Operational Guide

Bonded Warehouse Management: Possible IT Initiative
A Presentation BY
DR. MD. MATIUR RAHMAN

ADDITIONAL DIRECTOR GENERAL Customs, Excise & VAT Training Academy Sagorika Road, Chittagong. Phone: +880-31-751940 e-mail: matiur.rahman6650@yahoo.com bcta2010@yahoo.com
Presenation for NBR,2009
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Presentation Agenda
Objective , Current System, Automated System Proposed Modules for Total Automation Project Risk management avoiding failure
Q&A
Objective
The main objectives of the Customs Bond Commissionerate are as follows: Help and facilitate the export business Ensure proper collection of revenue Control misuse of bond facilities through risk management Preserve and record various data
Current System..1
Now the bond commisiionerate manages bond related activities in traditional ways . Present system has lack of transparency and also has scope of avoiding responsibilities. Major disadvantages of present system are as follows: There is no proper control over the system of issuing license to the bonders. So always there has opportunity to make the system corrupt which ultimately may create indiscipline in the bond Commissionerate. Lots of physical file handling with maximum risk License day to day process (Renewal, Audit, Intra bond transfer etc.) taking so many steps Corresponding with lien banks taking much time
Current System..2
No proper controlling of Utilization Declaration (UD) Smoggy passbook management system No proper justification over Utilization Permission (UP) No proper justification of Import Entitlement/Quota Control less flow and less synchronized audit function Unaligned monitoring system over updated DEDO co-efficient Claim duty & taxes for expired bonding goods taking much time with lots of error Demand adjustment bugs occurred while calculating
Proposed System1
The automated bond network will enable to supervise and oversee all bond related activities electronically. It is believed that after introducing automated system, the efficiencies and cost savings will greatly improve by delivery services in time. The automation will save time and ensure accountability Successful implementation of the automation process would change the mindset of all stakeholders. Import-export will take place more smoothly and cost of trade will be reduced.
Proposed System2
According to the project outline, clearance procedures will be reduced to minimum stages from the lengthy and flat steps Companies can be benefited by using automated filing, reduced paperwork, personnel, and administrative costs, participating in the initial development, and filing all data at a central filing point Next section would derive the overall procedures & functionalities of Bond Commissionerate with the existing system as well as current problems by running the operations & would also derive the precise solution what we are going to naming Bond Commissionerate Automation
Proposed Automation Project1

1. License 1.1 Bond License Issue (Initial Step) 1.2 Bond License process (day to day business as when & required) 1.2.1Renewal of Bond License 1.2.2 Extension of bonded period 1.2.3 Cancellation/ Suspension of bond license 1.2.4 Addition/Subtraction of raw materials at the bond license 1.2.5 Temporary/Permanent Intra-Bond Transfer of Raw Materials 1.2.6 Change of Ownership of Bond License and management of Irregularities 1.2.7 Transfer/Extension of Factory & Management of related Irregularities 1.2.8 Import Entitlement Approval/Enhancement &Management 1.2.9 Permission for Releasing Bank Guarantee 1.2.10 Temporary/Permanent Intra-Bond Transfer of Raw Materials (EPZ) 1.2.11 Addition / Modification & Interface with Lien Bank 1.2.12 General Bond Acceptance 1.2.13 Approval for opening part file
Presentation for NBR,2009

Electronic Bond Register 2.1 In Bond Management 2.2 Ex Bond Management 2.3 UP Management 2.4 Consumption certificate/declaration/input-output coefficient 2.5 Consumption certificate for supervise bond 2.6 BE Submission for home consumption 2.7 Lien Bank

Electronic Pass Book 2.7 UD Management 2.8 Consumption certificate/declaration/input-output coefficient 2.9 Lien Bank 2.10 Bill of Entry 2.11 Bill of Export

3. Audit Information Management 4. Treasury Management 5. C&F License Management 6. DEDO Interface Synchronization 7. Demand/ Irregularities 7.1Claim Duty & Taxes for Expired Bonding Goods 7.2emand Adjustment or installment fixation for outstanding revenue

7.3Permission for raw materials importation against bank guarantee or duty taxes 7.4Appointment of Inspector for Investigating Various Type of Irregularities 8. Writ Management 9. Human Resource Management 10. Lien Bank module 11. EPZ Module 12. Risk Management & Bond Commissionerate Confidential Report Generation 13. Data Migration
License Information Management System
License Issue Process (15 Steps) Before Automation

Application for License given by the bonder Application received in the dispatch center with check listed documents Bond License seen by Commissioner & send via DC, JC, AD File goes to the computer section for verification of Associate License if any & irregularity related to applicants other bond licenses if any Put up to JC for Inquiry permission
Send letter for Inquiry from JC
Officer will check documents & take step for inquiry
File put up with relevant document giving direction regarding inquiry & send to respective officer
Inquiry officer will prepare report on the basis of investigation including all documents & will submit for approval from JC, AD, and Commissioner
After approval of inspection report annual allotment letter for raw materials is issued which is included in the inspection report
After approval Bond License form is provided to the applicant for fill-up and after fill-up he then return it back to the Bond Office
After approval bonder will submit General bond, license fees and treasury challan & will sign in the license sheet
Dispatch License Issue Information to the relevant stakeholders by regular mail
Final license issued to the Bonder from the License Section of Customs Bond office
File put up with all document for signing by the JC, AD, Commissioner 17
License Issue Process (4 Steps) After Automation

Online License Application Submission & Submit Necessary Documents (Scan & Hard Copy) to the Pouch Center & get a license tracking ID
Verify application with documents & Central Database, send online notification to the applicants.
Handle the file with new concept eFile Movement
Online Approval/ Rejection with Status & Notification publication process to relevant stakeholders
Bond License Day to Day Business

Renewal of Bond License
Extension of bonded period
Cancellation/ Suspension of bond license Addition/Subtraction of raw materials at the bond license Temporary/Permanent Intra-Bond Transfer of Raw Materials
Bond License Issue Approval for opening part file
General Bond Acceptance
License Module
Change of Ownership of Bond License and management of Irregularities
Addition / Modification & Interface with Lien Bank
Transfer/Extension of Factory & Management of related Irregularities
Import Entitlement Approval/Enhancement &Management Temporary/Permanent Intra-Bond Transfer of Raw Materials for EPZ Permission for Releasing Bank Guarantee
Stakeholder identification related to license module

Applicants/Organization License Application for Deemed Exporter Bond NBR License Application for 100% Garments Exporter Bond Ministry of Foreign Affairs Lien Bank All Partner Organizations BGMEA Board of Investment BKMEA BTMA BCCAMEA BPGMA Environment LFMEAB BOND COMMISSIONERATE
License Application for Home Consumption Bond
Income Tax
EPZ Bond Trade License City Corp./Local Govt. Fire License Joint Stock Legend Service Seeker Authority Defined Process Future Plan VAT
Stakeholder identification related to Import & Export With flowchart

IMPORT EXPORT
Clearance/BOE/Asses sment Authority
UD (BGMEA/BK MEA/IP for EPZ)
Controls
Consumption Sheet 100% GMTS
UD(BGMEA/BKM EA/EP for EPZ)

NBR
Consumption Sheet BE Submission for Home Consumptio n Lien Bank Master L/C BB L/C Bank Guarantee PRC PI Calculate Balance
CTG Custom House DHK Custom House Benapole Custom House Mongla Custom House Others.
100% GMTS BC Eye H.Consu mption
Lien Bank Master L/C BB L/C Bank Guarantee PI
H.Con sumpt ion
Deemed
NBR
Deem ed
BC Eye
Audit Import Entitlement
Electronic Bond Register (In-Bond)
UP
Electronic Bond Register (Ex-Bond) Bangladesh Bank
Electronic Pass Book
Pass Book Registry Process (16 Steps) Before Automation

Manual checking system for imported goods (i.e. Maximum import permission/ Import permission at a time)
Import declaration
For 100% Export Garments, manual checking with UD provided by BGMEA/BKMEA
For EPZ Import permission or in other form from BEPZA. IP/EP manual checking system
Entry on PASS BOOK REGISTER (in)
Bill of Entry Approval
Manual checking with Bond License Status
Manual checking with Lien Bank if necessary
Export Process
Submission of Bill of Export
Manual checking with License Status
Manual Checking with UD
Calculate Balance (Manual)
Entry on PASS BOOK REGISTER (ex)
Manual Checking with Bill of Export
Manual Checking with Lien Bank
Pass Book Registry Process (6 Steps) After Automation
Import (Tag Imported BL/AWBL No. as that for Bond)
Online Customs Registry System will automatically get the bonded tagged data Systems will automatically cross-check with the license, BGMEA, BKMEA for UD, IP/EP for EPZ.
Bond Commissionerate Online Approvals if necessary
Update Registry Entry as per approval/rejection
While Export Check with Lien Bank, UD, EP as well as Bangladesh Bank
Calculate Balance
Electronic Bond Register
Bond Register Process (16 Steps) Before Automation

Submission of Bill of Entry Manual checking with License Status Final assessment & Release Order
Manual checking L/C, LCA,PI, BL etc
Put entry in-bond register
Bond Office will check the documents & goods & inspect ware house if necessary
Send 3rd copy BOE manually to Bond Commissionerate
Dispatch Bond
Manual UP Application
Manual UD Check
Manual BB L/C , PI Check
Manual Consumption Sheet Check
Manual Calculation/Deduc tion/Balance
If Approved then entry to bond register by area bond officer
Waiting for approval
Application/ Note Sheet verification by Inspector
Electronic Bond Register Process (6 Steps) After Automation

Online Customs Registry System will automatically get the bonded tagged data Systems will automatically cross-check with the license, BGMEA, BKMEA for UD, IP/EP for EPZ.
Auto Cross check with the Import Entitlement

Online Entry In-Bond Register
Online Application for UP, after application submission auto cross check with the UD, L/C, Consumption sheet
Online Approval/Rejection
Auto Generate Balance
In -Bond Management for SBW & EPZ
Start
Tag Bond related consignment BL/AWBL no. into the automation server.
Checking with UD. UD Module (BGMEA/BKMEA) will provide the asking data Checking with License for irregularities, previous administrative actions, License Expiry etc
Cross Check from Multi Dimension

Checking with IP/ for EPZ
Checking with Lien Bank for UD declared LC, BB LC PIothers
Approved? No
Bill of Entry Release order from port Dispatch Bond
Yes
Request for amendment
Auto Deduction & Balance
Saved in Bond Register
Ex -Bond Management for SBW & EPZ
Start
Submission of Bill of export
Checking with UD. UD Module (BGMEA/BKMEA) will provide the asking data
Checking with License for irregularities, previous administrative actions, License Expiry etc
Checking with Lien Bank for UD declared LC, BB LC,others
Cross Check for Fake/Duplicate Entry
Checking with EP for EPZ
Approved?
No
Yes
View approval inform and input of actual garments quantity by P.O on board
In -Bond Management for GBW
Start
Checking with Entitlement
Tag Bond related consignment BL/AWBL no. into the automation server.
Cross Check from Multi Dimension

Checking with Lien Bank for UD declared LC, BB LC PIothers Checking with IP/ for EPZ
Approved? No
Bill of Entry Release order from port Dispatch Bond
Yes
Ex -Bond Management for GBW
Start
Submission of UP
Checking with UD. UD Module (BGMEA/BKMEA) will provide the asking data
Checking with Lien Bank for UD declared LC, BB LC,PI, others
Cross Check for Fake/Duplicate Entry
Checking with EP for EPZ
Approved?
No
Yes
UD Module Diagram
UD Module Graphical Diagram

Online ud sub Bgmea crs chk with lic/lien bank Online publication
Receive UD format in Xml format
Update UD data with Database Yes
CNF submit Bill of Entry with UD No. Checking with License
Validate with UD Data
No
Display Error Message; B/E Not Valid
Checking with Lien Bank
If Yes, Add In-Bond Data Re-calculate Consumption Entry

Deduct
Generate In Bond Report
Generate Balance
Generate Ex bond Report
P/O (Custom) Confirm the C & F Data
CNF submit Bill of Export with UD No.
CNF Submit Style Data
Cross match Style Data with UD
Calculate Consumption Qty (Style Data multiply by consumption Data)
Lien Bank
Custom Bond Commissionerate verify documents with lien bank
UD No. & Date
Query for Master L/C (Export L/C)
Query for Back to Back L/C (Import L/C)
Query for Export/Import Statement
Justification for Proceeds realization certificate
Query for Proforma Invoice
Business Flow: Current System - Export

No. date, amount, applicant, Qty, PI, Packing List, Bill of Exchange
Receive Export L/C / Master L/C B 2 B doc recvd. - Which doc, How much, What Qty? -Which Export L/C, Full or Partial -Foreign Document Bills of Purchase - Funded facility through packing credit and export credit
Foreign B 2 B Opened
No. date, amount, applicant, Qty
Scrutiny of Export L/C
Valid Shipment Date Valid Clauses (all necessary doc)
Goods Imporetd against L/C & Kept in Bond
Query for Proforma Invoice: - If goods imported is above 200,000 then PI should require credit report. - If above 500,000 then Indent is requires & credit report of supplier is obtained.
Export made (After completion of all sort of work by the bonder)
Proceed Realization Certificate Presenation for NBR,2009
Business Flow: Current System - Import
B2B L/C opened/Any sort of import L/C
Doc received against B2B L/C
Entry in Lodgment Register
If B2B is Sight Payment then it is made immediately creating a Force Loan (SOD Exp) in the name of the Bonder. If B2B is Deferred/Usance then Bank informs the maturity date & on maturity payment is effected.
Retirement/Payment (Either Sight Payment or Deferred Payment)
Performance Register
Performance Register includes the following: Information related to Ex L/C, Master L/C Information related to B2B L/C Information related to Export (for verification) Export Quantity Shipment Date ELC Contract Expiry Date BTB Entitle in FC BTB L/C No. BTB Bill No. L/C amount Bill amount in FC Imported Item Bill maturity date Type of investment PC, ECC, SOD Export LD No. Disbursement amount in Tk. Outstanding amount in Tk LD Expiry date Export status Doc. Lodgment type FDBC (Foreign doc Bill sent on Collection) FDBP (Foreign Doc. Bill of Purchase), Amount in FC Outstanding balance in FCBPAR
Audit & Risk Management
Confidential report for Bond Commissionerate
Consignment wise export/import statement
H.S Code wise partial report generating with certain time span to identify/compare the actual unit price of the goods.
Consumption sheet or Markup Report
UP Value Addition
UD Value Addition
Auto Yearly Audit Report
Approval of Yearly Audit Report

Application to commissioner with required documents
Not Permitted No
Yes/No Yes
Investigation by internal audit team & report submission to JC/ADC
Further investigation by JC/Additional commissioner
Getting report from automated system as Imp/Exp Statement report with bank synchronization
Audit Report End
EPZ Module
EPZ Module (In-Bond)

Submit IP/EP to BEPZA BEPZA approval/ amendment Final Submit to Custom EPZ Bond Cross check with license Assign Bond No. by Custom EPZ Bond Personel Cross check with Lien Bank Update Needed For Those Entry Submit Amendment Request to Custom EPZ Bond Yes Online publication Submit Successful Bill of Entry Enter In-Bond Information against particular B/E Submitted
No
Submit Successful Bill of Export
Final Amendment App by Custom Personal
Update the Entry and Send the Final Amendment Request
Amendment App by Custom Personal
Enter the Infor. Abt Ex-Bond against B/E & Bond No. for a Particular Item
Send request for Approval to Custom EPZ Bond
Send request for Approval to Custom EPZ Bond Personel
Generate Balance Sheet
Infrastructural Diagram
Avoiding Failure
Avoiding Failure: Develop a full scale IT Strategy Have a total project control Have a Project Management Team Have a Project Development team Have a Project Maintenance team IT Domain Members Infrastructure with Hardware/ Software and Network team Participation among stake-holders Making sure that all the stakeholders participate Making roles for all in a defines format Involve them in all activities In project Definition Phase Training phase User acceptance Phase Execution phase
Change Management The truth about any IT initiative is Change and change is always unavoidable It is the change management strategy that shall determine the true success of the Project In change Management - the stakeholders must be involved and be convinced Building and Maintaining Infrastructure The infrastructure has to be world-class The system must be maintained to cater the future need Must have right mix of people process and Technology ( PPT - the infrastructure). Having the right Audit Practices for three processes: Value governance IT portfolio management IT investment Management
Financial Summary
Software Module wise costing

Software Modules Electronic Bond Register UP, UD Bond License Day-to-Day Business Digital File Archiving PMIS Demand Irregularities Writ Management Treasury Management Audit Management Lien Bank Module e-File Movement Bond License Issue Total for software Estimated Cost 2,418,000.00 1,755,500.00 1,930,500.00 507,400.00 994,000.00 967,400.00 794,900.00 1,024,900.00 852,400.00 679,900.00 564,900.00 1,405,500.00 13,895,300.00
Hardware specification derived from state of art technology

Item Database Server Description With on-line UPS (Store All Module Generated Data) Linux Server 2003, 2008 32-bit and 64-bit (x64) supported, My SQL Server 5.0 IBM recommended X3500 IBM 8GB RAM 2 Processor Dual Core Quantity 1
Back-up/Storage Server
SAN ICM 2 Slot 2 Terabyte Hard disk Including all SAN related software Apache Linux Linux Brand Server IBM Recommended X3500 IBM 8GB RAM 2 Processor Dual Core With on-line UPS (Store All Module Generated Data)
Application Server
Load Balancing Server Personal Computer
Previous version of X3500 IBM
Latest PC (IBM LENOVO Core2 Duo) Intel Xeon W3505 2.53 4MB/1066 DC CPU Genuine Windows Vista Business 32-bit with downgrade to Windows XP Professional custom installed HP 2GB (2x1GB) DDR3-1333 ECC RAM NVIDIA Quadro FX380 256MB Graphics HP 250GB SATA 7200 1st HDD HP 16X DVD+-RW SuperMulti SATA 1st Drive
100
Printer: Network
In-line laser printing technology, direct-to-page printing, Up to 600 x 600 dpi, Microsoft Windows 98 SE and Me (driver only); Microsoft Windows 2000, XP 32Bit, Server 2003; (HP 40105N)
Cooling System
2 Tons (2 for data center) Aireon-Auto Change over DC humidifier
Fire Fighting System Power Generator
FM 200 Power Generator for ultimate back up
UPS
For PCs (50 approx) (For Un-Interruptible Power Supply) NewTech -UPS, 600 VA, Input 230V / Output 230V,
100
Barcode Reader Furniture Bandwidth
LS 9208, USB kit: Scanner, USB cable, stand, & product reference guide. Color: white/black Required furniture for Personal Computers (1Mbps) (For Mission/Outside from Ministry Building Uses)
100 100 sets 12 months 2 4 2
CISCO Router Router Manageable Switch Server Rack Networking CCTV
CISCO 2811-HSEC/KG CISCO 2960 D-Link 42 U with Assential Accessories 10 coils

Model: DB-N348E Name: Dome Camera IMAGE SENSOR: 1/3 SONY Exview HAD CCD RESOLUTION: 480 TV Line MINIMUM ILLUMINATION: 0.3 Lux F1.2 / Lux F1.2 (IR On) SCANNING SYSTEM: NTSC: 525 lines, 60 fields/sec PAL: 625 lines, 50 fields/sec TOTAL PIXELS: NTSC: 537 (H) x505 (V) PAL: 537 (H) X 597 (V) (For Monitoring Activities) (Falco)
10
Engagement Model
Option 1: Fixed cost model for Bond Automation
Cost of Bond Automation Project Items Software Develepment Cost Hardware Cost Reccaring Expance Year 1 13,895,300 42,658,000 Year 2 0 0 Year 3 0 0 4,375,200 Year 4 0 25,594,800 4,752,720 Year 5 0 0 5,167,992 Total Cost in 5 years 13,895,300 68,252,800 22,047,912
3,720,000 4,032,000
Total
104,196,012
Option 2: Implementation through PPP Model For UP
Per UD: 100 taka Per UD
Per UP: 300 taka per UP
Per license: 5000 taka per license (1 time) 1500 per license per year ( renewal charge)
Note: All Charges shall be realized for 5 years from the date of official financial launching of the project. All future prices shall be subject to 10% increase every year
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Bonded Warehouse Management: Possible IT Initiative

DR. MD. MATIUR RAHMAN

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Presenation for NBR,2009

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Presenation for NBR,2009

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Presenation for NBR,2009

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Proposed Automation Project1

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Proposed Automation Project2

Presentation for NBR,2009

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Proposed Automation Project3

Presentation for NBR,2009

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Proposed Automation Project4

Presentation for NBR,2009

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Proposed Automation Project5

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License Information Management System

Presenation for NBR,2009

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License Issue Process (15 Steps) Before Automation

Send letter for Inquiry from JC

Officer will check documents & take step for inquiry

Dispatch License Issue Information to the relevant stakeholders by regular mail

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License Issue Process (4 Steps) After Automation

Handle the file with new concept eFile Movement

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Bond License Day to Day Business

Extension of bonded period

Bond License Issue Approval for opening part file

General Bond Acceptance

Change of Ownership of Bond License and management of Irregularities

Addition / Modification & Interface with Lien Bank

Transfer/Extension of Factory & Management of related Irregularities

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Stakeholder identification related to license module

License Application for Home Consumption Bond

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Stakeholder identification related to Import & Export With flowchart

Clearance/BOE/Asses sment Authority

UD (BGMEA/BK MEA/IP for EPZ)

UD(BGMEA/BKM EA/EP for EPZ)

100% GMTS BC Eye H.Consu mption

Lien Bank Master L/C BB L/C Bank Guarantee PI

H.Con sumpt ion

Audit Import Entitlement

Electronic Bond Register (In-Bond)

Electronic Bond Register (Ex-Bond) Bangladesh Bank

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Electronic Pass Book

Presenation for NBR,2009

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Pass Book Registry Process (16 Steps) Before Automation

For 100% Export Garments, manual checking with UD provided by BGMEA/BKMEA

Entry on PASS BOOK REGISTER (in)