Provision of separate form for LC

KATHMANDU, MAR 16: 

Nepal Rastra Bank (NRB) has asked importers to fill a separate form ‘ARE 1’ instead of the forms that are in use currently.

Since the Duty Refund Procedure (DRP) has been scrapped under the revised Nepal-India Trade Treaty, importers now need not fill ‘Nepal Invoice’ or ‘Invoice of goods liable to central excise duty in India transmitted under excise seal to Nepal’ that was one of the most important documents while opening a Letter of Credit (LC) for imports in foreign currency from India, according to the NRB which has asked ‘class A’ commercial banks and ‘class B’ development banks to follow the directive while opening an LC. 

Importers, from March 1, do not need to fill the ‘Bill of exports for duty free goods’ form along with the LC, as the DRP has been scrapped. Earlier, the Indian Central Excise used to refund the duty to the government and the forms were used to calculate the duty to be refunded.

Earlier, purchases from India were normally paid for in Indian Currency since the currency is fully convertible in Nepal. When Indian suppliers sold their products to Nepali importers, they used to pay Indian excise duty and used to be refunded.

Both the Nepali and Indian governments had agreed to implement the DRP according to the revised Nepal-India Trade Treaty signed in 2009. 

Nepal also allows imports of specified products from India for which payments can be made in foreign currency. Nepal Rastra Bank has listed the products which can be imported from India by making payments in foreign currency. Of the total imports from India, around 60 per cent of the goods are imported in foreign currency instead of Indian Currency, according to the Finance Ministry.

Nepal has got rid of the time-consuming process of duty refund which the Indian government used to charge and refund, but it is feared that the new step will encourage under invoicing by importers, according to the ministry.

India is the largest trading partner of Nepal.

Exports to India went up by 13.9 per cent during the first six months of the current fiscal year as compared to an increase of 9.3 per cent in the same period of the last fiscal year. Similarly, imports from India increased by 10.1 per cent as compared to a growth of 28.2 per cent in the same period of the last fiscal year.

Source: THT