Customs suspects at least 12 garment exporters misused bond facility
Officials say audits ongoing, more irregularities likely to surface.
Amid rising concerns over bond facility misuse, customs officials suspect 12 garment exporters of selling bonded fabrics in the local market after failing to account for duty-free imports under the scheme.
The Customs Intelligence and Investigation Directorate (CIID) has identified nine such garment exporters, while Customs Bond Commissionerate, Dhaka North, has flagged three others.
Officials from both agencies under the National Board of Revenue (NBR) said audits of other exporters are ongoing and more irregularities are expected to surface.
To promote exports, the government allows duty-free import of raw materials such as yarn and fabrics under the bond facility. These materials must be stored in designated warehouses and used only for producing export goods. Selling bonded fabrics locally requires taxes ranging from 45% to 89%.
Keep updated, follow The Business Standard's Google news channel
Most export-oriented factories operate under bond licences, granting them duty-free import privileges.
However, local textile mill owners have long accused some bond-holding factories of diverting imported fabrics to the domestic market, undermining fair competition.
A director of the Bangladesh Textile Mills Association (BTMA), speaking on condition of anonymity, told TBS that fabric imports through bond misuse have risen by 65% in the past eight months.
Factories under scrutiny
Discrepancies in the nine factories flagged by CIID were uncovered through factory raids and cutting inspections conducted between mid-2024 and mid-2025. Legal action has already begun, officials said.
The list of the nine exporters has been sent to the NBR, a copy of which was obtained by TBS.
The nine factories under CIID investigation are Narayanganj-based B Brothers Garments, West Apparels, Pacific Sweaters, Abanti Colour Tex, RT Fashions, Piangka Fashion, Anam Garments in Ashulia, Knit Bazar in Tongi, and Anannaya Socks and Inners Industries in Tejgaon.
RT Fashions and Abanti Colour Tex were found to have committed irregularities twice before.
An NBR official, requesting anonymity, confirmed the findings. "The concerned bond commissionerate offices have been instructed to take legal measures against the accused firms," the official said.
He added, "During field inspections and cutting supervision, we found discrepancies between the expected quantity of raw materials in warehouses and the actual stock or export records. In some cases, export evidence was completely missing."
The official further said they suspect duty-free fabrics were sold on the open market, causing estimated revenue losses of around Tk28 crore.
Cutting inspection means that Customs Bond officials visit the factory to physically inspect the fabrics and related materials before the factory starts cutting them for production.
Meanwhile, regarding the three factories identified by the Dhaka North commissionerate, Mia Md Abu Obaida, commissioner of the Customs Bond Commissionerate, told TBS, "Recently, during our raids, we discovered misuse of bonded facilities in three garment factories. Our operations to prevent such violations are ongoing."
What the accused say
Among the accused, West Apparels has been charged with misusing bond facilities worth Tk8.32 crore. The company allegedly sold 23,738kg of raw materials from an imported total of 27,480kg locally, causing the government to lose over Tk8.32 crore.
Moshiur Rahman Biplob, CEO of West Apparels, denied the allegation.
He said, "During the 2024 uprising, our production was inspected by the Customs Intelligence Office. The revenue officer could not visit the factory due to the situation. Despite that, we completed production and shipped the goods to the buyer by air, submitting all necessary documents as proof. The matter is now under hearing, and we hope to be cleared of the allegations."
Jashim Uddin, managing director of Anam Garments Limited, accused of failing to show raw materials worth Tk1.07 crore in its warehouse, also denied the charge. "Garments made from that fabric were shipped long ago, and we have already submitted all paperwork to the customs authority," he said.
Mohammed Rashed, managing director of Pacific Sweater, said fabric was imported in one container for use in sweater production, and the finished goods have already been shipped. "The relevant shipping documents have been submitted to the authorities, and they have even visited our factory once for a cutting inspection of the fabric," he added.
Weak action against bond misuse
Textile mill owners argue that despite repeated appeals to the NBR, little has been done to curb misuse of bonded imports. They said they had informed the NBR chairman and other senior officials multiple times, but effective measures remained absent, leaving them frustrated.
Khorshed Alam, chairman of Little Star Spinning Mills, said that indifference from customs authorities and a 32% wastage allowance for knitwear exporters had led to large volumes of illegally imported yarn and fabrics being sold locally, making competition difficult for domestic mills.
He added that although the domestic apparel market is worth about $12 billion, local mills sell only $7.5 billion worth of yarn and fabrics annually. "The remaining $4.5 billion worth of materials are sold illegally, which is one of the main reasons local mills struggle to sell their yarn," he said.
NBR officials, however, maintained that operations to curb violations are ongoing.
A senior official from the Dhaka South Bond Commissionerate said, "We are conducting audits and have not halted our activities."
Earlier on 28 August, NBR Chairman Abdur Rahman Khan warned that any company found selling bonded goods in the open market will have its bond licence immediately revoked.
