Import & Export Guides
CKD, SKD and CBU Imports in Bangladesh: How Customs Classifies Unassembled Goods
Oct
Bangladesh’s growing assembly industries, motorcycles, refrigerators, air conditioners, mobile phones, televisions and more, all depend on importing products in parts and putting them together locally. Customs, importers and policymakers use three abbreviations to describe how complete those imports are: CBU (completely built up), SKD (semi knocked down) and CKD (completely knocked down). The distinction matters because duty rates can differ significantly between a finished product and the parts used to manufacture it, and because customs has clear rules to stop importers from avoiding the finished-product duty simply by unscrewing a few bolts before shipping.
This guide explains the three terms, the classification rule behind them, how genuine local manufacturers can benefit, and the traps to avoid.
CBU, SKD and CKD in plain terms
- CBU, completely built up: the finished product, ready to use or sell, such as a fully assembled motorcycle in a crate.
- SKD, semi knocked down: the product arrives in a few major sub-assemblies that need relatively simple final assembly, for example a motorcycle with the engine already fitted to the frame but wheels, handlebars and some panels packed separately.
- CKD, completely knocked down: the product arrives as individual components and parts, requiring substantial manufacturing work such as welding, painting, assembly of the engine or electronics, and testing.
The exact line between SKD and CKD is not universal. For certain products, Bangladesh’s tariff schedule, SRO notifications and industrial policy define what qualifies as CKD for that industry, sometimes with lists of components that must be imported separately or made locally. Always check the definition that applies to your specific product.
The classification rule: General Interpretative Rule 2(a)
Under the Harmonized System used by Bangladesh customs, General Interpretative Rule 2(a) says two important things. First, a reference to an article includes that article incomplete or unfinished, provided it has the essential character of the complete article. Second, it includes the article complete or incomplete when presented unassembled or disassembled.
In practice this means that a motorcycle shipped in a box with the wheels detached is still classified as a motorcycle. A refrigerator missing its door shelves still has the essential character of a refrigerator. Disassembling a product for shipping convenience, or leaving out minor parts, does not change its classification to parts. Our guide to the general rules of interpretation explains GRI 2(a) alongside the other rules.
Why CKD can attract different duty
Many countries, including Bangladesh, use their tariff structure to encourage local manufacturing. Finished goods may face higher duty and supplementary duty, while components and raw materials for local production may be charged lower rates or receive concessions through SROs (statutory regulatory orders) for qualifying manufacturers. The aim is to build local industry, jobs and supply chains.
These concessions usually come with conditions. Depending on the product and the SRO in force, a manufacturer may need:
- An industrial IRC and registration as a manufacturer, not just a commercial importer.
- Proof of actual manufacturing capacity: factory, machinery, workforce and production process.
- Certification or recommendation from the relevant ministry or authority.
- Compliance with any local value-addition or localisation requirements.
- Records showing that imported components were used in production, which customs may audit.
The specific rates, conditions and eligible products change through budgets and SROs, so this article does not quote them; ask your C&F agent or customs consultant to confirm the current position for your product, or ask us to check it as part of a quote.
The splitting trap: separate shipments are assessed together
A recurring compliance problem is importing a complete product in pieces across separate shipments, for example frames in one container and engines in another, or main units under one bill of entry and the remaining parts under another, while declaring each as parts at a lower rate. Customs treats this as an attempt to avoid the duty on the complete article. Where the separate consignments together make up complete or essentially complete products, customs can classify them as the finished goods, reassess duty, and apply penalties.
Our article on customs penalties explains the consequences of misdeclaration, and post-clearance audit explains how customs can review imports after release.
Spare parts versus CKD
Importing genuine spare parts for after-sales service is different from importing CKD kits for production. Spare parts are usually imported in quantities and assortments that match repair demand, not complete sets that add up to whole units. If your spare parts shipment contains matching sets of every major component in equal quantities, customs may reasonably ask whether it is really a disassembled product. Keep spare parts shipments consistent with service demand, and document what they are for. Our spare parts import guide covers the general rules.
A worked example
A company plans to start assembling electric scooters. Option one: import complete scooters in crates, classified as finished vehicles. Option two: import scooters with the battery, handlebars and seat packed separately in the same container. Under GRI 2(a), this is still classified as finished scooters, unassembled. Option three: become a registered manufacturer, set up a frame welding and painting line, battery pack assembly and testing, import components in genuine CKD form under the applicable rules, and apply for any available concession. Only option three changes the duty treatment, because it reflects real manufacturing. Before committing to a factory, the company asks a customs consultant to confirm the current definitions and conditions in writing, perhaps through an advance ruling.
Valuation and invoicing of CKD kits
Classification is only half the picture; customs also checks the value. A CKD kit bought from a related company, such as a parent brand supplying its own local assembler, raises transfer pricing questions: is the declared price the price unrelated buyers would pay? Customs may compare the kit value with the value of the finished product or with similar imports. Payments made separately for the right to use a brand, technical know-how or tooling can also be added to the customs value if they relate to the imported goods. Our guide to valuation additions, assists and royalties explains when this applies.
For invoicing, the safest approach is a detailed invoice that lists each component or sub-assembly with its own description, quantity, unit price and HS code, rather than a single line describing a kit of a finished product. Ask your Chinese supplier to prepare invoices in this format from the first shipment, because changing format halfway through a production programme invites questions about why earlier shipments were described differently.
Practical checklist for assemblers
| Step | What to do |
|---|---|
| — | — |
| Confirm definitions | Check how CKD and SKD are defined for your product in current SROs and policy |
| Registration | Obtain the correct industrial IRC and any required certifications |
| Supplier coordination | Ask Chinese suppliers to pack and invoice components in genuine CKD form |
| Invoicing | Describe parts individually with correct HS codes, not as kits of a finished product |
| Records | Keep production and consumption records linking imports to output |
| Audit readiness | Expect customs to visit and verify the factory |
Common mistakes
- Assuming unassembled means parts: GRI 2(a) classifies it as the complete article.
- Splitting complete products across shipments: reassessment and penalties.
- Claiming a manufacturer concession without the required registration: concession denied at clearance.
- Vague invoices listing a kit of a product: customs treats it as the finished product.
- No production records: difficulty at audit even when the import was legitimate.
DE International sources components and CKD kits from Chinese manufacturers, coordinates correct packing and invoicing, and clears shipments with experienced C&F partners in Bangladesh. Explore our services, browse the shop, use our China sourcing and buying agent service, or contact us. Related: understanding HS codes and building a production line with Chinese machines.
