Customs dept hikes reference price for 203 goods

KATHMANDU, MAR 18, 2012

Amid complaints about revenue leakage through under-valuation of imported goods, the Department of Customs (DoC) has hiked valuation (reference prices) of 203 items, with effect from February 28.

Among the products that have been revalued include garment, textiles, readymade items, dry food, pvc flooring, plywood, dry foods, rice, fruits, sports shoes and sports items, hardware items, bathroom utensil and sophisticated cosmetic items.

The reference prices have been hiked from 5 percent to 25 percent based on the type of the items, according to a DoC source. The department has directed customs offices across the country clear goods as per the revised valuation rates, officials said. “Customs offices have begun clearing imported goods as per the revised reference price,” said Laxman Aryal, deputy director general at DoC.

A meeting on ‘Evaluation Seminar on Customs Management’ held in Pokhara on January 5-7 had taken a decision to this effect, according to DoC officials.

DoC revises valuation of imported goods every year to ensure minimum difference between the reference price and market price and to check undervaluation. If customs offices find goods undervalued significantly, they clear the goods as per the reference rates.

On the one hand, under-valuation of imported goods hurts government revenue, and on the other hand those practicing ethical business suffer. It is also one of the major sources of capital flight as the actual billed amount is paid through informal channels. “We hiked the valuation of some items following complaints of VAT evasion through under-invoicing of imported goods,” said DoC Director General Rana Bahadur Shrestha.

Three months ago, the department had directed customs offices across the country to recommend the items whose reference prices had to be hiked. After finalising the goods to be revaluated, DoC told importers to abide by the new rates for local imports (from India and China without opening letter of credit) within 7-10 days. Third country importers were given three weeks to comply with the new rules, considering the long time required to import goods from third countries.

Source: Kantipur

Govt laxity on buyback facility renewal hits RMG exports

KATHMANDU, Feb 23: 2012

Country´s ailing readymade garment industry has received a new jolt, as the government´s laxity to extend buyback facility, including tax and other incentives pledged to exporters operating with raw materials provided by importers, left a huge volume of raw materials stranded at major import points.

“The expiry of the facility has left a consignment of raw materials (supplied by the importers) worth $100,000 stranded at Tribhuvan International Airport,” Indra Chitrakar, senior staff of Sherpa Adventure Gear.

Sherpa Adventure Gear has been exporting ´Sherpa´ brand of garment under the facility by importing raw materials free of cost from Taiwan, Hong Kong, Japan and China.

“If the government did not act promptly, we will lose business worth around $1 million,” Chitrakar told Republica on Wednesday.

Four other apparels manufacturers, including Ami Apparels and Kathmandu Star Fashion, too have lodged similar concerns at the Ministry of Commerce and Supplies (MoCS).

The government had introduced buyback guarantee facility four years ago and it was subject to renewal every two years. Though the latest tenure of the facility expired two months ago, exporters said MoCS has yet to take initiative to extend the facility.

About half a dozen RMG exporters are enjoying the buyback facility, exporting apparels worth around Rs 500 million to overseas markets every year.

“We had requested the government for extension of the buyback guarantee facility long before it expired. Sadly, our requests fell on deaf ears,” said Uday Raj Pandey, president of Garment Association of Nepal (GAN).

The ministry´s inaction, meanwhile, has put the fate of garment orders worth millions of rupees and jobs of hundreds of workers into uncertainty.

Ami Apparel that operates with 300 workers said lack of timely decision on buyback arrangement has exposed it to a risk of losing exports worth around Rs 80 million. The company has been exporting readymade garments to leading branded stores in India.

“We have shut down our factory temporarily. If the government did not extend the facility, we will be forced to shut it down permanently,” Rajesh Udas, proprietor of Ami Apparel, said.

Ashok Shakya, chairman of Kathmandu Star Fashion, too said the government´s indecisiveness is set to cost his industry business worth Rs 180 million. “We are facing shortage of raw materials. We´ve already informed buyers about the problem here,” he stated.

Kathmandu Star Fashion that employs over 500 people has been exporting garment to Europe and the US.

Shakya further said that Nepali apparels industry will face over 30 percent rise in production cost if the government did not renew the facility.

Under the buyback system, no importer of raw materials was required to keep deposits on imports supplied by the buyer and exporters were provided with bonded warehouse facility even without letter of credit. They were also exempted from paying bank guarantee charge.

Readymade garment was once the country´s largest exports commodity with annual exports crossing over Rs 12 billion in 1999/2000. However, its export has presently dropped to Rs 4.08 billion per annum.

Meanwhile, Lal Mani Joshi, secretary at the MoCS, said that ministry has received complaints over the issue and added that the government would take appropriate decisions within few days.

Source: Republica