Kathmandu. The Office of the Auditor General has drawn the attention of the Department of Customs and the Ministry of Finance to the revenue evasion by bringing opened vehicles under the cover of industries producing foreign brand vehicles in Nepal.
In its 62nd annual report, the Office of the Auditor General has released rs. 10,000 crore in customs duty, excise duty and value added tax from Sirsia Dry Port, Birgunj Customs, Bhairahawa Customs Office. It has also directed to investigate and recover the rs 3 billion exemption.
It has drawn the attention of the government towards the tax exemption between the CKD (Completely Knocked Down) i.e. the industry that produces vehicles by adding fully separated parts and parts with the objective of producing vehicles in Nepal and the firms that prepare vehicles by reconnecting them.
Customs officials, in connivance with the traders, have caused loss to the revenue on import duty and excise duty by providing tax exemption facility without checking whether the importers of motorcycles, scooters, autorickshaws, and vehicles imported by CKD are productive industries, do not have assembly plants and the Department of Industry has not given permission to assemble the vehicles.
According to Section 14 (3) (and) of Schedule 1 related to Section 2(1) of the Internal Act 2080, there is a provision of 25 percent discount on customs duty and 50 percent discount on excise duty levied in accordance with Section (10) of the Schedule 1 related to Section 3 of the Excise Act, 2058.
“It was not found that the manufacturer of the vehicles had given permission to assemble the importer s and keep them assembled in Nepal,” the Auditor General wrote in the report. ”
Drawing the attention of the Ministry of Finance, the Office of the Auditor General has commented in the report, “The system of this facility should be improved as the assembling industry will not increase the minimum price in Nepal by bringing vehicles in CKD and providing duty facility at par with the assembly industry.” The goods imported into Nepal should be classified according to the rules of the harmonized system and the customs sub-heading should be determined and the tax, duty and customs duty levied on import as per the Internal Act, 2080 should be recovered at the customs point. ”
In the report, the Auditor General has written, “Even if the item in the title of Sub-rule 2 (a) of the rules is incomplete or semi-prepared or ready-to-be in a separate (unassembled) or disassembled state, the unassembled vehicles brought in the CKD under sub-headings 87.03 and 87.11 should be classified as assembled vehicles as per the provision of taking them as reference items.” ”
According to the office of the Auditor General, the tax exemption facility given at par with the unassembled vehicles should be recovered if there is no basis for exemption in unassembled vehicles as per the rule and the manufacturer has not accepted the vehicle as assembled in Nepal and the proof of registration as an assembled industry by the Department of Industry is not involved.
