Bentley caught under-invoicing

Published On: July 28, 2016 08:00 AM NPT By: Rudra Pangeni  | @rudrapang

Charged up to 71 times customs price for a wallet 

KATHMANDU, July 27: A leather wallet costs as much as Rs 4,650 at Durbarmarg-based Bentley The Leather, but the price the importer declared at customs was only Rs 64. The cheapest wallet at the store costs Rs 1,650. Prices of wallets are 25 times to 71 times higher than the prices declaration at Birgunj Customs. 

Finding the yawning gap between the real price of articles in the market and prices declared at customs, the Department of Customs has purchased articles from the importer worth Rs 1,057,000 at the prices the importer quoted at Birgunj Customs plus a profit of 5 percent (Rs 52,850). The articles are now in the process of being auctioned at Birgunj Customs. The department had assessed the articles to be worth a minimum of Rs 4.8 million before deciding on the purchase. 

The articles thus acquired from the importer of the popular international brands include 54 wallets, 727 pairs of slippers and sandals and 256 belts. The importer declared a price of Rs 240 for a belt at the customs. The price ranges between Rs 2,050 to Rs 5,000 at the store at Durbarmarg.

The declared price of the sandals at customs is Rs 360 while the price tag at the store was found to be Rs 5,000 when Republica visited there on Wednesday. 

The motive behind the price gap is tax evasion. “Importers declare low prices at the customs to evade tax,” said Surya Sedhai, information officer at DoC. DoC has now taken a strong stance against low priciung for customs purposes, which is also known as under-invoicing. 

Importers have to pay 20 percent tax on goods imported and an additional 13 percent value added tax. Calculations by Republica show that the importer would have paid only Rs 376,292 in tax for the articles procured by DoC. This amount would be Rs 1.70 million as per the price of Rs 4.8 million assessed by the department. The articles are to be auctioned and the proceeds will be deposited in the government treasury. 
Owner of Bentley The Leather, Chandra Mala Sharma, admitted that the articles were procured by DoC but declined to speak in detail about why the customs price was so low.  
DoC has also purchased medical equipment from the customs point at Tribhuvan International Airport  and some cosmetics from Krishnanagar Customs Office at Kapilvastu. The process to auctioning these goods is underway. 

Goods imported through suspicious price declaration will be passed through a red zone or watched closely during customs clearance, said Sedhai.  

Director General of Department of Customs, Sishir K Dhungana, said, “We are devising a separate guideline to deal with such under-invoicing, and the record of purchase of goods that are under-invoiced will be included in the performance appraisal of customs chiefs.”

To address the need to make purchases of such goods directly and immediately, the government has earmarked Rs 1 billion in the budget for the current fiscal year.

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