Rs.48bn revenue target from vehicle imports in jeopardy: VIAL

 From left: VIAL President Sampath Merechige, VIAL Secretary Keerthi Gunawardane and VIAL Vice President Prasad Kulathunga
Pic by Kushan Pathiraja

By Nishel Fernando
The Vehicle Importers Association of Lanka (VIAL) claims that several officials at Sri Lanka Customs (SLC) are attempting to jeopardise the government’s revenue target to collect Rs.48 billion as revenue from vehicle duties by arbitrarily classifying hybrid vehicles as petrol or diesel vehicles, which would drastically lower hybrid vehicle imports into the country.

“During the past seven years, SLC cleared around 50,000 Suzuki Wagon R MH-555 vehicles as petrol/electric hybrid vehicles under HS Code 8703.40.28. However, since March 22, the same Wagon R cannot be cleared as hybrids because the Nomenclature Committee (NC) of SLC claimed those to be petrol or non-hybrid vehicles,” VIAL President Sampath Merechige told the reporters yesterday, at a press briefing in Colombo. As per the VIAL, the price of Wagon R could increase by an estimated Rs.200,000 if it’s classified as a petrol vehicle. The duties on the vehicle amounts to Rs.1.6 million at the moment, which is a sharp increase compared to Rs.0.8 million in 2017.

The NC acts as the body that delivers decisions for disputes on classification of the goods between SLC officers and importers.

He noted that Suzuki Wagon R MH-555 has been classified under the coding DAA (hybrid) of Japanese national vehicles category code.

He pointed out that if Wagon R MH-555 is not considered as a hybrid vehicle, a large number of vehicles operating on identical technology will have to be classified as petrol vehicles while only the ‘Toyota Prius’ hybrid can be considered as a hybrid technology as per interpretation of hybrid technology by the NC of SLC.
“Based on the decision taken by weak administrators of the Customs, in future it will not be possible to import any hybrid vehicles to Sri Lanka as hybrids even if they are accepted internationally,” a VIAL official warned.

In addition, the VIAL also believed that such a move discouraging hybrid vehicle imports would be a massive setback for the government’s green initiative.

According to VIAL Secretary Keerthi Gunawardane, the NC members lack technical expertise to issue judgements on classification of goods and he further claimed that the NC tends to weigh in on personal rivalry and taxation in their decision-making rather focusing on quality, technical aspects as well as manufactured status of goods.

The organisation claimed that a particular member of the NC has influenced the other members of the NC to agree to term Suzuki Wagon R MH-555 as non-hybrid in order to distract attention from the revenue leakages in SLC.

Merechige opined that the move by SLC would tarnish the government’s image among the public as Wagon R remains to be the most popular vehicle among Sri Lanka’s middle class due to its affordability, which he termed ‘the last affordable car for Sri Lanka’s middle class’.

The VIAL has already informed this issue to SLC Director General P.S.M. Charles in a detailed letter with an attached video clip explaining the technical aspects.
Following the letter, Charles granted a temporary approval to clear the Wagon R vehicles under the HS8703.40.28 as usual.

Further, she has advised the NC to submit a complete technical report on the technology of Wagon R.

However, the VIAL officials noted that uncertainty remains over the clearance of vehicles despite Charles’ orders as some SLC officials are reluctant to implement the temporary grant issued by her.

They also said that a particular NC member is attempting to mislead Charles as well as the finance minister on the matter.

“We urge that such highly technical and nationally sensitive decisions should be made by technically qualified people in the consultation with local experts considering the catalogues and technical specifications,” Merechige stressed.

The VIAL is considered a leading vehicle importing body in the country with over 360 importers as members.