The government has extended time up to September 30 next for the release of indemnity bond offered to the export-oriented industries on promise of exporting goods.
The government has offered the indemnity bond facility to 100 per cent export-oriented garment industries on condition of meeting a minimum of 80 per cent export of their goods.
The government has imposed condition that exporters will have to install their duty-free machinery within one year and export 80 per cent of the goods produced within next one year from the date of import.
The National Board of Revenue (NBR) issued an order recently extending the time for the third time. Earlier, the government had set the time up to December 2007, and later extended to March 2008 to release the bond.
In the order, the board said: "The government will not further extend the time for the release of indemnity bond. Exporters will have to pay all duty/ taxes against import of machineries if they fail to get the indemnity bonds released by the extended time."
The validity of the indemnity bond that offers duty-free imports of machinery to industries remains until the condition on export of 80 per cent of the goods produced in a year's time is met.
NBR officials said there are around 10,000 such bonds stuck up with the Chittagong and other ports. The government has a blocked duty worth over Tk 3.50 billion with the unrealised indemnity bonds largely owned by the garment, knitwear and corrugated carton exporters.
"We have sought lists of the companies from BGMEA, BKMEA and BCCMEA which are yet to get the indemnity bonds released through exports. They have given lists of around 600 companies," said a customs official.
Bangladesh Garment Manufacturers and Exporters Association (BGMEA) has submitted lists of 522 companies while Bangladesh Corrugated Carton and Accessories Manufacturers and Exporters Association (BCCAMEA) 31 and Bangladesh Knitwear Manufacturers Exporters Association (BKMEA) 12 companies.
The official said the figures are confusing as the Chittagong port alone has 6070 stuck up indemnity bonds.
"We will launch a crackdown after September to realise government due revenue from the exporters who will fail to give declaration on export of their produced goods using the bond facility on importing machinery," he added.
Under the rule, if any exporter fails to comply with the conditions of bond he/she will have to pay all relevant duty with 10 per cent rate of interest.
"In an investigation, it has been found that a number of exporters availed the duty-free facility under bond licence, but they did not export those within the given timeframe," the customs official said.
Considering the abuse of the facility the government has withdrawn indemnity bond facility in the current fiscal and imposed 1.0 per cent duty instead of duty-free import of capital machinery.
Revenue board officials said a section of exporters have evaded government taxes by selling commodities in the local market after availing the duty-free facility.
Such a situation has led to uneven competition among the bond-licenced businessmen and others, they added.
Exporters require signing a bond paper on condition of export of produced goods, but a large number of such exporters remain out of government's vigilance after availing the duty-free import facility of capital machinery, officials said.
Explaining reasons of withdrawal of indemnity bond, a senior revenue board official said the national exchequer has been losing a large amount of duty over the years due to abuse of bond facility.
Besides, it has been found that customs officials remain reluctant to check the containers imported under bond facility as no revenue is involved. The facility also gives scope for entry of contraband items, he said.
Indemnity bond facility also leads to under-invoicing and money laundering, as importers in most cases do not declare price of the machinery imported under duty-free facility, he added.
In 2007-08, local industry imported capital machinery at 5.0 per cent special duty while 100 per cent export-oriented industries imported it at zero duty under indemnity bond.
"Availing indemnity bond facility is a time consuming and complex procedure, which has also been criticised by businessmen and reformists," the NBR official said.
The bond licencees have to obtain export certificates from relevant Value Added Tax (VAT) and bond commissionarates after installation of capital machinery and export of a minimum 80 per cent of the produced goods.
Customs houses will also have to spend time to realise duty from those who abuse the bond facility, which is a complicated and lengthy procedure.
The Regulatory Reforms Commission (RRC) has also suggested the government to simplify the execution process of indemnity bond.
Following suggestions of a cross-section of people, including apex chamber body, the government has waived the facility.
NBR insiders said 100 per cent export-oriented industries will still enjoy 2.0 per cent less import duty for machinery import while other industries have to pay 3.0 per cent.
Govt extends time again for release of bond for export-oriented industries
Doulot Akter Mala | Published: July 19, 2008 00:00:00 | Updated: February 01, 2018 00:00:00
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