NBR’s fresh move to identify exporters misusing bond facilities

Highlights

• Currently, 8,000 entities have bond licences and 4,000 are actively utilising the privilege
• The facilities given to increase export competitiveness
• Apparel sector most beneficiary, followed by plastic, leather and others 
• NBR earlier filed several cases accusing many exporters for the misuse of the facilities 

The National Board of Revenue (NBR) has recently taken fresh steps to identify the exporters who misuse the bond facilities by illegally selling imported raw materials in the local market. Initially, it targets suspicious large companies.

Following an NBR headquarters' instruction, its field-level offices have already made a list of over 100 entities across the country, who allegedly abused the facilities, according to the officials familiar with the matter, and documents of more exporters are being scrutinised. 

In the primary investigation, NBR officials found evidence of large-scale irregularities by at least three exporters, but they did not disclose the names immediately.

"Many companies are importing raw materials under the bond facilities but they are selling those in the local market illegally," a senior NBR official, seeking anonymity, told the Business Standard. 

As a result, the government was losing huge revenues, he said, adding that the abuse of the privilege was ruining the local industries, as well. "Some large-scale irregularities have already been unearthed. We will disclose those after the final inspection."

Currently, a total of 8,000 entities in the country have bond licences and some 4,000 are active in utilising the privilege. Most of them are apparel manufacturers followed by plastic, leather and other sector exporters. 

For the last four decades, the government has been providing bond facilities – the advantage of importing raw materials without any tax –  to export-oriented industries to increase their export competitiveness, on a condition that the goods must be kept in authorised warehouses under the supervision of the Customs Bond Commissionerate.

On the other hand, other importers, except the bond licence-holders, have to pay different types of taxes including customs duties, ranging from 1% to 100% to import the same products. 

Hence, selling the items imported under bond facilities in the local market is strictly prohibited.

If anyone wants to sell the goods in the local market, they must pay all the taxes and have approvals from the authorities concerned. Two Customs Bond Commissionerates are assigned to ensure fair use of the bonded warehouse facilities.

Apart from regular inspection, the NBR also conducted different drives earlier and figured out some irregularities in the warehouses. Subsequently, it filed several criminal cases. Many exporters, especially from the apparel sector, were accused there.

Meanwhile, leading exporters urged the NBR not to harass innocent exporters.

"We welcome any kind of audit or investigation and have no objection if the NBR punishes bond facilities misusers. But, we want this initiative of the NBR not to turn into a tool of harassing exporters," said Mohammad Hatem, executive president of the Bangladesh Knitwear Manufacturers and Exporters Association.

"It was important to realise the difference between misuses and mistakes. Sometimes, the customs officials do not want to understand that," he told The Business Standard.

Appreciating the NBR move, Bangladesh Textile Mills Association Vice-President Abdullah Al Mamun suggested that the real exporters not be harassed or fined for their silly mistakes.