BIRGUNJ: Traders have raised concerns about the country's largest customs office, Birgunj, arbitrarily changing the customs codes for imported goods. According to the traders, this reclassification is aimed at generating higher revenue by placing goods in categories with higher tariffs to meet revenue collection targets.

The customs office, however, claims that the changes to the Harmonized System (HS) codes were necessary due to some traders' tendencies to declare one product while importing another. The World Customs Organization created the HS code system to manage foreign trade, ensuring the first six digits are consistent globally, with the subsequent digits varying by country based on specific characteristics. This system is intended to facilitate uniform customs inspections and revenue collection.

However, traders argue that the Birgunj customs office has started reclassifying imported goods based on their own discretion, leading to increased costs of doing business. Importers report that since the decrease in foreign trade following the COVID-19 pandemic, customs authorities have been categorizing goods into the highest revenue-generating sections, pressuring them to comply.

Ashish Lath, General Secretary of Birgunj chapter of the FNCCI, criticized this practice, stating that while the HS code system is meant to ensure uniformity and facilitate foreign trade, its arbitrary reclassification for higher revenue is inappropriate. He called for the customs office to recognize the internationally accepted HS codes to avoid the difficulties businesses face with inconsistent classifications.

Traders have reported that the reclassification has particularly impacted the import of industrial equipment parts, increasing their costs. Chief Customs Administrator of Birgunj Customs, Dilaram Panthi, countered that the primary focus of customs is trade facilitation rather than revenue collection. However, he admitted that mistrust in importers has led to reclassifications, suggesting that reliability issues are at the root of the problem.

Madhav Rajpal, Vice President of Birgunj chapter of the FNCCI, added that the reclassification has also affected the South Asian Free Trade Area (SAFTA) concessions, with importers losing benefits due to the changed HS codes. He reiterated the call for Nepal’s customs to accept internationally recognized codes.

Despite these claims, customs officials maintain that the tightened HS codes are a response to traders' misdeclarations.

According to General Secretary Lath, importers have started opening Letters of Credit (LC) with double HS codes to navigate these classifications. Importers importing goods from India have had to mention codes for both countries in their LC, creating additional complications and highlighting the need for consistent HS code recognition.