Government urged to tighten entrepot trade regulations
The Sri Lankan Government has been urged to tighten entrepot trade regulations introduced during the previous Rajapaksa regime in 2013 which allegedly allows re-exporting rackets of unscrupulous exporters to enjoy tariff relief, Customs officers have revealed.
The gazette notification No. 1818-30 issued during the Rajapaksa regime has provided provisions for import and re-export goods without the control of Customs Ordinance, Exchange Control Act, and Import – Export Control Act, etc.
These regulations indirectly paved the way for racketeers to exploit its loop holes in manipulating entrepot trade without considering the country’s economic prosperity and environment, General Secretary of the All Ceylon Customs Service Union J.A. Gunatilleke said.
In a letter to the Minister of Finance, Director General of Customs and Sri Lanka Customs, he noted that regulations relating to entrepot trade involve an import, minor processing and re-export grant entry of a product into the country.
Entreport trade is defined as the trade in which imported goods are re-exported with or without any additional processing or repackaging.
Accordingly, if goods are imported from one country with the purpose of re-exporting to another, it is generally called entrepot trade. Import duty is not levied on these goods.
The union alleged that a large number of containers laden with used mattresses have been imported into this country exploiting provisions in the regulations imposed through the gazette notification No. 1818-30.
Further he added that a stock of 2800 tonnes of low quality pepper had been imported some time back to Sri Lanka from Vietnam in 134 containers under entrepot trade with no taxes.
This large stock was re-exported to India mixing it with local pepper causing a loss of US$9 million in taxes for the country, Customs investigations revealed.
The re-exported pepper consignment has had the Sri Lanka country of origin certificate obtained from a certifying officer in the Department of Commerce.
According to regulations stipulated in the Gazette Extraordinary issued on July 12, 2013, off-shore business is permitted where goods can be procured from one country or manufactured in one country and shipped to another country without bringing the same into Sri Lanka.
Logistic services such as a bonded warehouse or in the case of operation of multi-country consolidation in Sri Lanka have also been allowed under these provisions.
However a senior official of the Finance Ministry told the Business Times that the Customs has been directed to strengthen its Surveillance Division and entrepot procedures.
For all products imported into the country, domestic regulations, mechanisms and applicable import licensing requirements, applicable standards, and regulations applicable to protect plant, human and animal life will apply, he said.
This agreement does not take away Sri Lanka’s rights under the International Environmental Protection Treaties to which Sri Lanka is a signatory.
Therefore, the current environmental laws and regulations will apply to such products, he said.
The Cabinet of Ministers has approved a proposal to implement several new policies aimed at ensuring that spices re-exported from the Colombo Port are not diluted or fraudulently labelled indicating Sri Lanka as the country of origin.
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