Gold Smuggling in Nepal: Case Investigation and Court Procedure

Smuggling refers to importation or exportation of goods without paying the required custom duty, or doing it secretly, using illegal routes, or without declaring the goods—even if they aren't taxed. According to the Section 38 of the Custom Act 2064 (2007) (“Custom Act”), a person is considered to have committed smuggling when they fail to provide a declaration or proof of custom duty payment, when an inquiry or search is made by the Custom officer. Furthermore, section 4 of the Revenue Leakage (Investigation and Control) Act 2052 (“Revenue Leakage Act”) considers smuggling as an offence of revenue leakage and declares it an offence.

 

Under Section 3(1)(c) of the Export Import (Control) Act 2013 (1956) (“Export Import Act”) the Government of Nepal can prohibit or restrict the export/import of gold, silver, and similar precious metals or ornaments to:

Protect national security,

Maintain public order,

Manage trade in precious metals.

 

This implies that unauthorized import or export of gold is legally prohibited and qualifies as smuggling if done without a valid license or in contravention of a government notification. Currently, females can bring 50 grams of gold and male can bring 25 grams without paying custom duty in Nepal from foreign jurisdiction. Besides this, an individual can bring up to 200 grams of gold jewelry by paying custom duty. However, gold that is made only by giving the shape of the jewelry, such as customized rings, bangles and necklace, without the use of chemicals, are not considered jewelry. Commercial import of gold is typically restricted to licensed traders and banks authorized by Nepal Rastra Bank which are subject to quotas and specific procedures. 

 

 

The primary laws dealing with the regulation of the import and export of goods include:

a. Custom Act 2064 (2007) (“Custom Act”)

b. Export Import (Control) Act 2013 (1956) (“Export Import Act”) 

 

Additionally, depending upon the nature and complexity of the smuggling operation, following laws could be invoked:

a. Revenue Leakage (Investigation and Control) Act 2052 (“Revenue Leakage Act”)

b. Prevention of Organized Crime Act 2070   (“Organized Crime Act”)

c. Nepal Rastra Bank Act 2058  (“NRB Act”) 

d. National Penal Code 2074 (“Penal Code”) Along with these statutory provisions, the government of Nepal can issue directives and notices in regard to the restriction, regulation or prohibition of import/export of gold.

 

Several authorities are involved in governing the export and import of gold, and in investigating the gold smuggling such as:

 

2.1. Department of Custom:

The Department of Customs under the Ministry of Finance is the primary agency responsible for overseeing the import and export of goods and preventing customs offenses at border points, including airports. Customs officials are often the first to detect smuggling attempts. They have the authority to investigate initial cases of smuggling, especially those involving smaller quantities, and act as a quasi-judicial body for the gold valuation less then NPR 1,00,00,000 ( Ten Million Nepalese Rupees) . In this regard, the Ministry of Finance can also designate any officials of its own when needed under Section 85 of the Custom Act.

 

Section 6 of the Export Import Act also reaffirms the authority of the concerned custom officer to originally try and settle cases in regard to the illegal importation of gold. In fact, the Custom Office shall normally settle the case within 3 months of being filed under Section 81(3) of the Custom Act for gold valuation less then NPR 1,00,00,000 (Ten Million Nepalese Rupees) . While doing so, the Custom Officer as well as the employee of the Custom Office has the same powers as the court of first instance in relation to the summoning of the concerned person, taking his or her deposition, examination of evidence, requiring the submission of documents and the trial of case under Section 86 of the Custom Act. If a person is not satisfied with the decision of the custom officer then they can appeal to the Revenue Tribunal within 35 days.  However if gold valuation is more than NPR 1,00,00,000 (Ten Million Nepalese Rupees) then the case shall be forwarded to concerned district court. 

 

2.1.1. Initiation of Case and Investigation Procedures: 

a. Detection and Seizure:

Under Section 36 of the Custom Act, the Customs officers or authorized employees may stop, search, and seize goods suspected of smuggling. Such suspected goods or persons are produced before the Custom Office within 24  hours of the arrest. 

 

b. Examination of Goods:

Under Section 28 of the Custom Act, the Custom Officers have the power to open and examine the consignments. Special tests may also be conducted if the goods are suspected to be harmful or mis declared. Moreover, the gold is also sent for tests to check its quality and the quantity.

 

c. Post Clearance Audit:

Under Section 34 of the Custom Act, the Director General of Customs Officer may audit records to verify declarations up to four years after clearance.

 

d. Search of Premises:

If there is reasonable ground to believe goods are hidden, customs officers may search houses, buildings, or go-downs.

 

2.2. Department of Revenue Investigation (DRI): 

This department, under the Ministry of Finance, is mandated to investigate revenue leakage and economic offenses, including large-scale smuggling. They often get involved when the scale of gold smuggling is significant or when there are suspicions of organized crime or significant financial implications.

 

2.3. Central Investigation Bureau (CIB): 

This specialized wing of the Nepal Police is responsible for investigating serious and organized crimes, which often includes large and sophisticated gold smuggling operations with national or transnational links. They typically take over investigations of significant cases from the Customs or DRI.

 

a. If customs officials at entry points (like Tribhuvan International Airport) intercept individuals with relatively small amounts of undeclared gold (above the negligible personal allowance but not indicative of large-scale commercial smuggling), the Customs Office often handles the initial investigation and may impose penalties as per the Customs Act, which could include fines and confiscation of the gold.
 

b. When the amount of smuggled gold is substantial, or if the initial investigation suggests the involvement of organized networks, sophisticated methods of concealment, or links to other criminal activities, the case is usually taken over by specialized agencies like the Department of Revenue Investigation (DRI) or the Central Investigation Bureau (CIB) of Nepal Police. These agencies have broader investigative powers and resources to tackle complex criminal enterprises. The District Attorney's Office would then get involved to file charges based on the findings of these investigations.

 

Therefore, while the Customs Office handles initial detection and smaller cases, significant gold smuggling operations are typically investigated by the DRI or CIB, and the prosecution is initiated by the District Attorney's Office at the District Court.

 

 

 

Steps	Detail Process
STEP 1	Confiscation of gold and initiation of investigation by taking the person into custody by Custom Office
STEP 2	Custom Office shall send the gold for examinations at NRB
STEP 3	NRB provides the market valuation of suspected gold
STEP 4	Investigation report by the Custom Office is forwarded to District Attorney's Office for decision on whether or not to initiate the case
STEP 5	District Attorney's Office decides whether or not to initiate the case proceeding, and registers the case accordingly at concerned district court
STEP 6	Bail hearing before the court (Court decides whether to release the accused on bail or proceed the case by taking into custody)
STEP 7	The court shall examine the evidence and provide the final judgement

 

Kindly Note:  

a. The period of custody for normal bail is 25 days . If the offence falls under organized crime, then it can take up to 90 days .

b. If the smuggled gold is equivalent to less than 1 crore, the case shall be decided by the Custom Office itself. 

c. If a Custom Office finds the smuggling is done through organized channels then, they have the right to investigate up to 90 days by taking into custody before bail hearing.

 

If the accused person accepts the crime at the time of bail hearing before court, then the person is convicted the same day and it shall take additional 1 months to receive the final judgement. If the accused denies the crime, then it will take approximately 6 to 8 months for the final decision.

 

The statutory provision provides for 3 kinds of Punishment in the case of gold smuggling, namely confiscation, and fine or imprisonment or both.

 

a. Confiscation:

The smuggled gold and related items (packaging, vehicles used for transport) may be forfeited to the government under Section 49 of the Custom Act.

 

b. Fine:

The fines may be imposed equal to the amount of the value of smuggled golds.

 

3. Imprisonment:

Pursuant to the Section 57 of the Custom Act, the period of  imprisonment varies based on the value of the smuggled gold as below:

 

S.N.	Valuation of Gold (NPR)	Period of Imprisonment
1	25,000 to 1 Lakh	Up to 2 months
2	1 Lakh to 5 Lakh	2 months to 6 months
3	5 Lakh to 25 Lakh	8 months to 2 years
4	50 Lakh to 1 crore	1 year to 3 years
5	Amount exceeding 1 crore	2 years to 5 years

 

Furthermore, the driver of the vehicle used for smuggling of the gold is also liable for the imprisonment of one year if he/she had knowledge of the crime. 

 

 

If an individual is not satisfied with the decision of the Court then they can make an appeal to the higher court within 70 days of the knowledge of the judgment, which could be extended to another 30 days if the party had no knowledge of the judgment. However, after the expiry of one year, it is presumed that the parties had the knowledge of the judgment. Appeals can also be made from the prison. 

 

As stated by the Supreme Court in the case of Government of Nepal v. Amit Daruka and others, if no appeal is made within the time limit, it is considered that the convicted party has accepted the crime as well as the judgment. 

 

 

The informers of the smuggling are rewarded with 30% of the value of the confiscated goods as a reward, however if false informers face a fine of NPR 200-500 if proven malicious.

 

Nepal has been a hub recently for smuggling gold; it is mostly used as a transit to illegally smuggle gold in third countries mostly in India. Moreover, there is also a rise of using Nepali migrant workers as carriers in lure of money by the gold racketers. 

 

Recently, a case against a foreign Indian National was initiated by the District Attorney’s Office for smuggling gold, after making an arrest at the Tribhuvan International Airport (TIA). Here, the accused accepted the crime and hence, was fined Rs. 1,07,35, 904.40  the exact valuation of the smuggled gold as claimed by NRB and sentenced to 1 year of imprisonment. 

 

In another case, gold and electronic items were smuggled into Nepal from India via a Hyundai car, and were intercepted within the customs perimeter near Birgunj by customs and revenue officials. Four gold biscuits, 372 grams of gold jewelry, and 19 memory cards were recovered. Three individuals including the passenger, driver and the vehicle owner were convicted by the Parsa District Court. They were fined the amount equal to the gold amount, and sentenced to imprisonment.

 

Similarly, 4 foreign nationals were arrested in TIA for smuggling the gold and convicted by the Kathmandu District Court. In all of these cases, the District Attorney’s Office had charged the offenders with the offence of gold smuggling pursuant to Section 57 of the Custom Act. 

 

 

Court judgments in gold smuggling cases in Nepal show a clear trend of strict enforcement under the Customs Act. Offenders are consistently fined equal to the value of the smuggled gold and sentenced based on statutory guidelines. When the accused accepts the crime during the bail hearing, courts often issue immediate convictions. If denied, proceedings typically take 6–8 months, ensuring due process. 

The law firm has handled numerous cases related to this gold smuggling  and is well-equipped to defend against allegations made by the Customs Office and the Public Prosecutor.

 

Date of Publication: 21 April 2025

 

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