Exporters relieved of custom hassles over HS Code mismatch
NBR tells customs not to hold imported raw materials over HS Code issues
The National Board of Revenue (NBR) has instructed all customs houses to release consignments of imported raw materials for bonded establishments, even if there are minor discrepancies between the declared HS code or product description and the actual goods.
An HS code (Harmonised System code) is a globally standardised numerical system used to classify products for international trade and customs purposes.
Business leaders welcomed the move, saying it will prevent customs officials from holding consignments for days, reducing lead time, port demurrage, additional costs, and unnecessary delays in delivering goods to buyers.
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In a press release issued yesterday, the NBR said that for raw material imports by bond license-holding companies, as long as the main part of the HS code or product identification number is correct, consignments cannot be detained for mismatches in subsequent digits. Any errors can be corrected within a specified period, which the customs authority must accept.
The move comes in response to long-standing demands from businessmen and is expected to significantly reduce customs harassment.
NBR officials said that around 90% of customs-related cases involve HS code issues, suggesting that the number of disputes will decline.
NBR Chairman Abdur Rahman Khan told TBS, "A major complaint from businesses was that disagreements between importers and customs officials over HS codes caused delays in clearing goods and increased costs. The directive has been issued to ensure that raw materials for export production are not held up under any circumstances."
He added, "If any disagreement arises regarding the HS code, the importer can clear it by providing an undertaking. Corrections must then be made within the specified time. Even if there is an error in the first four digits of the HS code, the consignment cannot be held."
The NBR chief also called on traders to follow rules, saying, "This decision has been made to speed up business, reduce complexity, and facilitate imports and exports. However, anyone who misuses it will face extreme punishment under the law."
Welcoming the decision, Shovon Islam, managing director of Sparrow Group, one of Bangladesh's largest garment exporters, told TBS, "There is not a single garment exporter in the country who has not faced harassment over HS codes or does not have bitter experiences related to this issue. The NBR's directive has been our long-standing demand, and we are extremely pleased with this decision."
Key points of the NBR directive
According to the instruction, if imported goods are declared under a product description and HS Code listed in the bond license, but Customs identifies a different HS Code or description, the consignment can still be released. This applies as long as the first four digits of the Customs-assigned HS Code match those in the bond license.
In such cases, the importer must give an undertaking to update the HS Code or product description in the bond license within 30 days. Once the undertaking is submitted, Customs cannot hold the consignment.
Additionally, the bonded enterprise may update the HS Code in its entitlement through the Customs Bond Management System (CBMS) and clear the goods within a maximum of two days.
The NBR chairman said that the corrections or additions can be made within the given time frame, as the Customs Bond system is now fully automated.
85% of exporters to benefit directly
According to the Export Promotion Bureau (EPB) of Bangladesh, the country exported goods worth $44.47 billion in the last 2024-25 fiscal year.
According to exporters and customs officials, around 85% of exports are carried out through bond license-holding companies, with the readymade garment sector being a major contributor.
Currently, there are nearly 5,000 active bond license-holding enterprises under the three Customs Bond Commissionerates in the country.
Bonded companies are allowed to import all types of raw materials and accessories duty-free, storing them in designated warehouses for manufacturing under export conditions.
Import duties on these materials typically range from 30% to 90% or more, which must be paid if the goods are sold domestically or on the open market instead of being exported.
There have been allegations that some exporters — or companies using exporter names — misuse the bond facility by importing duty-free materials and selling them in the local market. This practice causes revenue loss for the government and creates uneven competition for domestic producers of the same products.
To prevent such misuse, customs authorities impose strict regulations on bonded imports. However, exporters claim that those intending to flout rules often collude with customs officials and face no consequences, while genuine exporters are subjected to harassment.
Exporters also report that some customs officials sometimes create difficulties over minor mistakes or when bribes or payments are not made, using their authority to intimidate legitimate exporters.
How exporters face harassment
Bond license-holding companies import the quantity of raw materials and accessories needed for their general export orders by submitting a Utility Declaration or import entitlement through their respective trade associations.
HS codes, which are eight-digit codes, are used to identify any product: The first four digits classify the product broadly — e.g., fabric, yarn, or buttons. The last four digits specify the product further — e.g., for fabric, the percentage mix of polyester and rayon in the yarn.
Disputes usually arise over the last four digits, causing losses for traders.
For instance, officials at the Chattogram Customs House recently blocked an import consignment worth $98,000 that belonged to a Narayanganj-based exporter, claiming the HS code was incorrect. The fabric importer had listed it as 5408, while customs insisted it should be 5407.
BKMEA President Mohammad Hatem told TBS that both are man-made fibres, with minimal difference: one is polyester staple filament, the other rayon staple filament. Since the goods were under a bond license for export, customs could have released the consignment, but it was held for two months.
Despite contacting the commissioner, the consignment was not cleared, and ultimately imposing a 200% fine — meaning a Tk1.10 crore consignment faced a Tk2.20 crore penalty — and instructed that the goods be cleared only with full payment.
Even after informing the NBR chairman and applying for reconsideration, the importer was not allowed to meet the Chattogram Customs commissioner, and the goods remained blocked. He ultimately had to file a petition with the High Court to get an order to clear the consignment.
"The order had already been cancelled by the buyer," Hatem added.
Sharing a similar experience from 2022, Sparrow Group's Shovon Islam said, "We produce women's linen pants for a top UK-based Bangladeshi brand eight months a year. A shipment of fabric with a small variation in the man-made fibre mix was held up. I had to spend one and a half months resolving it. Even using a bank guarantee to clear the consignment was denied."
He added, "This caused significant port demurrage costs and damaged credibility with the buyer."
