When a Bangladeshi importer receives a customs demand notice at Chattogram port challenging a tariff classification or disputing a valuation, they face a familiar dilemma, ‘accept a potentially unlawful assessment or spend years fighting in courts already burdened with over 400,000 pending cases.’ For most traders, this is no real choice at all. The majority of disputes involve inflated valuations, arbitrary HS code reclassifications and post-clearance audit demands. These issues are better suited to structured facilitation than adversarial litigation. And yet buried in Bangladesh’s statute books is a mechanism designed precisely for this problem, one that has barely functioned since it was first enacted.
The Customs Act, 2023 (Act No. 57 of 2023) provides, in sections 216 to 219 for alternative dispute resolution (ADR) covering assessments, classifications, valuations, fines and penaltiesfrom the customs authority level up to the Supreme Court. On paper, this is a significant reform, aligned with the WTO Trade Facilitation Agreement and the WCO Revised Kyoto Convention. In practice, it is nearly non-functional.
Customs ADR in Bangladesh is not new. Chapter XVIIIA of the Customs Act, 1969, inserted by the Finance Act 2011, first introduced the mechanism over a decade ago. The Customs Act, 2023 carried those provisions forward. Yet despite more than a decade on the statute books, there are virtually no publicly reported cases resolved through this channel. The NBR’s own ADR publications focus almost entirely on income tax and VAT but customs ADR barely features. As of late 2024, over 27,000 cases involving Tk 39,000 crore remain pending across revenue dispute forums and the customs share continues to grow silently.
The reasons are structural. First, section 219 assigns facilitator appointments and procedures to subsidiary rules that have never been properly established. Without a functioning facilitator panel at Chattogram, Dhaka, Mongla or Benapole, ADR cannot start. Second, customs authorities investigate disputes and make initial decisions at the same time. They also represent revenue interests in negotiations. This creates a conflict of interest that no trader would accept. Third, importers and freight forwarders remain largely unaware the mechanism even exists. A 2023 Bangladesh Foreign Trade Institute study found pervasive ignorance of dispute resolution channels among traders and chronic difficulty reaching customs officials. Fourth, NBR officials are judged by the revenue they collect. This makes ADR, which could reduce penalties, look more like a concession than a solution. Fifth lack of confidentiality protections in the current framework. Traders worry that any information shared during ADR proceedings could be used against them in later audits. This fear discourages them from participating.
The cost of this failure is escalating. Bangladesh’s WTO TFA implementation sits at 44.5%, below the Asia-Pacific average and average customs clearance takes over eleven days for sea cargo As Bangladesh gets ready to graduate from Least Developed Country status in November 2026, it will lose the preferential trade access it has relied on for decades. The EU’s GSP+ pathway, which is Bangladesh’s best option after graduation, requires clear improvements in governance and trade efficiency. A customs dispute system that exists only on paper directly undermine the case.
The good news is that no new primary legislation is required. Four targeted reforms can activate what already exists. The most urgent is promulgating subsidiary rules under section 219 to establish a National Customs ADR Panel. This panel should include retired judges with commercial experience, senior retired customs officials and qualified legal practitioners. They must be completely separate from the officials who investigated the disputed matter. The Bangladesh Bank’s 2024 ADR circular demonstrates that even conservative revenue institutions can mandate institutional separation through administrative instruction alone.
Financial incentives matter too. NBR should introduce a structured penalty reduction of 30 to 50% of assessed penalties. This reduction should only be available through ADR settlement, similar to existing programs under the UK’s HMRC ADR scheme and the US CBP’s administrative review process. Equally important are time-bound settlement deadlines: without a fixed 60 to 90-day resolution window, ADR becomes another form of delay. Confidentiality protections must also be codified, explicitly prohibiting use of ADR disclosures in subsequent enforcement proceedings. The VAT and Supplementary Duty Act, 2012 already protects parties by excluding conciliation time from appeal limitation periods, NBR must clearly extend this protection to customs ADR.
Awareness-building cannot be left to chance. BGMEA, BKMEA, FBCCI and the Bangladesh Freight Forwarders Association should be formally incorporated into an NBR-led Customs ADR Awareness Programme, producing plain-language Bengali guides distributed through customs houses, the Bangladesh Customs portal and the National Single Window currently under development. Finally, NBR must test the framework at Chattogram and Dhaka customs houses. They will process an initial group of cases and share the results. This will provide the evidence needed to convince a skeptical trade community that the system truly works.
Bangladesh has enacted customs ADR twice, in 2011 and again in 2023. The problem has never been the law. The Madaripur Legal Aid Association’s community mediation programme has resolved over 50,000 disputes at an 80% success rate, proving the model works in the Bangladeshi context. There is no structural reason customs ADR cannot achieve comparable results but only if NBR treats section 219 of the Customs Act, 2023 as an instruction to act not a provision to file away. Bangladesh’s traders cannot afford the luxury of laws that exist only on paper. As LDC graduation approaches, neither can Bangladesh itself.
About the Author :
H. M. Raj, an undergraduate law student and research assistant at North South University, Bangladesh. He is actively engaged in legal studies, mooting and academic research, with a growing interest in contract law, international relations and alternative dispute resolution (ADR). He has a strong passion for writing on legal issues, enhancing his advocacy and analytical skills. Raj is committed to building a solid legal foundation and contributing to academic and professional communities through continuous learning and practical experience.