The Sunday Leader

Billion-Rupee Vehicle Import Fraud Continues

  • Ignoring Court of Appeal Judgement

By Nirmala Kannangara

Director General of Customs Jagath Wijeweera, Toyota Lanka letter to the SLC and The Court of Appeal Judgment against De Silva

Startling revelations have come to the fore on how the Director General of Customs (DGC) is aiding a vehicle spare parts importer, against a Court of Appeal judgment delivered in 2000, causing losses amounting to thousands of millions to Sri Lanka Customs.
Director General of Customs, Jagath Wijeweera is accused of allowing Harsha de Silva of Vehicles Lanka Pvt Ltd to import vehicle units despite a Court of Appeal judgment against de Silva banning him from importing complete vehicle units.

“Although we have informed the DGC that there is no way we can allow the consignments De Silva has imported to be released and it should be forfeited forthwith since there is a court order. We are surprised as to why the DGC is dragging his feet without taking a stern decision. This was proved clearly when we were asked to come for a meeting with him to discuss about De Silva’s issue. The meeting was headed by the DGC and attended by the Deputy Director (Legal), all Additional Deputy Director Generals, Initiating Officers, Director Customs (Preventive) and Deputy Director (Preventive),” said reliable Customs sources on condition of anonymity.

According to sources, it was questionable as to why the DGC has asked whether there is a necessity to impose a penalty for De Silva.
“Although the DGC is new to the post that does not mean he doesn’t know the Customs rules and regulations. If he doesn’t know the law then he should not hold the DGC post for the sake of the country and Customs Department. Sri Lanka Customs earns revenue to Finance Ministry coffers in billions and if we allow the importers to get away after committing any fraud, it is not a loss only to the Customs but to the entire country,” said the sources.

The sources further added that he and all other Customs officials who attended the aforesaid meeting that was held on Tuesday, February 19 were taken aback when they were informed that a decision taken unanimously was changed soon after the meeting.
“During the meeting the DGC with our consent wanted the Customs Preventive Division (the division that was carrying out De Silva’s investigations over the years) officials to submit a report within one week whether the Customs can charge a penalty from De Silva or whether there are any provisions to take legal action against this importer. No sooner we left the meeting and were waiting for the lift to go to our respective floors; Thilak Perera, one of the Deputy Director Generals told us that the DGC wanted the Central Investigations Bureau to prepare the report that was first assigned to Customs Preventive Division. This development is highly questionable. What made the DGC to change the decision that was taken unanimously” asked the sources.

Harsha de Silva of Vehicles Lanka Pvt Ltd, the person who was accused of allegedly framing Director (Preventive) Sri Lanka Customs Ranjan Kanagasabai for a bribery charge too is accused for dishonouring the Court of Appeal judgment delivered against him in year 2000. De Silva is further alleged to have met the DGC with one of bribery commission officials last week to get his shipments that are now held at Customs released.

“We came to know that De Silva is a regular ‘visitor’ to the DGC and last week he has accompanied one of bribery officers to get the consignments released,” alleged the sources.

“This is a simple case of contempt of court for which Harsh de Silva should be arrested and charged,” said W. M. R. P. Wijekoon, General Secretary of the Sri Lanka Independent Government Trade Union Organization of Sri Lanka Customs. According to Wijekoon, it was De Silva who had filed a writ application of certiorari and prohibition in terms of Articles 140 of the Constitution against Sri Lanka Customs (case No: C.A. 1124/ 98) at the Court of Appeal in 1998 against the seizure of five of his assembled vehicles by the Customs.

“Although De Silva was given a duty concession to import used motor spare parts to assemble in Sri Lanka using local parts and providing employment, he violated the Board of Investment (BoI) agreement and Customs Ordinance completely. When used parts are imported to be assembled, the Customs duty for a motor car is around Rs.500,000 depending on the vehicle. If a complete vehicle unit is imported, the Customs duty for a car is around Rs.3 million based on the value of the car. As importing complete vehicle units costs a lot, De Silva got BoI approval to import ‘used vehicle parts’ and to assemble them using local parts. Although the agreement was as such De Silva imported vehicle units in separate shipments under two names and got them assembled and sold for higher prices. Once this racket came to the limelight the SLC seized five of such assembled vehicles which led De Silva to file a case against SLC to get them released. For his bad luck the ruling went against De Silva and he was banned from importing vehicle units to the country,” said Wijekoon.

According to the observations of the Court of Appeal judgment, De Silva knew rightly or wrongly for certain that he could not import vehicles with all parts together without paying the full duty that could be levied on complete or perfected vehicles which is mentioned in regulation II in scheduled ‘A’ of Customs Ordinance.
“While De Silva imported front portions of the cars, the rear potions have been imported under a name of S. N. Jayasinghe. It was revealed that De Silva has subsequently purchased the rear portions from Jayasinghe and assembled as complete vehicles,” said Wijekoon.

Under the BoI agreement, De Silva has been allowed to import used motor vehicle parts to assemble 2,400 units of vehicles in the country using local parts.

De Silva is also accused for importing these vehicle units that are over aged – which is strictly against Import Controller’s regulations.
According to Import Controller’s regulations, cars that are more than three years old from the manufacturing date cannot be imported to the country.

However, it has now come to light that all vehicle units that De Silva had imported so far is more than three years old from the date of manufacture and in some the date of manufacture goes back to year 2003, almost 10 years.
This has been confirmed by Manager Sales Toyota Lanka Pvt Ltd in a letter dated January 15, 2013 to M. B. Jayaratne, Preventive Officer, Sri Lanka Customs. The letter clearly states that the engines and chassis numbers matched the original vehicles that were imported from Japan.

Meanwhile, a Toyota Lanka letter has clearly stated that all these vehicles are of more than three years old which is yet another fraud De Silva has committed.

“Had the SLC acted strictly against him, the Customs would have recovered millions from De Silva. When President Mahinda Rajapaksa is finding it difficult to provide the necessary facilities for the people due to lack of funds, the DGC and a few of his men are finding ways and means to allow Harsha de Silva to escape through the legal net,’ said Wijekoon.

According to Wijekoon, in the event De Silva is allowed to continue this racket, the country will lose Rs.6,000 million as Customs levy.
“Although the Customs duty for a vehicle that is assembled with imported used parts is Rs.500,000, if vehicle units are imported, the importer has to pay at least Rs.3 million Customs levy per unit depending on the type of vehicle. If SLC allows De Silva to continue in this illegal importation then the country is deprived of Rs.6, 000 million as taxes,” said Wijekoon.

According to Wijekoon, it was one of the former DGCs who worked as a Director Customs earlier that first allowed De Silva to continue in his illegal business without any hindrance after the Court of Appeal judgment.

Meanwhile, Wijekoon in a letter dated February 18 to the DGC in regard to the illegal importation of vehicles by De Silva has stated that in the interest of the department and the country as a whole it is suggested that the prevention division of Sri Lanka Customs should comply with the Court of Appeal judgment to take immediate steps to forfeit the consignment imported by De Silva failing which the union is compelled to resort to legal action.

“De Silva of Vehicles Lanka Ltd has imported vehicles in two shipments in unassembled form declaring both as parts with the intension of assembling complete vehicles. M/S Toyota Lanka Pvt Limited confirmed in their letter that the engine numbers and the chassis numbers match the original vehicles manufactured by Toyota Company Japan. Thereby it is clear that the engines fitted with gear boxes and axels are removed from the same / original vehicles and shipped as one consignment and the rest of the vehicles have been shipped in a separate shipment,” he said

According to him, the modus operandi of the above importation and the violation are similar to the Court of Appeal case No; CA 1124/98. However the present operation is of a more serious nature as unlike the previous cases both shipments are consigned to one and the same importer. In addition, the officers who carried out the inspection had identified undeclared goods amongst the goods imported. “The present importation declared as vehicle parts is also to overcome the prohibition in schedule B as the vehicles imported are overaged and subjected to import control license. It is thereby evident from all of the above that De Silva’s illegal operation is continuing unabated despite the ruling of the Court of Appeal. Thereby we must be mindful and cannot disregard the fact that the order delivered by the Court of Appeal is still binding. Based on the judgment of the Court of Appeal the goods in question should be forfeited forthwith. Any attempt to ignore the judgment or to hold an inquiry to overrule the judgment will amount to contempt of court unless permission is sought from the Supreme Court or Court of Appeal itself,” he claimed.

When DGC Jagath Wijeweera was contacted to find out as to why he had failed to take action against Harsha de Silva based on the Court of Appeal Judgment, Wijeweera declined to make any comment and wanted the newspaper to contact Media Spokesman SLC Director Preventive Lesley Gamini.

However, Lesley Gamini too declined to make any comment on the matter.

“We have to see whether De Silva has committed any fraud. We are conducting further investigations to find it out,” said Gamini.
Asked as to why the collective decision to allow the preventive department to hold the investigations against De Silva was later given to the CIB without the knowledge of those who attended the meeting and whether it is a plan to allow De Silva to get the shipments that are now detained by the Customs released, Gamini said that the DGC has powers to take any decision pertaining to Customs affairs.
“Since we are conducting investigations I cannot make any further comment,” Gamini said.

3 Comments for “Billion-Rupee Vehicle Import Fraud Continues”

  1. Athula De Silva

    Ethical companies cannot do business in this country. Same thing with spares where duplicates are brought is and masses get caught to using duplicates. How much lobbying is done rogues continue to do business.
    Harsha De Silva is a well knows fraudster. Customs chief is a close friend of this chap.

  2. Kamran

    What a den of thieves. Apparently even a court decision can be overturned/ignored if you are a leading racketeer and has ‘political’ pull ;you can hold the country to ransom with impunity. We are told the treasury is broke- no wonder when you have such corrupt top rung management in every important post we do not need any enemies from outside.

  3. Renu

    IUnvestigate whether top politicians are involved in the racket like in the Thenol case

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