Digital Valuation System Successfully Tested at Biratnagar Customs, Boosting Business Confidence

The government’s newly introduced Customs Valuation Database System, aimed at making customs management more transparent and trustworthy, has successfully completed its test phase at the Biratnagar Customs Office. This marks the first implementation of a digital system that replaces the long-used reference value book with an automated, declaration-based valuation and clearance process.

According to customs officials, both customs officers and traders have reported positive experiences since the system’s trial began in late September. The new database-based mechanism is said to have effectively addressed long-standing issues of under- and over-invoicing in customs valuation.

Biratnagar Customs Chief Umesh Shrestha stated that importers can now easily verify the actual transaction value of any goods. “The old practice of arbitrarily determining prices is ending,” he said. “This database system has made customs clearance more transparent, faster, and fair.”

Previously, determining the actual transaction value under the reference value book and system was difficult. Importers often submitted invoices from countries different from where the goods were produced, creating discrepancies in valuation. Since prices were set at the discretion of customs officials, the system was vulnerable to irregularities, corruption, and revenue leakage, problems that the new system is expected to eliminate.

The Customs Valuation Database System digitally stores price details of cleared goods and analyzes transportation, insurance, and other associated costs to determine the true transaction value. Officials believe this system will enhance accuracy in valuation, revenue protection, and audit effectiveness.

During the system’s launch, Department of Customs Director General Shyam Prasad Bhandari said that the digital database would help identify valuation risks, control revenue leakage, and strengthen post-clearance audits.

Officials confirmed that the system was developed in accordance with the WTO’s Customs Valuation Agreement under the General Agreement on Tariffs and Trade (GATT). Finance Minister Rameshore Khanal, who inaugurated the system on September 25, said it will facilitate legitimate trade and reduce business costs.

“The government has placed its trust in traders by replacing the reference value book,” Minister Khanal said. “The valuation database system will help curb corruption and make business easier for honest traders. Malpractices like importing sugar with rice invoices will now come to an end.”

Previously, the reference value book was updated twice a year and listed prices for about 7,000 commodities. However, traders criticized it for failing to reflect actual import prices. Many importers resorted to under-the-table payments and fake billing, contributing to capital flight and the growth of the informal economy.

Rajendra Raut, president of the Koshi Province chapter of the Federation of Nepalese Chambers of Commerce and Industry (FNCCI), said that the new system would benefit industrialists and traders. He noted that the private sector had long demanded a more scientific and hassle-free valuation system instead of the outdated reference book.

Similarly, Prakash Mundada, senior vice president of the Koshi Province chapter of the Confederation of Nepalese Industries (CNI), said the private sector had been urging the government for years to adopt an online valuation mechanism aligned with GATT standards. “We are happy it has finally been implemented,” he said. “It will create a fair business environment and reward honest traders.”

With the new database, each product’s price, transportation cost, insurance details, and trade-country data are integrated digitally. This removes the need for customs officers to make price estimations. A digital risk engine will now identify risky transactions for targeted inspection at the destination, ending the practice of stopping trucks unnecessarily on highways.

Anil Shah, senior vice president of the Morang Trade Association, said the system will make customs valuation more convenient and save time for traders during clearance. Although it may take some time for businesses to adapt, he expressed optimism that the system will eventually make operations faster and more efficient.

How the System Works

The new valuation database collects price details of all cleared goods. Using this digital record, customs can analyze and compare items, helping accurately identify transaction values. When importers or exporters submit shipment details, the system cross-references them with international price data and previous customs records to determine the actual transaction value.

This digital valuation process aligns with the government’s goal of promoting transparency, reducing manual discretion, and ensuring that customs duties are based on authentic, data-driven assessments.