• Customs detains 300 vehicles over alleged breaches of import, export control laws
• Cross-border LCs, overseas pre-registrations flagged as methods used to skirt tax rules
• Finance Min. directive expected to determine whether re-export or milder penalty will apply
• Customs admits earlier lapses in detection, seeks consistent action even for past evasions

Sri Lanka Customs is currently awaiting a directive from the Ministry of Finance on how best to penalise vehicle importers who have violated import and export control regulations, the department’s Spokesperson reveals.

Speaking to The Sunday Morning Business, Customs Media Spokesperson and Additional Director General Seevali Arukgoda disclosed that approximately 300 vehicles were detained at present by Sri Lanka Customs for breaches of import and export control regulations. 

Among these, certain vehicles had reportedly been imported under cross-border Letters of Credit (LCs), while others had been pre-registered overseas to improperly avail themselves of the 15% tax concession applicable to reconditioned vehicles.

Arukgoda further suggested that these two methods may have been strategically employed in tandem, indicating a possible pattern of coordinated evasion.

He explained that, under current import regulations, the standard penalty for such violations typically involved having to re-export the vehicles in question. 

However, he added that no final decision had been made about whether that would happen in this case, suggesting that a less severe option might be considered if re-exporting was viewed as too harsh.

“These vehicles have been brought down in violation of import control regulations. Considering their violation of the regulations, they must be punished in terms of the law. 

“We are now considering the best solution for this situation. We are currently awaiting a directive from the Finance Ministry in this regard,” he stated.

Arukgoda acknowledged that prior to Sri Lanka Customs’ identification of these import control violations and its subsequent enforcement actions, it was likely that certain importers may have successfully evaded detection and brought vehicles into the country by employing such schemes.

“It is the importer’s obligation to import according to the law. We can only monitor. 

“Since this law is from 2013 and we have started importing vehicles after five years, the officers are also new, and therefore it is possible that they missed this [in the beginning]. However, the moment we realised it, we started to enforce the law,” he added.  

Accordingly, he stated that they were currently awaiting a directive from the Ministry of Finance that would outline a uniform course of action to be applied across the board, even to those importers who may have previously evaded detection.

Under the Import and Export (Control) Regulations No.2 of 2013, import documentation must bear the stamp of a corresponding bank located in the country of export, rather than that of a third-country bank. 

Accordingly, Sri Lanka Customs maintains that vehicles imported using cross-border LCs contravene these regulatory requirements.