of capital machinery and parts under the same HS code through multiple chalans and experts verification report submission time on installation of imported machinery in the factories.

According to Bangladesh Bank (BB) data, import of capital machinery reached US$2.69 billion in July-December period of FY2021-22, registering 67.37 per cent growth year-on-year.

In FY 2020-21, the country's spending on capital machinery import was $3.74 billion.

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