Kathmandu: Nepal’s customs offices have been accused of misclassifying imported vehicles in ways that deprived the state of billions of rupees in revenue, according to the 63rd Annual Report of the Office of the Auditor General.
The report says customs officials manipulated vehicle classifications by improperly interpreting seat capacity, weight limits, and physical specifications, allowing importers to pay lower customs duties than required under the law.
The irregularities were identified at the customs offices in Bhairahawa, Birgunj, Tatopani, and Rasuwagadhi. The Auditor General concluded that customs staff and importers colluded to bypass technical standards and evade taxes, recommending that the government immediately investigate and recover more than Rs 1 billion in lost revenue.
Under Nepal’s Customs Tariff Act 2011, the Motor Vehicles and Transport Management Act 1993, and related regulations, vehicles are categorized based on seat numbers, weight, and structural design. Only permanent passenger seats and the driver’s seat are counted for classification purposes, while conductor seats, folding seats, and temporary seats are excluded.
Vehicles weighing more than 10 tons are classified as large buses, those between 4 and 10 tons as minibuses, and vehicles under 4 tons as cars, jeeps, vans, or microbuses. Separate technical standards also apply to cabin dimensions, seat arrangements, aisle width, and interior height.
Despite these clear legal provisions, the Auditor General found widespread violations in vehicle imports.
In Bhairahawa and Birgunj, customs officials allegedly classified “Traveller 1” vehicles as minibuses even though the vehicles failed to meet the required structural standards. The vehicles weighed 3,965 kilograms and measured 5,615 mm in length, but their narrow width and cabin structure meant they should have been categorized as microbuses. The report estimates revenue losses of Rs 44.7 million in Bhairahawa and Rs 4.9 million in Birgunj from this single model alone.
The report also highlighted irregularities involving “Starline 10.75 E” buses, which were declared as 30+1-seat buses despite being far narrower than the minimum width required for such seating arrangements. Similar violations were found in “Prestige 2815” and “3315” models, resulting in an estimated Rs 73.7 million in lost revenue.
The biggest losses, however, were linked to electric vehicle imports.
At Tatopani Customs, several electric vehicles were cleared as 11-seat minibuses even though removing the folding seats reduced actual seating capacity to just nine seats, which would classify them as microbuses subject to higher duties.
The Auditor General calculated revenue leakage of Rs 317.4 million from multiple EV imports through Tatopani, Rs 152.4 million through Rasuwagadhi, and another Rs 11.4 million through Birgunj. Combined, the three customs offices are estimated to have caused losses exceeding Rs 481 million.
The report also criticized the Department of Transport Management for issuing roadworthiness certificates without conducting proper technical verification of motor capacity. Customs offices were likewise accused of clearing vehicles without requiring certified technical reports or manufacturer specifications from the country of origin.
According to the report, Rasuwagadhi Customs alone granted questionable tax exemptions worth Rs 1.27 billion, while Tatopani Customs accounted for another Rs 1.23 billion, prompting calls for a high-level investigation.
The Auditor General directed the government to ensure that future tax assessments are based strictly on official manufacturer specifications and dynamometer testing of motor capacity.
Several specific EV models were singled out in the report.
The Zeekr X, imported by Pioneer Motocorp, was reportedly cleared based on a declared peak motor power of 200 kilowatts. However, the manufacturer’s official specifications and international listings show the vehicle producing 272 PS, or roughly 200.06 kilowatts. Since vehicles exceeding 200 kilowatts attract a 60 percent customs duty, the slight underreporting allowed the importer to benefit from lower taxes.
Similarly, MAW Vriddhi allegedly imported the Deepal E07 and JAC J6 by declaring motor outputs below 200 kilowatts, despite international specifications listing them at 252 kilowatts and 205 kilowatts respectively.
Another discrepancy involved the Nami Box EV, also imported by MAW Vriddhi. The vehicle was declared with a 50-kilowatt motor, qualifying it for lower taxes, while the manufacturer’s brochure reportedly lists the motor capacity at 70 kilowatts.
The report also detailed the manipulation of seat numbers in electric passenger vans.
At Tatopani Customs, 206 units of Foton electric passenger vans were classified as 15-seat minibuses, even though the same model had previously been imported as 14-seat microbuses. The Auditor General estimated losses of Rs 67.1 million at Tatopani and another Rs 9.2 million at Rasuwagadhi from the same practice.
Additional irregularities were found in Joylong E-4, E-5, and E-6 electric vans, where improper minibus classification allegedly caused another Rs 25.8 million in revenue losses.
In Birgunj, Toyota Hiace vans with 14 seats were also categorized as minibuses instead of microbuses, resulting in an estimated Rs 59.7 million in unpaid revenue.
The report concludes that the most alarming pattern emerged at Rasuwagadhi Customs, where vehicle models that had previously been cleared as microbuses were later reclassified as minibuses, causing an additional Rs 353.4 million in revenue leakage.
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