2 govt bonded warehouses on cards to counter liquor syndicate

The National Board of Revenue (NBR) has decided to issue licences of diplomatic bonded warehouses to state-owned Bangladesh Parjatan Corporation and InterContinental Dhaka to address the ongoing liquor crisis. 

The crisis began as the existing six private diplomatic bonded warehouses called a strike after the NBR made the use of a software mandatory from 2 July. The strike left the country's liquor market dry.

The strike prompted the revenue authorities to issue new licence after three decades on condition that the software, which aims at automation of the liquor market, is used, according to NBR sources.

Both the organisations were asked to procure a 'no objection' from the Bangladesh Bank and the commerce ministry to go for importing liquor.

Confirming the matter of issuing a new licence, Kazi Mustafizur Rahman, commissioner of Customs Bond Commissionerate said that the decision was taken as NBR wants government organisations to operate diplomatic bonded warehouses.

NBR moves to bring bonded operation under automation:

NBR is also going to incorporate a new provision of bringing bonded operation under automation in the bonded warehouse licensing regulations 2008.

In section 119A  of Customs law 1969, NBR is given authority to add or alter any provision to meet any special requirement.

With this authority, NBR is adding the new provision of electronic bonded operation in the regulations which reflects that the revenue authority is firm in implementing the use of software in the liquor trade.

Meanwhile, the bonded warehouse which filed a writ petition against the NBR's decision on mandatory use of software in business got a High Court order in their favour on 30 November.

However, the NBR appealed against the court order.

Though diplomatic bonded warehouses have the High Court order in their favour, they did not resume sales as they did not get a positive signal from the revenue authority, according to licensees.

On the other hand, when the Business Standard asked a top official of NBR about this matter, he said that the authority has no problem if bonded warehouses sell liquor through the prescribed software.       

It is an open secret that alcohol, imported duty-free by bonded warehouses for diplomats, often makes its way out through the backdoor through the abuse of diplomatic passbooks.

Despite having 37 licences of importing duty paid alcohol, sales closure of only six diplomatic bonded warehouses created a liquor crisis in the entire market which indicates that duty-free houses are the main source of illegal supply.

So to check this illegal market, the NBR has developed the software to strengthen monitoring on the warehouses and check the misuse of the duty-free import facility.

Currently, the warehouses sell liquor against hard copies of passbooks and often against fake passbooks or passbooks of diplomats who left the country but did not return the books to the foreign ministry.

They show fake sales against these passbooks and sell the liquor in the black market at hefty profits. Slices of this pie then reach various departments of the government.

But when sales are tracked by the software, warehouses will be required to enter necessary data. Every diplomatic bonded warehouse will be required to enter all information regarding import – including bill of entry number, import date, office code, invoice number and date, name of purchased goods, volume, and price – into the bond automation system.

During sales, they will have to log into the system and input information about passbooks or Tax Exemption Certificate (TEC) numbers, names of sold goods, volume, the bill of entry number, and price in the software.

Previously, bonded warehouses used to provide all the information manually to the NBR.

This is why the warehouses are now resisting the use of the software by keeping their doors closed.