information on IMPLEMENTATION and administration
of the agreement on customs valuation

Check-list of Issues

Nepal

The following communication, dated 23 January 2025, is being circulated at the request of the delegation of Nepal.

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1._           Questions concerning Article 1:

(a)_         Sales between related persons:

(i)_          Are sales between related persons subject to special provisions?

No, there is no special provision for sales between related persons. However, Sales between related person are subject to the provisions under Section 13 (1) of the Customs Act, 2007 which correspond to implement of Article VII of the General Agreement on Tariffs and Trade 1994 for determining the customs value of imported goods.

(ii)_         Is the fact of intercompany prices prima facie considered as grounds for regarding the respective prices as being influenced?

Under Section 13 (6) of the Customs Act, 2007, in sub-section (3) of the provision relating to the determination of customs value, there is a provision that the customs officer can do so if he has reasonable grounds to believe that the value declared by the importer is questionable. It is the provision that the importer shall be required to submit additional documents or evidence in writing to prove that such price is the actual transaction price, and it shall be the responsibility of such importer to provide the documents so requested.

(iii)_       What is the provision for giving the communication of the afore-mentioned grounds in writing if the importer so requests? (Article 1.2(a))

Sections 61 and 62 in Chapter 12 of the Customs Act, 2007 contain provisions relating to review and appeal. It states that "A person who is not satisfied with the customs duty determined by the Customs Officer or other employee under this Act or with any order or punishment or decision issued or made by the Customs Officer, except any decision or order referred to in Section 13, or with any decision made by the Valuation Review Committee formed pursuant to Section 61 may make an appeal to the Revenue Tribunal within thirty five days after the date of the determination of such customs duty or the imposition of punishment or the making of decision". Furthermore, in the event of not being satisfied with any decision made by the valuation review committee formed pursuant to Section 61, the Customs Officer may file an appeal to the Revenue Tribunal no later than thirty-five days after the making of such decision.

(iv)_        How has Article 1.2(b) been implemented?

Provisions Relating to Determination of Customs Value under Customs Act, 2007- Section 13 has been adopted in a sequential order as per the provision of the WTO Customs Valuation Agreement (Annex-I & Annex- II).

(b)_         Price of lost or damaged goods:

            Are there any special provisions or practical arrangements concerning the valuation of lost or damaged goods?

Rule 66 (C) of Customs Regulations, 2007 explicitly mentions the damaged goods. If the goods are imported having damaged or broken or low quantity, the goods-owner shall make an application to the Custom Officer by mentioning the same content before conducting clearance of the goods.

2._           How has the provision of Article 4 to allow the importer an opinion to reverse the order of application of Articles 5 and 6 been implemented?

The Customs Act, 2007 under Section 13(13) has provision of "Notwithstanding anything contained in sub-sections (10) and (11), if the importer requested for customs valuation is made under sub-section (11) before the procedures mentioned in sub-section (10). The Customs Officer may determine the customs value in accordance with the provisions of sub-section (11)".

3._           How has Article 5.2 been implemented?

The Customs Act, 2007 under Section (10) illustrates that "[i]f the customs value cannot be determined on the basis of the transaction value of similar goods pursuant to sub-section (9) and such goods have already been imported into Nepal and sold at 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". The Department of Customs has also implemented Customs Valuation Directive in regard to this provision.

4._           How has Article 6.2 been implemented?

The Customs Act, 2007 under Rule 13 (13) states that "Notwithstanding anything contained in sub-sections (10) and (11), if the importer makes a request for the determination of customs value by adopting the procedures set forth in sub-section (11) prior to adopting the procedures set forth in subsection (10), the Customs Officer may determine the customs value in accordance with the provisions of sub-section (11)". The Department of Customs has also implemented this through the Customs Valuation Directives.

5._           Questions concerning Article 7:

(a)_         What provisions have been made for making value determinations pursuant to Article 7?

The Customs Act, 2007 under Section 13 (12) has the provision that "[i]f the customs value cannot be determined pursuant to subsection (11), the Customs Officer shall so determine the customs value of such goods on a reasonable basis as not to be contrary to the provisions of sub-sections (2), (8), (9) and (10)".

(b)_         What is the provision for informing the importer of the customs value determined under Article 7?

The Customs Act, 2007 under Section 13 (12) has the provision that "[i]f the customs value cannot be determined pursuant to subsection (11), the Customs Officer shall so determine the customs value of such goods on a reasonable basis as not to be contrary to the provisions of sub-sections (2), (8), (9) and (10)".

The Customs Act, 2007 under Section 13 (7) provides that "If the customs value of any goods cannot be determined on the basis of the transaction value declared by the importer pursuant to sub-section (3) or the bills, invoices and documents submitted by the importer, the Customs Officer shall give a notice, accompanied by the reason for the same, to the concerned importer".

(c)_         Are the prohibitions found in Article 7.2 delineated?

The Customs Act has clear provisions to determine the valuation of and there are no provisions to calculate the value on the basis of provisions (a) to (g) of Article 7.2.

Apart from this the Section 13 Subsection (14) of Customs Act states that "Notwithstanding anything contained elsewhere in this Section, if the owner of the goods imported under the Luggage and Baggage Order for personal purposes or the goods received as a gift or specimen/model and imported from a foreign country makes an application for the valuation of such goods, showing the reason for failure to indicate the transaction value thereof and if the Customs Officer considers the matter to be appropriate, he or she may determine a reasonable customs value of such goods". Section 13 Subsection (15) "If the value declared by an importer pursuant to sub-section (3) is less than the customs value determined by the Customs Officer pursuant to this Section, the Customs Officer may do the following in relation to such goods: (a) Clearing such goods by collecting fifty percent additional customs duty on such difference value, or (b) With the prior approval of the Director General, purchasing, or causing to be purchased, such goods in a manner to pay the amount to be set by adding five percent amount to the value so declared to the importer".

6._           How have the options found in Article 8.2 been handled? In the case of f.o.b. application, are ex-factory prices also accepted?

The Customs Act, 2007 Section 2 (b) has defined the "transaction value" as the total amount to be set by adding freight, insurance and other related costs incurred or incurable in the transportation of goods imported by an importer up to the border of Nepal to the price actually paid or payable, directly or indirectly, by the importer to the seller of such imported goods.

7._           Where is the rate of exchange published, as required by Article 9.1?

The Customs Act, 2007 under Section 13 and Section (16) has state that the customs value shall normally be determined in a foreign currency. It also provisions that "Where the valuation of goods on which the duty has to be paid at the time of import is made in a foreign currency, the conversion of such currency into Nepalese rupees shall be made according to the selling rate of foreign currency which is prescribed by the Nepal Rastra Bank and prevailing on the day of the customs declaration. In the case of a foreign currency of which exchange rate is not prescribed by the Nepal Rastra Bank, such foreign currency shall be converted into American dollars, and the selling rate of American dollars shall be taken as the basis". Thus, the rate of exchange is published on the Website of the Nepal Rastra Bank.

8._           What steps have been taken to ensure confidentiality, as required by Article 10?

Section 88A of the Customs Act, 2007 is about the provision relating to confidentiality. According to the section, the information which is by nature confidential provided by the exporter or importer to the customs office for the purpose of customs valuation and other personal commercial information shall be kept confidential except to the extent that it may be asked by authorized officer for the purpose of an investigation or an audit or may be asked by the Court in the context of judicial proceedings.

9._           Questions Concerning Article 11:

Under Section 61 of the Customs Act, 2007, there are the following provisions regarding the Valuation Review Committee: (1) A person who is not satisfied with any decision or order made by the Customs Officer pursuant to Section 13 may, for the review of such decision or order, file an application, as prescribed, to the valuation review committee formed pursuant to sub-section (2) no later than fifteen days after the date of such decision or order.

(a)_         What rights of appeal are open to the importer or any other person?

Chapter 12 Section 61 of the Customs Act 2007 contains provisions relating to review and appeal of valuation.

(b)_         How is he to be informed of his right to further appeal?

Section 61 sub-section (1) A person who is not satisfied with the customs duty determined by the Customs Officer or other employee under this Act or with any order or punishment or decision issued or made by the Customs Officer, except any decision or order referred to in Section 13, or with any decision made by the valuation review committee formed pursuant to Section 61 may make an appeal to the Revenue Tribunal within thirty five days after the date of the determination of such customs duty or the imposition of punishment or the making of decision.

The Customs officer provides the rights to further appeal when determining the customs valuation as per the act.

10._         Provide information on the publication, as required by Article 12, of:

(a)      

(i)_          The relevant national laws;

The Customs Act, 2007 and Tariff Act, 2024 containing provisions related to determination of Customs Value, are Published on the website of Nepal Law Commission (https://lawcommission.gov.np/) and Department of Customs (https://www.customs.gov.np/).

(ii)_         The regulations concerning the application of the Agreement;

The regulation concerning the application of the Agreement has been incorporated in the Customs Regulation, 2007 and Tariff Regulations published in the website of Nepal Law Commission (https://lawcommission.gov.np/) and Department of Customs (https://www.customs.gov.np/).

(iii)_       The judicial decision and administrative rulings of general application relating to the Agreement;

The Judicial decisions and rulings of the Tribunal are published on the website of Department of Customs (https://www.customs.gov.np/).

(iv)_        General or specific laws being referred to in the rules of implementation or application.

Section 92 of the Customs Act, 2007 refers to the rules of implementation or application.

(b)_         Is the publication of further rules anticipated? Which topics would they cover?

The Department of Customs does not anticipate the publication of further rules in near future.

11._         Questions concerning Article 13:

There are no provisions in prevailing national laws for withdrawal of goods from Customs.

12._         Questions concerning Article 16:

(a)_         Does the respective national legislation contain a provision requiring customs authorities to give an explanation in writing as to how the customs value was determined?

Section 13 Sub-section (7) of the Customs Act 2007 has explicit provisions regarding it. It mentions that "[i]f the customs value of any goods cannot be determined on the basis of the transaction value declared by the importer pursuant to sub-section (3) or the bills, invoices and documents submitted by the importer, the Customs Officer shall give a notice, accompanied by the reason for the same, to the concerned importer".

(b)      Are there any further regulations concerning an above-mentioned request?

No, the Customs Act 2007 solely governs it.

13._         How have the Interpretative Notes of the Agreement been included?

The interpretative notes to the Agreement have been included in the provisions relating to Determination of Customs Value under the Customs Act,2007 and Customs Regulations, 2007.

Section 13 Sub-section (1) of the Customs Act 297 states that "The rules on customs valuation, annexes and interpretative notes set forth in the Agreement on Implementation of Article VII of the General Agreement on Tariffs and Trade 1994 shall be pursued in determining the customs value of imported goods".

14._         How have the provisions of the Decision on the Treatment of Interest Charges in the Customs Value of Imported Goods been implemented?

Nepal Customs do not have explicit legal provision on the treatment of interest charges in the customs value of imported goods.

15._         For those countries applying paragraph 2 of the Decision on the Valuation of Carrier Media Bearing Software for Data Processing Equipment, how have the provisions of this paragraph been implemented?

Para. 2 of the decision is not applied in our context.

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