Bonded Warehouse Facility & License Overview
Lesson Contents Overview
Learning Objectives
Comprehensive Technical GuidanceTextbook & Training SOP
1. The Economic Role of Bonded Warehouses
Without the Special Bonded Warehouse (SBW) facility, the Bangladesh apparel industry could not compete with global manufacturing giants.
Under normal trade rules, importing raw materials incurs:
- Customs Duty (CD): 5% to 25%
- Regulatory Duty (RD): 3% to 5%
- Supplementary Duty (SD): 10% to 45%
- Value Added Tax (VAT): 15%
- Advance Income Tax (AIT): 5%
- Advance Tax (AT): 5%
For a medium factory importing $10 million in fabric annually, the upfront tax burden would exceed $4.5 million USD. Under the Special Bonded Warehouse scheme, this entire liability is deferred and extinguished upon the verified export of finished garments.
2. Statutory Legal Obligations
Under Section 84 through 119 of the Customs Act and the Bonded Warehouse Licensing Rules 2008:
- Bond Area Demarcation: The factory premises, storage sheds, cutting floors, and packing zones must be mapped and officially approved by the Customs Bond Commissionerate.
- General Bond Financial Security: The factory must execute a legal financial bond pledging factory assets as collateral against potential customs duty defaults.
- No Domestic Leakage: 100% of raw materials entering under bond must either be exported as finished garments or documented as legitimate, approved production scrap/wastage.
3. The Bonded Lifecycle
[ Raw Materials Arrive at Port under Back-to-Back L/C & Valid UD ]
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[ Cleared with 0% Duty under Bond Passbook Debit Entry ]
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[ Transported under Customs Lock / Escort to Factory Bonded Store ]
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[ Converted into Finished Garments on Factory Production Lines ]
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[ Shipped Overseas under Customs-Endorsed Shipping Bill ]
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[ Bond Passbook Credited & Duty Liability Extinguished ]4. Operational Prerequisites for Maintaining a Valid License
- Fire Safety & Building Approval: Valid Fire License, Accord/RSC structural certification, and factory layout plan.
- Environmental Clearance (DoE): Required for washing, dyeing, and finishing units.
- Annual Renewal: Timely audit submission and renewal every two years.
Special Bonded Warehouse Regulatory Overview
| Parameter | Standard Commercial Import | Special Bonded Warehouse Import (RMG) |
|---|---|---|
| Customs Duty & VAT | Full payment upfront (30% to 90% total tax) | 0% Duty & VAT (Deferred under bond) |
| Target Industry | Domestic commercial trading | 100% Export-Oriented Manufacturing |
| Regulatory Authority | Port Customs House | Customs Bond Commissionerate & Port Customs |
| Warehouse Requirement | General commercial warehouse | Approved, secured Bonded Store with locked cages |
| Disposal of Goods | Freely salable in local domestic market | Strictly restricted to 100% export conversion |
Practical Commercial Flow
A factory imports 200,000 meters of woven fabric ($500,000 CIF). Under standard commercial import, total customs duty, regulatory duty, VAT, and AIT would exceed $240,000 (48% aggregate duty). Under the Special Bonded Warehouse license, the factory pays $0.00 upfront customs duty, preserving working capital for production operations.
Factory Real-Life Scenario
Scenario: During an unannounced inspection, Customs Bond Officers found the factory's accessory store unlocked with cartons missing bin cards and serial numbers.
Solution: Commercial team overhauled the store standard operating procedure, implemented strict digital bin card logging, and installed biometric access control to satisfy the Bond Commissionerate.
Impact: Avoided license suspension and regularized warehouse compliance.
Commercial Officer Best Practice
Always ensure your bonded fabric store and accessory store have dedicated locked enclosures with separate "Bond In" and "Bond Out" physical registers.
Top Beginner Mistakes to Avoid
- Storing locally purchased duty-paid materials inside the designated bonded warehouse area without separate marking.
- Failing to notify the Customs Bond Commissionerate when expanding factory floor space or adding new storage sheds.
Important Commercial & Trade Terminology (2 Terms)
A customs-licensed facility allowing 100% export manufacturers to store imported duty-free raw materials under customs bond.
💡 Note: Regulated by Customs Bond Commissionerate.A legal financial guarantee executed by factory directors on judicial stamp promising to pay all duties if raw materials are misused.
💡 Note: Renewed periodically with the bond license.Interview Preparation Questions & Answers (2 Questions)
Master these high-frequency interview questions for Commercial Officer, Merchandising, and Export Executive roles.
A Special Bonded Warehouse license is a statutory facility granted by the Customs Bond Commissionerate to 100% export-oriented apparel factories. It allows the import of raw materials (fabrics, yarn, trims) with 0% advance customs duty and VAT. It is essential because paying 30%–60% import duties upfront would drain working capital and render export prices uncompetitive.
Frequently Asked Questions (1 FAQs)
Clear, beginner-friendly answers to the most common questions about the Commercial Department.
Key Takeaways & Summary Points
Executive Lesson Summary
The Special Bonded Warehouse scheme is the economic engine of the Bangladesh apparel sector, providing zero-duty raw material liquidity under rigorous customs oversight.
Lesson Downloads & SOP Templates
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