Custom Duty

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Custom Duty

Custom duty is the tax levied when goods are transported across borders between countries. It is the tax imposed on imports and exports of goods. It is a form of indirect tax and also known as border tax. The government uses custom duty to raise its revenue, safeguard its local industries and also to regulate the movement of goods in and out of the country.

In Nepal, the customs duty is regulated by Customs Act, 2064 B.S. The objective of the Act is to make safe and facilitate international trade by making customs administration systematic, transparent and accountable. 

Custom duty is charged on all goods to be imported or exported except those goods which enjoy customs duty exemption. Here the goods mean any kind of movable goods or property including currency.

Custom Area and Route

The Government of Nepal through notification in Nepal Gazette, prescribe any area of Nepal as the customs area for the purpose of administering the laws relating to customs and collecting custom duty.

The Government of Nepal through notification in Nepal Gazette, prescribe routes through which export from or import into Nepal is to be made through the customs areas.

Any goods to be exported from Nepal or imported into Nepal shall be exported or imported only through the routes as so specified.

Custom Duty Exemption

The Government of Nepal can accord partial or full customs duty exemption to certain goods by publishing in the Nepal Gazette. The government provide such partial or full customs duty in the following goods:

  • The goods to be imported in the name of any projects to be operated under foreign loan or grant assistance or in the name of the contractor of such project.
  • To the fuel to be consumed during international flight, engine of aircraft, spare parts, machine, equipment thereof, food, liquors, beer and light drinks consumed in the flight by an international air service company.
  • Total duty exemption while importing relief materials. 

Custom Duty on re-import of exported goods

The duty is levied even in the re-imported goods which have been manufactured or finished in Nepal and exported. The duty on such goods is levied as it is levied on the importation of the goods of similar kind or to the same value manufactures or finished in a foreign country. 

Conditions where custom duty is not charged

  • If any importer makes an application to not release imported goods and to leave such goods with the customs office. Noe that it belongs to Government of Nepal, no duty is charged on such goods.

The government can itself use such goods so left or the custom officer may action them. If they are in such situation where they cannot be used or be auctioned, it will be removed from the office and the expense of such removal will be recovered from the concerned importer.

  • If the importer makes an application about the low quality of the goods at the time of dispatchment, valueless or in low in quality or weight by business point of view due to calamity or theft with in the prescribed time by fulfilling the prescribed process, the custom officer may give duty rebate or refund if it is already recovered of that goods which is lost or have low quantity or is found valueless by business point of view.

The custom officer may recover the duty by determining the value of such goods accordingly if they can at least be used as waste or scrap or other nay alternatives.

Duty facility to the diplomats

The Government of Nepal may accord diplomatic facility or duty facility to those bodies, officials or persons who are entitled to enjoy such diplomatic facility under any bilateral or multilateral treaty or agreement to which Nepal is a party. The government provides such facility on the recommendation of the Ministry of Foreign Affairs.

Other duty facility

The duty facilities are given to following conditions:

  • If any goods are to be brought again in Nepal from any part of Nepal via any abroad route.
  • If any goods to be sent again to a foreign country from the foreign country via Nepal. 

Base Date for Determination of Duty

The duty of any goods to be exported or imported shall be determined according to the tariff rate prevailing on the date on which the declaration form of such goods is registered in the Customs Office or received in customs office in electronic medium through the computer system.

Provided that where the declaration form has been registered in the Customs Office or received in customs office in electronic medium through the computer system, prior to the arrival of goods at the Customs Office, the duty shall be determined according to the tariff prevailing on the date of arrival of such goods at that Office.

In the case of goods imported under the diplomatic facility, duty facility or partial or full exemption, according to the tariff prevailing on the date of payment of duty of such goods.

In the case of goods imported under the bank guarantee facility, according to the tariff prevailing on the date of clearance of such goods.

Valuation Procedure of Imported Goods

  1. The customs value of goods to be imported shall be determined on the basis of the transaction value of such goods. Such transaction value also includes freight, insurance and other expenses.
  2. If the customs value cannot be determined on the basis of the transaction value, the customs duty of such goods shall be determined on the basis of the transaction value of identical goods already imported into Nepal prior to the import of such goods.
  3. If the customs value cannot be determined on the basis of the transaction value of identical goods, the customs duty of such goods shall be determined on the basis of the transaction value of similar goods already imported into Nepal prior to the import of such goods.
  4. If the customs value cannot be determined on the basis of the transaction value of similar goods, and such goods have already been imported into Nepal and sold at 19 market to a person who is not related to the importer, the customs value of such goods shall be determined on the basis of deductive value method, by deducting the tax, duty levied in Nepal on the selling price of each unit of the maximum unit so sold, and other related costs and profits.
  5. If the customs value cannot be determined by deductive, the customs value shall be determined on the basis of computed value method, also calculating the costs incurred in the production or manufacturing of such goods and profits made or likely to be made by the seller while selling such goods to the importer. 
  6. If the customs value cannot be determined as per computed value method, the Customs Officer shall so determine the customs value of such goods on a reasonable basis.

Valuation Procedure of Exported Goods

The custom value of goods to be exported shall be the invoice value declared by the exporter. However, the Government of Nepal may determine separate custom value of any goods of specific nature to be exported by notification in the Nepal Gazette. The value of goods shall be determined in foreign currency and such foreign currency shall be converted into the Nepalese rupees.

Punishment

If any person commits or attempts to commit export smuggling or import smuggling of any goods or exports or imports or attempts to export or import any goods through any route other than the specified route, the Customs Officer, if the amount in controversy is up to ten million rupees and District Court if the amount in controversy is more than ten million rupees, may forfeit such goods and impose a fine equal to the amount in controversy of such goods and imprisonment.

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