An Overview of Customs Rules and Regulations in Nepal

1. Introduction to Customs Law in Nepal

The Customs Act 2064 governs the import and export of goods, imposing customs duty on nearly all items except those explicitly exempted. Goods re-imported after being manufactured or finished in Nepal are subject to customs duty similar to foreign imports, with exceptions for certain circumstances such as undelivered parcels or quality issues. Importers may opt for government ownership of imported goods, waiving duty. Customs valuation methods, based primarily on transaction value, may resort to alternative methods if necessary.

1.2. Laws Regulating Customs Law in Nepal

The Laws and Regulations governing Customs Laws in Nepal are:

  1. Customs Act, 2064 (2007)
  2. Customs Rules, 2065 (2007)

1.3. Customs Duty Regulations: Charged and Not-to-be Charged

Customs duty applies to all goods being exported or imported, except for those exempted under Customs Act 2064.

Goods manufactured or finished in Nepal and then re-imported are subject to the same duty as similar goods imported from foreign countries except for goods returned due to undelivered parcels, refusal by the recipient, or quality issues due to accidents or natural disasters. Duty may also apply to raw materials used in returned goods if initially imported duty-free.

Importers can request to leave imported goods with the Customs Office for government ownership, exempting them from duty. The government may utilize or auction such goods, with provisions for disposal if they cannot be used or auctioned.

2. Determination of Custom Duty

Duty for exported or imported goods is determined based on the tariff prevailing on the date the declaration form is registered at the Customs Office. If the declaration form is registered before the goods arrive at the Customs Office, duty is determined according to the tariff on the arrival date. The Exceptions are:

  • For goods imported under diplomatic, duty, or exemption facilities, duty is based on the tariff on the date of payment.
  • For goods imported under bank guarantee, duty is based on the tariff on the date of clearance.

Conditional Exemptions and Facilities of Customs Duty

Diplomatic or duty facilities are granted to eligible bodies, officials, or persons based on recommendations from the Ministry of Foreign Affairs, Government of Nepal, as per relevant treaties. The Government of Nepal announces such facilities for specific goods or individuals through notifications in the Nepal Gazette. Customs duty exemptions may also apply to goods imported for projects funded by foreign loans or grants, or to goods imported for international air services with exceptions extended to fuel, aircraft engines, spare parts, machinery, equipment, food, beverages, and light drinks consumed during international flights.

3.1. Customs Valuation Methods for Imported Goods

The Basis of Determination of Customs Value are established in the Agreement on Implementation of Article VII of the General Agreement on Tariffs and Trade 1994.

The customs value of imported goods is primarily based on the transaction value, which is the price paid or payable for the goods when sold for export to Nepal. Importers are required to declare the transaction value of goods they are importing. If the declared transaction value aligns with the prescribed guidelines, the customs officer will determine the customs value based on this transaction value. If the customs value cannot be determined based on the transaction value, alternative methods such as the transaction value of identical or similar goods, deductive value method, or computed value method may be employed.

3.2. Customs Valuation Methods for Exported Goods

The customs value of goods to be exported is generally determined based on the invoice value declared by the exporter. However, the Government of Nepal reserves the right to establish separate customs values for specific types of goods to be exported. If a separate customs value is established, it will supersede the invoice value declared by the exporter, provided that it is higher. Similar to the determination of customs value for imported goods, the value of exported goods is also determined in foreign currency.

4. Customs Procedures for Importing and Exporting Goods

The driver of a motor vehicle transporting goods for export/import must provide prescribed details of the goods to the Customs Officer before entering the Customs Office. Anyone exporting or importing goods must fill out a declaration form, accompanied by prescribed documents, and submit it to the Customs Office.

If unable to submit required documents with the declaration form due to exceptional circumstances, a request may be made to submit them later, subject to approval from the Customs Officer. Upon submission of the declaration form, the Customs Officer examines whether the declared goods are exportable/importable under the law and may conduct physical inspections if necessary.

After examination, the Customs Officer determines the customs value of imported and exported goods. Following valuation, the Customs Officer determines the duty chargeable on the goods. Goods are cleared by the Customs Officer upon payment of duty unless exempted or waived.

4.1. Customs Agent in Import-Export Operations

Anyone intending to act as a customs agent for importers or exporters, clearing goods through Customs or conducting related activities, must obtain a customs agent license from the Department or Customs Office.

Importers or exporters may appoint a customs agent to handle the clearance of goods or any related activities with the Customs Office. A customs agent appointed by a goods owner for clearance or other designated activities and is considered the legal owner of those goods. 

Customs Officers have the authority to suspend the license of any customs agent who violates this Act or its associated Rules. During a suspension, the customs agent is prohibited from engaging in any customs-related activities, and in case of license cancellation, they are not eligible to reapply for a customs agent license.

5. Offences and Punishment of Customs Law in Nepal

Offence

Punishment

Export or import smuggling

– Fine equal to the amount in dispute or imprisonment: – For a term not exceeding two months to five years depending on the value of goods smuggled

Use of motor vehicle in smuggling

– Forfeit the vehicle and imprisonment for the owner not exceeding one year – For driver: fine up to five thousand rupees or imprisonment not exceeding one year or both

Aiding and abetting smuggling

Punished as if the person committed the offense

Concealing smuggled goods

Forfeit goods and fine up to ten thousand rupees

Under-invoicing

Clear goods by imposing a fine of cent percent of the value of under-invoiced goods and collecting chargeable duty

Falsifying country of origin

Clear goods by imposing a fine equal to the duty chargeable on the goods

Excessive declaration of quantity

Fine equal to two hundred percent of excess value

Falsification of goods details

Forfeit goods and impose a fine equal to the amount in dispute

Falsification of import declaration

Forfeit goods or impose a fine equal to the value of goods or two hundred percent of the value and collect chargeable duty

Submission of forged documents

Fine equal to two hundred percent of the duty or revenue lost or imprisonment for six months to one year or both. Matter forwarded for action under prevailing laws regarding forgery

Attempted theft from customs godown

Fine not exceeding five thousand rupees

Unauthorized removal from customs godown

Fine equal to the amount in controversy and imprisonment not exceeding six months or both punishments

Forgery of customs documents

Fine not exceeding five thousand rupees and imprisonment not exceeding one year or both punishments. Matter forwarded for action under prevailing laws regarding forgery

Reckless loss or damage of goods

Fine not exceeding five thousand rupees. Recovery of the value of goods and chargeable duty

Unauthorized removal of goods from godown

Fine not exceeding five thousand rupees or imprisonment not exceeding two years or both punishments

Submission of fake bills or invoices

Fine equal to two hundred percent of the value of cleared goods or imprisonment not exceeding one year or both punishments

Contrary acts to the Act or Rules

Fine not exceeding five thousand rupees

6. Conclusion

 The Customs Act 2064 regulates import and export in Nepal, imposing duties on most items unless exempted. Customs duty applies to all goods unless exempted, and exemptions are granted for diplomatic or duty facilities or for specific projects or individuals. Customs valuation methods for imported and exported goods rely on transaction value or may resort to alternative methods if necessary. Offences under customs law include smuggling, under-invoicing, falsification, and theft.

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