Implications of Advance Ruling by NBR

In December, 2013, Trade Facilitation Agreement (TFA) was adopted by the World Trade Organisation (WTO) in its 9th Ministerial Conference in Bali, Indonesia. The Trade Facilitation Agreement (WT/MIN/13/36) aimed at expediting the movement, release and clearance of goods, including goods in transit and improving customs cooperation.

The agreement contains unique Special and Differential (S&D) treatment measures that link the requirement to implement TFA taking into account the capacity of developing and least developed countries. The Agreement also recognises the need for donor members to enhance assistance and support for capacity building. The Agreement came into force as soon as it got been ratified by two thirds of the WTO member countries. However, the S&D provision allows each developing country to determine when they will implement the each of the individual provisions as well as those provisions for which they will need technical assistance and support for capacity building in order to implement the TFA.

To enjoy the S&D flexibilities, a member must place each provision of the agreement into one of the three categories defined as under:

Category A: Provisions that a developing country Member designates for implementation by the time the Agreement enters into force.

Category B: Provisions that a developing country Member designates for implementation after a transitional period of time after entry into force of the Agreement.

Category C: Provisions that a developing country Member designates for implementation after a transitional period of time following the entry into force of the Agreement and the provision of assistance and support for capacity building.

Soon after the adoption of the agreement, member countries are taking initiatives for implementation of the provisions of TFA with a view to minimising the lead period of customs clearance and to avoid confusion and difference of opinion by the customs officers while fixing up Harmonised System (HS) Code of the merchandises imported.

The National Board of Revenue (NBR) has issued statutory regulatory order (SRO) No. 188-Law/2016/37/Customs on June 02, 2016 to introduce Advance Ruling system in Bangladesh in line with TFA to simplify  international trade procedures and reduce the cost of doing business. The NBR established an Advance Ruling Unit (ARU) headed by the Member (Customs Duty) to issue Advance Rulings regarding classification, origin, valuation and other information relating to the imported or exported product/s. Under this system, the NBR will also establish a database on Advance Ruling so that the importers and exporters can get necessary information from the database.

Under the Advance Ruling, the importers will get the facility to know about the HS Code and duties to be imposed on the goods imported well ahead of the shipment of the consignment. As such the importer will be able to assess the classification code of the consignment and the rate of duty applicable to it. It will facilitate trade, increase transparency and minimise lead time to release the consignment from customs authority which will ultimately reduce cost of import.

The application for classification of goods may be submitted in form KA with an application fee of Tk. 2,000/- (Taka two thousand) addressed to the President, Advance Ruling Unit, National Board of Revenue, Dhaka. The application for Advance Ruling must be submitted at least 60 working days ahead of the submission of Bill of Entry or Bill of Export. The application may be submitted by the importer/exporter or a person authorised by them or an entity permitted to stay in Bangladesh or legally authorised and registered in the country. In case of origin of the goods, application must be submitted in Form KHA. During submission of the application, details of the goods if possible photographs, sample etc need to be placed before Advance Ruling Unit (ARU).

The ARU will verify the application submitted within seven working days of the receipt of the application. If additional documents are required, it will be notified within 15 working days of the submission of the application. The ARU will take decision within 45 working days of the submission of the application. Any incorrect, incomplete or misleading information provided by the applicant shall make the Advance Ruling invalid. An applicant may withdraw his application within 30 working days of the submission. At the same time the applicant may apply for extension of time for submission of additional documents and information and in such case, necessary documents must be submitted within the extended time.

Advance Ruling (AR) is valid for 18 months from the date of its issuance unless the law, rules or any decision of the government is changed. It will be effective typically from the date of issuance of the ruling letter, if otherwise not mentioned in the AR letter. An Advance Ruling may be modified, revoked in case of necessity where misleading information is given by the applicant or by withholding relevant information. However, the ruling holder must be given the opportunity to be heard in person to clarify his position if he desires to be heard before revoking or invalidating an Advance Ruling.

The Ruling holder may request in writing for review of the Advance Ruling where reasonable grounds exist for consideration. In that case, the ruling holder must submit his review petition within 60 working days from the date of the receipt of the Ruling. The review petition must be disposed of within 60 working days from the date of the receipt of the review petition.

ARU of NBR shall publish all Advance Rulings to make them available for use by the general public. NBR has already established a database of Advance Rulings which is available on www.bangladeshcustoms.gov.bd where the general users will be able to got updated information of Advance Ruling issued by ARU of NBR. However, if the applicant desires, specific information may be kept confidential while publishing a ruling for the general public. Till writing of this article, a total of 8 (Eight) rulings were issued by the Advance Ruling Unit of NBR.

Advance Ruling for classification of HS Code is new in Bangladesh. Sri Lanka and India introduced Advance Ruling earlier and it has been found that complications as regards identifying H.S. code and fixing up of duties have been reduced significantly. In Bangladesh, Advance Ruling is yet to attract the attention of the business community though it came into force with effect from June 02, 2016.

The NBR should, therefore, organise awareness programme with the stake-holders more frequently. At the same time, trade associations should come forward to organise similar campaigns among their members. It is expected that Advance Ruling will significantly remove the impediments in classification of HS Codes of goods and services currently being faced by traders and as such facilitate import and export trade of the country.

The writer is Secretary of Bangladesh Indenting Agents' Association.

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