Supreme Court does not halt customs duty on goods above Rs 100 from India, Clarifies interim order

KATHMANDU: Nepal’s Supreme Court has not suspended customs duties on goods worth above Rs 100 brought from India through land border crossings, despite widespread public confusion following a recent interim order linked to Nepal’s controversial border customs enforcement.

The clarification comes after concerns spread across Nepal’s southern border districts that the court had effectively blocked the government’s move requiring customs duty on items exceeding Rs 100 in value for travelers entering through land routes.

However, according to Supreme Court spokesperson Arjun Prasad Koirala, the court’s interim order does not prohibit the government from collecting customs duty, but instead directs authorities to ensure implementation does not violate citizens’ constitutional rights or dignity.

“The court has not spoken about stopping customs charges,” Koirala told media, clarifying that the order was issued to protect the constitutional right to live with dignity under Article 16 of Nepal’s Constitution.

What Did the Supreme Court Actually Order?

A joint bench of Justices Hari Prasad Phuyal and Tek Prasad Dhungana issued the interim order on Friday while hearing a writ petition challenging Nepal’s customs practice affecting goods brought from India.

The court acknowledged that imposing customs duty is a sovereign power of the state, and under Section 13(3) of the Customs Duty Act, 2081 (2024), the Government of Nepal has legal authority to determine customs exemptions through official gazette notifications.

The order explicitly stated that the court does not currently need to comment on the legality, relevance or justification of the Rs 100 threshold introduced by the Ministry of Finance through a Nepal Gazette notification.

Instead, the court focused on how the rule is implemented

According to the interim order, customs and law enforcement authorities must ensure that enforcement of the notification does not infringe on citizens’ constitutional rights, particularly when dealing with:

• Essential medicine and health-related items
• Minimum necessary goods used in social and family relations, including marriage-related materials
• Basic personal-use goods purchased by border residents for daily life

Authorities have been directed to treat individuals with dignity and respect during implementation of customs rules.

Constitutional Right to Live With Dignity

The court’s reasoning rests primarily on Article 16 of Nepal’s Constitution, which guarantees the right to live with dignity.

Constitution of Nepal states:

“Every person shall have the right to live with dignity.”

The petitioners argued that strict customs enforcement at border checkpoints was creating hardships for people living in border regions, particularly low-income households dependent on everyday purchases from nearby Indian towns.

Why Was the Petition Filed?

The writ petition was filed on Baisakh 14, 2083 BS (late April 2026) by advocates Amitesh Pandit, Akash Mahato, Suyogya Singh, and Prashant Bikram Shah, seeking annulment of the customs provision.

The petition argued that security agencies and customs officials were obstructing ordinary citizens from bringing in goods worth above Rs 100, affecting daily livelihood, food purchases and cultural practices in Nepal’s border communities.

Petitioners requested an interim order instructing the government:

• Not to obstruct food and essential items brought for daily consumption
• Not to impose customs duty on necessary personal-use goods
• Not to interfere with materials carried for social events, including marriages

According to the petition, the government’s implementation of the rule was adversely affecting fundamental rights of people living in Nepal’s border areas, many of whom rely heavily on cross-border trade and shopping due to lower prices in India.

The Rs 100 Customs Rule: New Policy or Old Law?

Contrary to public perception, the government says the measure is not a new policy but enforcement of an existing rule.

A notification published in the Nepal Gazette in May 2025 under the Customs Duty Act states that individuals crossing borders via land routes are generally not entitled to customs exemptions, except in limited circumstances.

The notification allows customs officials to waive duty only for personal-use goods worth up to Rs 100, subject to reasonableness.

This rule has become particularly controversial in Nepal’s Tarai and border districts, where many residents routinely cross into India to purchase groceries, medicine, clothing and household necessities at lower prices.

Government Defends Crackdown to Protect Revenue and Domestic Market

The stricter enforcement comes amid government efforts to curb informal imports, customs leakage and cross-border smuggling, which officials say have long undermined Nepal’s domestic market and tax base.

Soon after assuming office, Finance Minister Swarnim Wagle reportedly instructed customs officials to intensify revenue collection and strengthen enforcement mechanisms.

According to customs department data, Nepal missed its revenue target in the previous fiscal year, collecting slightly over 83 percent of the planned Rs 582 billion customs revenue target.

Officials argue stricter implementation is necessary to reduce informal cross-border shopping, increase domestic consumption and improve tax compliance.

Experts Divided: Border Hardship vs Economic Nationalism

The issue has triggered intense public debate among economists, legal experts and border communities.

Bipin Adhikari, a law professor at Kathmandu University, has publicly defended the government’s move, arguing that stronger customs enforcement could ultimately strengthen Nepal’s domestic economy.

Adhikari believes controlling informal imports and smuggling could revive Nepal’s border cities such as Birgunj, Biratnagar, Birtamod, Bhairahawa, Butwal, Damak and Nepalgunj, transforming them into competitive commercial hubs.

He argues that stronger domestic markets could eventually make international consumer goods more affordable inside Nepal itself and even attract Indian consumers.

However, critics warn that aggressive enforcement without flexibility could disproportionately hurt poorer households in border districts, many of whom rely on small-scale daily purchases from India for affordable essentials.

What Happens Next?

The Supreme Court has only issued an interim order, meaning the case remains under judicial review.

For now, the Rs 100 customs threshold remains legally in effect, and customs officials can continue collecting duty on goods exceeding the limit. But authorities are now expected to implement the rule more cautiously, particularly for medicine, essential personal items and socially necessary goods, while respecting constitutional protections.

The final verdict could have major implications for Nepal-India border trade, customs policy, informal imports, tax revenue collection and daily life in Nepal’s southern border economy.