RMG accessories makers demand end to ‘customs harassment’ over HS code

Readymade garment accessories manufacturers have demanded an end to "harassment by customs officials" at ports over the determination of HS code (product identification code) for raw material imports.

Leaders of the Bangladesh Garment Accessories and Packaging Manufacturers and Exporters Association raised the demand at a pre-budget meeting with the National Board of Revenue (NBR) in the capital's Agargaon on Thursday.

HS code is the harmonised commodity description and coding system, also known as the harmonised system of tariff nomenclature is an internationally standardised system of names and numbers to classify traded products. The NBR collects import tax on the basis of the code.

The RMG accessories makers urged the NBR to take necessary steps to stop the harassment of the importers.

"There is harassment over HS code. If raw materials are imported under a similar HS code to those mentioned in our licence, it is not being accepted [by the customs authorities]. We are to face various kinds of fines and harassment," Rafez Alam Chowdhury, former president of RMG accessories makers' association, said at that meeting.

He said, "In a clarification issued in 2023, the NBR had said that if there is any error in the last four digits, it will not be considered a false declaration. And it will be assumed that it was done unintentionally."

"If a customs officer wants, he can impose a fine of up to four times the amount. Since the adjudicator can do so at his own discretion, this needs to be resolved." Rafez Alam Chowdhury Former president, Bangladesh Garment Accessories and Packaging Manufacturers and Exporters Association

Rafez Alam also said, "However, if a customs officer wants, he can impose a fine of up to four times the amount. Since the adjudicator can do so at his own discretion, this needs to be resolved."

He said at present, they are unable to remain competitive in business by importing raw materials after paying customs duty and VAT. "Many are being forced to leave the business. We're suffering too much."

Businessmen have been complaining of widespread harassment over HS code issues for the past few years. On the other hand, customs officials say they are now paying more attention to it to prevent mis-declaration.

The association also called for a ban on the import of accessories and packaging materials under bond (duty-free benefits), stating that "the country's garment accessories factories are now able to supply almost 100% of the accessories used in exports."

It demanded that the authorities grant entitlement or utility declaration for the import of raw materials to its members to be given to the organisation, in line with the views of two garment sector associations. This is currently being done by the Customs Bond Commissionerate, the RMG accessories manufacturers' association said.

Rafez Alam said, "Instructions were issued from the ministry to give us utility permission. But due to the complexity, it has not yet been implemented," he said. It can be started as a pilot project, if necessary, he suggested.

Other demands that were placed at the meeting were: timely completion of bond audits and allowing imported goods to be cleared from the port without a bank guarantee in case of failure; keeping export-oriented manufacturers outside the purview of VAT; reducing the export tax by one-fourth (from the existing 1% to 0.25%) for the next five years; and increasing the tax-free income limit for individual taxpayers from the existing Tk3.5 lakh to Tk4 lakh.

Calling for a three-year term for bond licences like the garment sector, the association said there seems to be two rules in the country as one party (garment sector) can import as they wish, and the other group cannot.

At the end of the meeting, the NBR chairman said, "We want to support, but we have to make sure that it is not misused."

Meanwhile, the Bangladesh Furniture Industries Owners Association and the Bangladesh Society for the Change and Advocacy Nexus (B-scan) also placed their various demands to the NBR at the meeting.