Customs dispute grounds six aircraft and four helicopters

KATHMANDU, March 6: Six aircraft and four helicopters have been grounded due to a dispute over the customs duty on spare parts. Almost two months ago, the aircraft were grounded due to an unresolved dispute between the Department of Customs (DoC) and the airline operator regarding the customs duty on the imported spare parts.

The air service operators have been claiming that a one percent duty will be levied on the spare parts of aircraft. The DoC has been insisting that only one percent of the items specified by the Financial Act and the World Customs Organization will be levied and other items will be subject to customs duty.

Due to this dispute, parts have been held at the Tribhuvan International Airport (TIA) for two months. As a result, aircraft and helicopters have been grounded one after another due to the lack of maintenance.

The DoC has sought to levy customs duties on displays used in aircraft, such as televisions. Likewise, officials have been trying to impose the same customs rate on the tires used in aircraft as in cars.

"We did not pass the inspection after the DoC told us to impose customs duty on the parts of the aircraft in the same way as other items. Within two months, we have met the Finance Minister twice and the Director General of Customs four times," Pratap Jung Pandey, the first vice president of the Airlines Operators Association of Nepal (AOAN) said.

As the aircraft are grounded at a time when the tourist season is about to start, the entrepreneurs say that the government will also suffer losses due to this.

“Tens of millions of rupees is being lost as the aircraft are grounded. If it is not changed soon, more aircraft will be grounded," said Pandey. "When the economy of the country is in a difficult situation, it is not a good thing to stop the goods by creating issues."

Airline companies have been paying a huge revenue in the form of income tax, VAT, personal income tax etc. Entrepreneurs complain that the government is not positive about the aviation business, which plays an important role in tourism promotion.

Airline operators have contributed significantly to the revenue. Apart from that, the role played in tourism promotion is important. However, it is wrong to tax the spare parts used in the same company like other luxury items," Pandey said. "Understanding this seriousness, the finance minister has given verbal instructions to collect one percent customs duty. However, the DoC did not implement it. As a result, the entire airspace is being victimized.

The director general of the DoC, Shobhakant Paudel, clarified that one percent of customs duty would be levied on the spare parts and other items specified by the Financial Act and the World Customs Organization and the customs duty on spare parts other than these will be as per the law. "Like in the past, aircraft parts are not inspected," he said adding, "They also should not try to bring other items except spare parts by paying only one percent of customs duty."

Paudel said that he is ready to facilitate the customs, but the entrepreneurs should be ready to pay the necessary fees. “We should conduct the customs inspection by following the rules and regulations. But, we don't have the right to waive the revenue," he said.