25/05/2026
A Landmark Supreme Court Decision on Excise Duty Credit and Industrial Packaging
Gandhi & Associates is pleased to share a significant judgment of the Supreme Court of Nepal in favor of our client, Pokhara Noodles Pvt. Ltd., concerning the interpretation of Nepal’s Excise Duty framework applicable to packaging materials used in manufacturing.
In a landmark ruling delivered by the Full Bench of the Supreme Court, the Court held that packaging materials (wrappers) used in the manufacturing process constitute “raw materials” for the purpose of excise duty credit under the Excise Act, 2058 (2001) for the relevant pre-amendment period.
The dispute arose from excise assessments issued against Pokhara Noodles Pvt. Ltd. relating to excise duty paid on packaging materials used for instant noodles products. Tax authorities had argued that wrappers were merely auxiliary or post-production materials and therefore ineligible for excise credit adjustment, resulting in additional assessments, penalties, and interest.
Following proceedings before the Inland Revenue Department and the Revenue Tribunal, the matter was referred to a Full Bench of the Supreme Court due to conflicting interpretations and its broader implications for Nepal’s manufacturing sector.
In its judgment, the Supreme Court recognized that a product must not only be manufactured but also marketable and legally saleable. The Court acknowledged that, particularly for food products, packaging forms an integral and indispensable part of the production process itself.
The Court further addressed important legal principles concerning:
• marketability of goods;
• integral production process analysis;
• protection against double taxation; and
• prohibition against retrospective application of taxing provisions.
Importantly, the Court clarified that the subsequent amendment introduced through the Finance Act, 2072 BS disallowing excise credit on packaging materials could not be retrospectively applied to earlier fiscal periods.
This judgment has significant implications for Nepal’s manufacturing and industrial sector, particularly industries involving packaged consumer goods, including food and beverages, FMCG products, pharmaceuticals, soaps, and edible oils.
The decision provides important judicial clarity on:
• the scope of “raw materials” under Nepal’s excise framework;
• the treatment of packaging within the manufacturing chain; and
• the limits of retrospective taxation.
Gandhi & Associates is proud to have represented Pokhara Noodles Pvt. Ltd. in this important matter and to have contributed to a precedent likely to influence excise administration and industrial taxation disputes across Nepal.
A Landmark Supreme Court Decision on Excise Duty Credit and Industrial Packaging Gandhi & Associates is pleased to share a significant judgment of the Supreme Court of Nepal in favor of our client, Pokhara Noodles Pvt. Ltd., concerning the interpretation of Nepal’s Excise Duty framework applicable...
