Packaged imports to become dearer

Consumers are likely to face higher prices of imported packaged goods such as cosmetics, perfumes, shampoos owing to a recent order by the National Board of Revenue, said importers.

The NBR asked customs offices to calculate the duty of the imported items by adding the duty for the containers if the cost of the packing materials such as perfume bottles, glass jars or containers is not included in the import prices.

For ease of valuation, the revenue collectors said duty could be calculated by determining the prices of the packaging materials based on weight per kilogram.

Importers said the sudden move by the customs authority will increase the duty of consumer goods imported in packaged form and thus lead to a spiral in prices of the commodities in the domestic market.

“Exporters sell the products by factoring in the cost of packaging. So, there is no need to assess duty on the weight of the packet separately,” said Altaf Hossain Chowdhury, general secretary of the Chittagong Customs Clearing and Forwarding Agents Association.

This will lead to a rise in prices of the products, he said.

The NBR said it took the step in line with the global best practice of calculating the duty of the packaging materials, the cost of which is not included in the import prices of the goods.

The measure was also meant to protect domestic manufacturers from uneven competition and duty evasion as some traders import the goods by mentioning only the net weight of the product, according to Lutfor Rahman, member, customs policy of NBR.

Local manufacturers are facing uneven competition and the government is also losing proper revenue due to the practice, he said.

The measure will create complexities and lead to delays in taking delivery of goods by importers from the congestion-ridden port, importers and C&F agents said.

For instance, sauces, jams, perfumes or coffee come in glass bottles and the weight of the containers is much more than the content.

So, if the duty of a kilogram of coffee is calculated by assessing the weight of the jar, the total tax incidence will go up, said importers.

Duty will increase two to three-fold in most of the goods following the NBR directive, said Kazi Mahmud Emam, joint secretary of C&F Agent Association. C&F agents said the NBR, which issued the rule on October 9 last year, has been flexible until January 12.

The customs officials at Chittagong port started enforcing the rule from January 12, prompting some importers to refrain from taking delivery of their packet goods.  

Until yesterday, more than 150 consignments remained stranded at the port.

Some took delivery of the goods packed in low weight containers, according to some importers and customs officials.

In the face of the stalemate, the Customs office at Chittagong port sought a directive from the NBR.

A senior official of a leading multinational fast-moving consumer goods company said the prices of the products sent by the parent companies are in general inclusive of all costs.

In other words, the cost of the containers or bottles is factored in the quoted price.

“The authority's attempt to curb importers who quote low invoice value to evade duty has in turn affected our imports.”

Subsequently, he urged the NBR to come up with a separate rule for those firms that import directly from their parent companies.

The revenue authority should also consult compliant companies without taking any decision all on a sudden, he added.