Ever heard of a senior customs official who takes unreasonable and arbitrary action in clearing imported vehicles, changing its classifications according to his whims and fancies? This was nothing but a true fact conveyed to media among other untold incidents connected to official mafia ingrained in Sri Lanka Customs with alleged malpractices, favouritism and bribe [...]

Business Times

Case of misuse of authority sparks in Sri Lanka Customs

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Ever heard of a senior customs official who takes unreasonable and arbitrary action in clearing imported vehicles, changing its classifications according to his whims and fancies?

This was nothing but a true fact conveyed to media among other untold incidents connected to official mafia ingrained in Sri Lanka Customs with alleged malpractices, favouritism and bribe taking from importers in clearing goods for carrying out tax manipulation.

In this saga, the relevant high official using his undue power manipulates Customs tariff Heads (HS codes) under which duties and taxes of imported vehicles are assessed, motor traders claimed.

This Wagon-R small car involved in tax controversy has a new mild-hybrid system and an energy-saving electric air conditioning system.

With the RO6 engine combined with an electric motor/generator and a lithium-ion battery, this new hybrid system provides regenerative braking and at least some level of power assist to the internal combustion engine while it can also run certain electrical equipment.

It comes with an upgraded ISG (integrated starter generator) and increased capacity for the hybrid battery. Due to the improved battery and ISG, Wagon-R is capable of driving alone on its hybrid battery up to 10 seconds if the speed is kept under 13km/h.

The Vehicle Importers’ Association of Lanka (VIAL) warned that they will fight tooth and nail to expose the unjust practices of this high handed senior official who is trying to deprive the middle class buyers of buying even a small car at a reasonable price.

VIAL President Indika Sampath Merinchige told a media conference in Colombo on Wednesday that vehicle importers have now been forced to pay high Customs duty when clearing Wagon-R small hybrid car, classifying it as a non-hybrid vehicle.

This high handed practice of the official cannot be challenged at the Custom’s Department level because of his involvement in the Customs Nomenclature Committee (NC), he said adding that this action has been interpreted as high tax revenue collection measure.

But this action will deprive millions of rupees in revenue as vehicle importers are compelled to suspend the imports of Wagon-R small hybrid cars as they cannot pay high taxes imposed on petrol cars due to misinterpretation of technical specifications by an arrogant official.

Petrol and diesel vehicles have been classified under two different HS codes 8703 and 8704 respectively, but there was no HS code for hybrid vehicles, he claimed.

However the Wagon-R had been classified under the Benz C-Class category by Nomenclature Committee citing that the two vehicles have the same technology.

As a result the price of a brand new Wagon-R vehicles has been increased to Rs. 3.5 million, due to heavy customs duty amounting to an astounding Rs.1.6 million.

Around 55,000 Wagon-R cars cleared by Customs during the past few years considering it as hybrid vehicles with less customs duty are plying on local roads; Mr. Merinchige said.

The Customs NC Committee on the directions of the senior official with vested interest has classified the Wagon-R as a non hybrid vehicle following the presentation of 2019 budget in parliament, he revealed.

The Director General of Customs has issued a temporary approval to import these vehicles under the HS 8703.40.28 hybrid technology category, and directed relevant officials to submit a technical report on these vehicles, Mr. Merinchige said.

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