The government plans to enforce Import Export Code (IE Code) to bring all exporters and importers under the formal customs system.

IE Code is the government identification number issued to traders. In its absence, the government has not been able to track unregistered importers and assign Harmonised System Code (HS Code) to goods imported by such traders, according to the Department of Customs (DoC).

“This has led to improper valuation of imported goods, giving rise to under-invoicing,” said DoC Director General Shishir Kumar Dhungana at a programme organised by the Federation of Nepalese Chambers of Commerce and Industry (FNCCI) here on Wednesday.

The six-digit HS Code is an internationally recognised coding system of traded goods. It enables customs authorities to identify the nature of imported goods 

and maintain their customs valuation.

Dhungana said they have assigned HS Code to—and maintained retail prices of—380,000 imported goods sold in the domestic market. “Based on the set price, DoC charges customs duty on the goods,” he said.

Implementation of IE Code is expected help the government manage the customs clearance process in an organised manner, Dhungana said, adding the government has also been facing problems in formulating an effective customs policy in the absence of IE Code.

DoC estimates there are around 40,000-50,000 traders importing goods from various countries. “Of the total importers, 32 percent are non-filers in value added tax, while 50 percent are non-filers in income tax,” Dhungana said. 

Also, a large number of such traders import goods without opening Letters of Credit (LCs). Dhungana said around 45 percent of the import is done without LCs.

FNCCI President Pashupati Murarka termed the existing customs valuation system “faulty”. “The government has to enforce online auction system, or conduct post customs clearance audit of imported goods, if there is lack of clarity on imported goods.”