HS code hurdles force businesses to pay heavy cost

Staff Reporter :
Businesses are paying cost heavily for the lengthy process in securing permission for using the Harmonised System (HS) codes for new products.

They said the taste of the consumers and the nature of goods are changing frequently.

But the National Board of Revenue (NBR) is failing to rearrange the HS codes in line with the changes timely, which is increasing sufferings of them.

Importing a new type of raw material beyond the NBR’s list of HS codes, they are being forced to make the rounds for its enlistment with bond licences, they alleged.

There is no margin even for a minor discrepancy in HS codes they come across – when customs officials deem a shipment of goods not matching HS codes, they immediately scrap its duty-free facility and impose a regular duty under another HS code.

Resolving the crisis, the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) has sent a letter to the NBR last week.

In the letter, it said that the country’s export sector is in deep crisis as production activities have disrupted severely amid the adverse economic environment caused by Russia-Ukraine war followed by the Covid-19 pandemic.

The increase in price of industrial raw materials in the international markets, soar in production cost due to gas-electricity crisis and transportation cost hikes have also affected the country’s manufacturing sector.

Foreign buyers are reducing export orders, some even are cancelling shipment and some are requesting for slow shipments. In such a crisis, there is no alternative to business facilitation and cost saving to sustain the country’s main foreign exchange earner garment industry.

Besides, as the export lead time is decreasing day by day, there is a need to simplify the customs clearance and procedure to stay competitive, the letter read.

The export-oriented garment industry is dependent on fashion and season as the buyers place orders for the latest fashion design of clothes.

The manufacturers import new fabrics and accessories against the export order.

But, it is not being possible to release the imported raw materials of the RMG sector from customs stations throughout the country without having the name and HS code of the product in the bond licences.

In many cases factory inspection is being made mandatory after applying for new code.

Invoice-based certificates are being issued by excluding the HS codes of locally made accessories from the list of application. As a result, cost is increasing as well as it creates prolonging.

So, it is very important to add the HS codes of the new raw material and accessories to the bond license, if applied with the recommendation of the BGMEA, the letter read.

Mohammad Hatem, Executive President of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), told The New Nation, “More than 50 per cent of 8,500 bond licence holders have to go through hassles in securing HS codes for new raw materials that they need because of a constantly changing market demand.”

“Sometimes, it takes more than two months to release the imported raw materials from the port, mainly for HS code related problems, resulting in a delay in production,” he added.

NBR officials, however, said if they give wholesale approval for the use of HS codes for all raw materials they demand, there will be misuses, such as local market sales of goods made with raw materials imported without duty.