IMPORT REGULATIONS OF NEPAL
Guide to Importing
Nepal has an open and transparent import regime. The import-related rules and regulations are governed by the Ministry of Industry, Commerce, and Supplies (MoICS) and its various entities, along with the Department of Customs under the Ministry of Finance.
Rules related to import
Except for prohibited and quantitatively restricted items, no license is required for imports.
For importation of plant and plant products, an importer has to apply to the Plant Quarantine Office for an import permit. The application form is to be filled in with details of the plant and purpose of importation and must be submitted with documents like income tax registration and enterprise registration, and recommendation letter of a concerned institute, if imported for research purposes, are also submitted along with the application.
National Plant Quarantine Programme of the Department of Agriculture and seven other quarantine check posts conduct quarantine examination and issue import permits and phytosanitary certificates.
In the case of import of wool for carpets, the Government of Nepal only allows the import of quality wool minimum length of 4" with a thickness of not more than 38 microns. Thus, a test certificate from an authorized agency is to be produced at the time of customs clearance.
Nepal Customs does not require any pre-shipment inspection and there is no generalized system of such inspection. A few commodities like wool, pharmaceuticals, and industrial chemicals may need pre-shipment quality inspection certificates to maintain certain standards in Nepal.
The Customs valuation provides a basis for the declaration of value by an importer in the Nepal Customs Declaration Form for the calculation of applicable duty and tax.
The customs duty on imported goods is assessed on the basis of their transaction price. The owner of the goods is required to submit to the Customs bills and invoices showing their price, as well as other necessary documents relating to imports as demanded by the Customs for the purpose of verifying their transaction price.
No demurrage is charged on the imported goods until they are valued for the purpose of assessing customs duty.
List of prohibited items
Products injurious to health: a) narcotic drugs such as opium and morphine; and b) liquor containing more than 60 % alcohol.
Arms, ammunition, and explosives (except under government import license): a) materials used in the production of arms and ammunition; b) guns and cartridges; c) caps other than those of paper; and d) arms, ammunition and other explosives.
Communications equipment: wireless walkie-talkies and other similar audio communication equipment (except under import license of the GON).
Valuable metals and jewelry (except permitted under bag and baggage regulations).
Beef and beef products (Five-star hotels are allowed to import beef with a special license issued by the Department of Commerce).
Paying for imports
Imports from India are normally paid in Indian Rupees. However, the Nepal government allows imports of some products from India with payment in hard foreign currency.
For imports from the third country, the government does not allow advance payments for goods and separate payments for freight. In addition, with the exception of prohibited and quantitatively restricted goods, there is no restriction on the release of foreign currency for importing any type and quantity of goods. But to obtain foreign currency from the commercial bank, the importer has to get a letter of credit (L/C) issued by fulfilling the requirements of the bank.
Irrevocable L/C is the commonly used documentary credit for the settlement of payment in imports from third countries
An importer fills in a foreign exchange control form BBN 3 requesting the bank to open an L/C in the name of a nominated overseas exporter, and submits it along with an undertaking of the importer identifying the bank against any liability, and other supporting documents. Depending upon the credit limit sanctioned by the bank for L/C purpose and the relation with the bank, the importer is generally required to deposit an amount ranging from 10 to 100 percent of the L/C value at the bank. Note that the transaction may not necessarily be channeled through banks. Banks are authorized to draw drafts or telegraphic transfers (TTs) for settlement of payment in credit imports, provided that the Nepalese importers approach banks with documentary evidence. Much of the imports from India are under this scheme due to the extra cost attached to payment through L/C.
For importing raw wool, TEPC issues a recommendation letter (wool specification test report) specifying the quantity and standard of wool to be imported by an applicant/importer in the name of the concerned bank. Under the widely used L/C, full payment is made to the exporter by the correspondent bank at the time of submission of shipment documents as specified in L/C. Similarly, the Nepali importer is also required to make full payment to his bank at the time of the release of shipment documents.
Being a landlocked country, most of Nepal’s international trade takes place via transit in India. Nepali cargo is mostly routed through Indian ports at Haldia and Kolkata in West Bengal but
since 2016 Vishakhapatnam Port in Andhra Pradesh is also being used for Nepal bound freight. From the respective ports, goods are transshipped through railways or roadways to Nepal’s border customs. Importers can also use airfreight to deliver their goods to Nepal via Tribhuvan International Airport in Kathmandu.
Importing from India
1. Authority letter of Customs Agent
2. Delivery order of Terminal Management Company (TMC) in case of inland clearance depots (ICDs) at Biratnagar, Birgunj, and Bhairahawa
4. Nepalese Customs Declaration
5. Packing list
6. Additional documents for specific cargo such as plant quarantine/health/phytosanitary certificates for plants, lab test report for food products, analysis report for chemicals, health certificate for raw wool, a veterinary certificate for animals, etc. where applicable.
Upon submission, the customs office takes processes of the application and sends the commodities for clearance upon imposing required tariffs.
Importing from India (In-bond process)
Under the in-bond process, the payment for imported goods is made through the bank in convertible foreign currency. Indian exporters are required to enter into a bond contract after which the commodities can be exported to Nepal. The export consignment is verified on its arrival at the Nepal Customs, upon which the contracted bond will be released. Note that only limited products specified by the Nepal Rastra Bank can be imported from India through the in-bond process.
While following the in-bond process, on arrival of such commodities in the Nepalese customs, the CA must submit the following documents:
1. Authority letter of Customs Agent
2. BBN Form 4 of NRB while clearing goods
3. Bill of lading/delivery order
4. Certificate of L/C or advance payment
5. Delivery order of TMC in case of Inland Container Depots (ICD) at Biratnagar, Birgunj, and Bhairahawa
7. Nepal Invoice (In-bond form) Nepalese Customs Declaration
8. Packing list
9. Additional documents for specific cargo such as plant quarantine/health/phytosanitary certificates for plants, lab test report for food products, analysis report for chemicals, health certificate for raw wool, a veterinary certificate for animals, etc. where applicable.
Upon submission, the customs office takes the process further and sends the commodities for clearance upon imposing required tariffs.
Importing from the third country via India
a. Entry into Nepal
o After the cargo reaches the Nepal border, the importer or Customs Agent has to go to Nepal’s Customs with the following documents:
1. BBN 4 form of The Nepal Rastra Bank (Central Bank)
2. Bill of lading/delivery order
3. Certificate of insurance
4. Certified copy of L/C or advance payment
5. COO (this is not strictly required except where imported goods are subject to a special tariff concession on account of their place of origin
6. CTD (Original)
7. Delivery order of TMC in case of Inland Container Depots (ICDs) at Biratnagar, Birgunj, and Bhairahawa
8. Enterprise registration certificate
10. Letter of the authority of CA
11. Nepal's Customs Declaration (white color)
12. Packing list
13. VAT registration certificate/PAN
14. Wool specification test report if applicable
15. Additional documents for specific cargo such as plant quarantine/health/phytosanitary certificates for plants, lab test report for food products, analysis report for chemicals, health certificate for raw wool, a veterinary certificate for animals, etc. where applicable
o The documents numbered 1, 2 and 12 are not normally required for clearance of duty-free goods or imports by the Government.
o The requirement of a certificate of insurance by the Customs is only for customs valuation. Any insurance document submitted by the importer is acceptable to the Customs for valuation purposes.
o The Customs verifies BBN 4 document issued by a commercial bank with BBN 3 received previously from the same bank at the time of opening L/C. After the goods are cleared, the Customs certifies BBN 4 and hands over to the importer for delivering to the issuing bank.
o After the documents have been checked. Customs assess the applicable duty and VAT for payment by the importer before releasing the cargo. When the goods are cleared after the payment of customs dues, the Nepalese customs officer endorses the original and 3rd copy of CTD, and the original is returned to the importer and sends back the 3rd copy in with a covering letter for delivery to the corresponding Indian Border Customs.
o The importer is required to submit the original CTD to the corresponding Indian Border Customs within 15 days of the date on which the goods were released at the Indian port of entry or such extended time as the concerned Assistant Commissioner of Customs House may allow.
Importing from Bangladesh
The Protocol to the Transit Agreement signed between Nepal and Bangladesh for Nepal’s trade with third countries applies to bilateral trade between Nepal and Bangladesh. Thus, the procedures and documentation for importing from Bangladesh are the same as those applied to imports through Bangladesh.
Importing from the third country via Bangladesh
All the procedures prescribed for third-country trade have to be followed at the border at both the Indian and Nepal's Customs.
Importing by Air
After the arrival of the cargo, the CA approaches the TIA Customs with the following documents:
1. Air waybill
2. BBN 4 form of NRB
3. Certificate of insurance
4. Certified copy of L/C or advance payment
5. COO (this is not strictly required except where imported goods are subject to a special tariff concession on account of their place of origin)
6. Enterprise registration certificate
8. Letter of authority for CA
9. Nepal Customs Declaration
10. Packing list
11. VAT registration certificate/PAN
Additional documents for specific cargo such as plant quarantine/health/phytosanitary certificates for plants, lab test report for food products, analysis report for chemicals, health certificate for raw wool, a veterinary certificate for animals, etc. where applicable.
Wool specification test report if applicable
Customs use the transaction value as the basis for customs valuation and thus require the certificate of insurance for customs valuation purposes.
The importer or CA pays the customs dues and approaches NTWCL with the customs declaration and payment receipt to obtain the release of the cargo. The importer arranges the loading and transportation of cargo from the airport godown to his warehouse.
As the import and export activities are not undertaken with a hundred percent upfront cash payment before the delivery of goods is undertaken, trade financing plays an important role in the fulfillment of a trade-related transaction. Trade financing refers to short-term credit offered to importer or exporter to facilitate them with working capital while helping in risk mitigation. In Nepal, class ‘A’ commercial banks are allowed to undertake trade financing activities. For example, the importer's bank may provide a letter of credit to the exporter (or the exporter's bank) providing for payment upon presentation of certain documents, such as a bill of lading. The exporter's bank may make a loan (by advancing funds) to the exporter on the basis of the export contract.
Letter of Credit (L/C)
LC is a commitment in the form of written instrument by a bank on behalf of its customer (known as buyer/importer) to pay the "counter-value" of goods/services within a given date to its supplier (known as seller/exporter) according to agreed stipulations and against presentation of specified documents as specified in the instrument. A "Letter of Credit" is used as an instrument for settlement of payment arising out of commercial transactions like sales/purchases. In such credit, a payment obligation arises only upon the fulfillment of specified conditions.
Advance Payment Certificate
In case of advance payment for the purchase made by buyers in the foreign country for the goods produced in Nepal, this mode of payment is used. In this case, the importer pays the actual amount stipulated in the invoice before having received any delivery.
Based on the contract terms for purchase between the exporting and importing parties, importers in the destination countries can transfer the money through authorized banks to the account of exporter in the class ’A’ commercial bank. The Nepali bank then issues the advanced payment certificate to the exporter. The certificate then can be used for further export procedures, which include obtaining an export license for certain products, customs declaration, and ordering freight-clearance services.
Bank Guarantee is an unconditional undertaking issued to back up performance and payment obligations on a wide range of international as well as domestic transactions. Most of these instruments place an obligation on the issuer to pay a specified sum of money either on simple written demand or a demand accompanied by stipulated documents in the event of default by the principal debtor.
Trust Receipt/ Importers Loan
Trust Receipt loans (TR) are granted to importers of goods as a payment to settle the outstanding letter of credit related to the goods being imported. TR Loan is a short term loan provided to the importer on trust to clear the consignment from the port whereby the borrower agrees to provide the legal title of the goods to the bank though under its possession. We provide a very competitive rate of interest for TR loans.
Packing Credit / Pre-Shipment Loan
Packing Credit / Pre-Shipment loan are offered to the exporters to finance purchase of raw materials, manufacturing, processing, packing and shipping of the goods meant for exports against irrevocable Letter of Credit established in favor of the exporter by the buyers for exports through the bank and a confirmed order/export contracts placed by the buyer for exports from Nepal.
A post-shipment loan is offered to the exporters in the form of export document negotiation/purchase/discount of export bills drawn under letter of credit, confirmed orders/export contracts. The loan is offered to exporters to finance export receivables after the date of shipment of goods till the date of realization of export proceeds.