Jagdamba Overseas Pvt. Ltd., a company under the Shanker Group, has been found evading more than half of the applicable taxes on a special type of cigarette designed for use in electric smoking devices.
The company allegedly colluded with customs officials to manipulate the ASYCUDA (Automated System for Customs Data) customs system, resulting in a revenue loss of Rs 7.088 million in the current fiscal year.
Sulav Agrawal, the owner of Jagdamba Overseas, was previously arrested in 2020 for illegally marketing thermal guns used for COVID-19 testing. He has repeatedly been involved in controversies, including participation in the trade of vaping products. Officials from the Ministry of Finance say evidence indicates his direct involvement in tax evasion of imported tobacco sticks.
The tobacco sticks, imported under HS Code 24041100 were brought into the country at values lower than the legally required rates. By manipulating the ASYCUDA system, the company paid substantially less duty than mandated. “The ASYCUDA system generates invoices with taxes based on the HS code and declared value, but these tobacco sticks were imported at a lower duty, indicating collusion between customs officials and the importer," an official at the ministry said.
Trade data shows that by mid-November of FY 2025/26, Nepal imported 610 kilograms of tobacco sticks worth Rs 9.6 million, but collected only Rs 6.7 million in revenue, representing just 71.875% of the actual tax owed. Kishor Bartola, a spokesperson for the customs department, noted that the taxes on such products should exceed the import value, with a standard rate of 143.628%.
Customs Director General Shyam Prasad Bhandari admitted to being unaware of the tax evasion but promised to verify the facts. According to the Finance Act for FY 2082/83, tobacco and reconstituted tobacco are subject to 40% customs duty, 40% excise duty, 10% health risk tax, and 13% VAT. Previously, the excise duty was fixed at Rs 520 per kilogram, but it was raised to 40% this year to discourage consumption and increase revenue. Despite the increase, system manipulation allowed the importer to avoid paying the higher excise duty.
In the previous fiscal year (2081/82), Nepal imported 1,219 kilograms worth Rs 15.8 million, collecting only Rs 10.46 million in revenue. Customs officials note that investigations are initiated only upon formal complaints; the department does not proactively monitor potential revenue losses.
Jagdamba Overseas distributes these tobacco sticks in Nepal through a dealer outlet at the International Club in Sanepa. The sticks, imported from Indonesia, are associated with Philip Morris International (PMI), which markets them as smoke-free alternatives. The sticks are used in electric devices employing smart-core induction technology, which heats rather than burns the tobacco, producing no smoke or ash. Unlike vapes, these devices do not use liquid; users insert tobacco sticks for use.
A full tax calculation shows that on imports worth Rs 9.6 million, the government should have collected Rs 13.788 million in revenue, including customs duty, excise duty, health risk tax, and VAT. However, only Rs 6.7 million was collected, indicating a revenue loss of Rs 7.088 million.
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