Smuggling is rampant at the Nepal-India border due to the absence of a unified customs valuation system between the two countries. Experts and industrialists have called for harmonizing Nepal's customs valuation system with India's Goods and Services Tax (GST) to address the growing problem.

The Armed Police Force in Parsa seized goods worth Rs 151.8 million in the first four months of the current fiscal year. The confiscated items included clothing, electronics, hardware, motor parts, and groceries. Additionally, goods without proper invoices worth Rs 26.43 million were seized during the same period.

In the last fiscal year, Parsa Police seized goods valued at Rs 534.7 million smuggled through customs fraud or without invoices, while the Armed Police Force confiscated goods worth Rs 342.78 million. Combined, these seizures amounted to Rs 877.4 million in illegal goods from Parsa district alone.

The lack of a unified customs valuation system has also hindered revenue collection. The Birgunj Customs Office collected only Rs 157.4 billion, 64.1% of its target, in the last fiscal year, while the Birgunj Dry Port Customs Office achieved 71.75% of its annual target, collecting Rs 47.3 billion against a goal of Rs 65.94 billion.

Industrialists and business leaders in Birgunj have emphasized the need for better coordination between Nepal's customs valuation system and India's GST. Hari Gautam, senior vice president of the Birgunj Chamber of Commerce and Industry, stated that the price disparity between Nepali and Indian markets, particularly for high-duty goods, has fueled illegal cross-border trade.

"If the prices, including GST in India and customs duties in Nepal, were standardized for essential goods, it could significantly reduce smuggling and control the informal economy," Gautam suggested.

He also urged the Department of Customs of Nepal to recognize invoices from reputable Indian companies to curb illegal trade. "Basing customs valuations on the 'marked value' in the invoice or 'Bill of Export' issued by Indian Customs could help reduce smuggling significantly," he added.

Gautam criticized the Department of Customs’ reliance on the reference price book for valuation, noting its inconsistencies. "Importers face fines if the invoice value is lower than the reference price book. To avoid penalties, they overstate values, which distorts the system," he said.

Anil Kumar Agrawal, president of the Birgunj Chamber of Commerce and Industry, expressed concern over the informal economy thriving under the current system. "The customs valuation system strengthens the informal economy more than the formal one. It needs urgent reform," he said.

Chief Customs Administrator Deepak Lamichhane highlighted technical issues faced by importers, including non-compliance with the Harmonized System (HS Code). He acknowledged the decline in imports and its impact on revenue collection, stating, "Our priority is to facilitate the import and export processes for industrialists and traders." -- RSS