🚗 Vehicle Import Sri Lanka 🇱🇰: Cross-border LCs Loophole Blocked by Customs

⭕ Cross-border LCs are LCs opened in a third country such as 🇸🇬 or 🇦🇪, while the vehicle ships from a different export country like 🇯🇵 or 🇬🇧.

⭕ This structure allows importers to avoid declaring the true purchase price by bypassing endorsement by a bank in the actual export country.

⭕ According to importers On May 27, 🇱🇰 Customs suspended the clearance of vehicles under such LCs, citing non-compliance with the 2013 Gazette No. 1804/17.

⭕ The Vehicle Importers Association says 200–300 vehicles are now stranded at the Colombo Port, with another 300 in transit. Demurrage costs are increasing daily.

⭕ Importers claim the cross-border LC method has been an accepted industry norm for over a decade, even among authorized agents.

⭕ They argue that if enforcement is necessary, it must be applied uniformly across the sector and with advance notice.

⭕ Customs says the move is to combat duty fraud: “The majority — not all — use a third country to under-value the vehicle to pay lower duty amount.”

⭕ Customs media spokesperson: “If you open the LC from 🇯🇵, you must state the actual price. But many use 🇸🇬 LCs for 🇯🇵 vehicles to declare less.”

⭕ “Japanese banks refused endorsement because declared values were lower than the actual purchase price. That is the issue.”

⭕ In the case of brand new vehicles, there is no risk of undervaluation due to the requirement that the purchase invoice be issued and certified by the manufacturer.

⭕ Customs & Import control department maintains this is in line with the Gazette, which mandates that the bank endorsement must be from the export country.

⭕ Import control department says a resolution is under discussion to release the stranded vehicles.
It will probably be a fine or an additional tax… so that the amount they tried to evade will be paid.

#SriLanka #VehicleImports