Sri Lanka’s messy vehicle valuation system creates confusion once again
Sri Lanka’s messy vehicle valuation system is creating confusion once again following the decision taken by the newly appointed Director General of Customs (DGC) Chulananda Perera to release 189 Toyota Land Cruiser Prado TRJ jeeps which were earlier detained at the Hambantota port by the Customs Central Investigation Directorate (CCID).According to the CCID, the reason for the detention was the failure by the respective vehicle importers to declare the ‘true transaction value’ for Customs purposes in these imports.
Backing the CCID’s decision, the All Ceylon Customs Services Union (ACCSU) said that there was a misappropriation committed on the part of the importers because they have resorted to under- invoicing in their custom declarations. According to a gazette notification issued by the Finance Ministry recently, customs authorities have been empowered to make the valuation of the imported vehicle without considering the declared imported value.The new law governing valuation of motor vehicles permits no penal sanction once the importer pays levies on the minimum value so determined by the DGC, where whatever the transaction value declared would not affect the levy recovery process.
According to a statement made by the DGC, 189 Toyota Prado TRJ 150W jeeps have been imported and unloaded at the Hambantota port on concessionary permits given to the public servants and taxpayers.Each vehicle has been valued at JPY 3,375,000 FOB (approximately Rs. 4 million). A sum of Rs 5.1 million was determined as Customs levy on each vehicle under the Customs levy category 2 (110 per cent).
A decision has been taken to apply the revised FOB value of JPY 3,640,200 as the valuation to assess the duties for vehicle identified as fitted with extra options. A sum of Rs 6.7 million was to imposed as the duty on each vehicle.
However the DGC directed to release all the vehicles seized by the CIB Directorate (held at Hambatota port for over two months) on levies which had already been paid based on the minimum value so determined by Customs.Under these circumstances the ACCSU has lodged a complaint with the FCID regarding a large scale customs duty fraud amounting to over Rs.1 billion.The fraud, according to the union, has occurred, when the DGC decided to release these 189 Prado vehicles.General Secretary of the ACCSU J.A. Gunathilaka said the DGC was trying to justify his decision of releasing the vehicles after levying an import duty of only Rs 1.6 million per vehicle.“Sri Lanka should follow the World Trade Organisation agreement on customs valuation for a fair, uniform and neutral system for the valuation of goods for customs purposes — a system that conforms to commercial realities,” one motor trader said.