KATHMANDU, April 22: A month after terminating long-practiced duty-refund procedures (DRP), Nepal and India have agreed to close down all accounts and settle outstanding dues related with DRP by March 2013.
During the bilateral talk, which was led by Director General of Customs Department of the two countries, the two sides have decided to form a technical committee to ascertain and quantify the amount (of unpaid excise duty in bilateral trade) that India needs to refund to Nepal.
The talks were held earlier this week in Kathmandu on formally closing the DRP. Laxman Aryal, deputy director general of the Department of Customs (DoC) told Republica that the technical committee will be formed after having a letter of exchange between two countries.
"Its primary responsibility will be to calculate out the total outstanding duty amount that Nepal is yet to get from India," said Aryal, adding that the committee was being formed mainly to avoid any mismatch of refundable amount.
The committee will have representatives from Customs Department and Ministry of Finance from both the countries. "However, we have not yet finalized who exactly will be in the committee," said Aryal.
Nepal and India had put DRP mechanism in place in 1961 to facilitate import of excisable items from India. Under this mechanism, Nepali customs allowed Indian goods without charging any excise duty, and later claimed the due duty from the Indian government. The volume of claim depended on the basis of import volume and valuation.
But the two sides had agreed to scrap the mechanism while singing bilateral trade treaty in 2009 and terminated it on March 1 this year. The new arrangement has enabled Nepali importers to acquire the goods without paying any duty to the Indian government. It has also empowered the local customs to collect excise duty on all applicable Indian goods at import point.
Officials at DoC said India has not made any DRP refund to Nepal over the last two years. Given that the government used to get some Rs 3 billion in duty refund from India every year, they estimated that the outstanding DRP amount stands at well over Rs 6 billion.
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