Importers have been facing difficulties in releasing their imported goods from customs houses due to a different type of duty levied through an order issued by the customs wing recently.
In its order on October 09, 2017, the customs wing under the National Board of Revenue (NBR) instructed all the customs houses to determine the prices of packets and packaging materials containing products like cosmetics, perfume, shampoo, toys, chocolate and biscuits and levy duty on the same.
The order was made applicable to the products which are presented to the customs authorities as a single item. The goods and packaging materials are not shown separately and sold to consumers intact in the same way.
However, the customs wing later issued another order clarifying the earlier order.
Field-level customs officials and business leaders said the order resulted in a significant hike of duty on imported products.
Officials said some importers at the Chittagong Customs House recently declined to take delivery of their products complying with the order in question.
Also, inconsistencies in customs assessment of products have been found at different field offices.
Customs Intelligence and Investigation Directorate (CIID) recently also pointed out the difficulties in implementing the order and suggested immediate suspension of the two orders.
Also, the apex chamber body demanded immediate withdrawal of the order terming it 'not viable'.
In an investigation report, submitted to the NBR on January 29 this year, the CIID said prices of products would go up significantly and tendency of misdeclaration by the importers would increase to avoid higher customs duty payment.
Following the observation, the NBR has moved to review the two orders by taking opinions of the field-level customs officials.
It has sought opinions from the members of the customs wing and commissioners of customs houses, customs and VAT commissionarates and other field offices on the two orders.
The customs wing requested them to put forward recommendations on the orders and assess the necessity of amending the same within three working days.
The CIID investigation report pointed out that the orders caused widespread confusion among the customs officials as different customs houses are following different rules in conducting customs valuation of imported goods with packets and packaging materials.
Even different rules are followed by different officials at the same customs houses too, the report said.
For example, an officer assesses the duty on a product considering its gross weight as net weight while another officer does it in reverse way.
Gross weight and net weight of a packaged cosmetics item might be 150 gram and 100 gram respectively. Some customs houses are conducting assessment considering 150 gram as net weight while some assessed the products on its net weight but determining the duty on packaging materials separately.
"There may be a huge difference between gross weight and net weight such as perfume," the report said.
In case of declaration of lower value of import products, the customs officials can re-fix minimum value or adjust the price in line with the market price, but it would be against the customs valuation rules if prices of packaging materials are added to each of products, the CIID said.
Talking to the FE on Tuesday, Shafiul Islam Mohiuddin, president of the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI), said the orders should be suspended immediately as it is not a viable one.
"Customs duty on packaging materials should not be same as like as its product. Tax on perfume should not be same as its packet," he said.
Packaging or packet can be made by any forms of materials which should not be taxed or taxed at a lower rate, he added.
"Such orders may prompt underhand dealing, misdeclaration for releasing products from the port. Also, it's a barrier to doing business through legal channel," he added.
He acknowledged that many importers are not releasing products from ports due to issuance of this order. "This might lead to congestion at the port that has also limited capacity," he said.
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