Anomalies in procuring tyres by SLTB, bemoans CEAT Kelani in Supreme Court

By S.S. Selvanayagam

The Supreme Court on Friday (11) granted leave to proceed with the rights petition filed by CEAT Kelani Holdings (Pvt) Ltd. against the Sri Lanka Transport Board for alleged anomalies in the procurement of pneumatic tyres.

The Bench comprising Justices granted leave to proceed for the infringement of the Petitioner’s fundamental right to equality and equal protection of the law. The matter was fixed for hearing on 16 March next year.

Petitioner cited Sri Lanka Transport Board (SLTB) Chairman M.D. Bandusena and the Attorney General as Respondents.

C.R.de Silva PC with Suren de Silva instructed by Paul Ratnayake Associates appeared for the Petitioner Company. Daya Guruge appeared for the SLTB and its Chairman.

The petitioner who claims itself as the undisputed market leader in the tyre industry in Sri Lanka states the SLTB on 14 February 2011 called for bids for the supply of spare parts for Tata and Ashok Leyland buses under a purported duty free concession project.

It alleges that the said bid document did not contain any technical specifications relating to the tyre kits as the SLTB had done in the past.

In terms of Clause 9.1 of the Bid document, selected Bidders will be entitled to exemption from all duties, taxes and levies imposed at the point of importation by the Customs, it states.

The Revenue Protection Order made in terms of the Revenue Protection Act exempts from Customs Import Duty for the parts and accessories of motor vehicles and locomotives imported by the SLTB and the Department of Sri Lanka Railways, on the recommendation of the Transport Ministry Secretary, subject to the approval of the Director General of Customs.

The objective of the said Revenue Protection Order was to exempt from Customs import duty for the spare parts for Ashok Leyland and TATA buses operated by the SLTB as the original spare parts for such buses are not manufactured locally.

As pneumatic tyres required for such buses were locally manufactured previously by Kelani Tyres PLC and thereafter by the Petitioner CEAT Kelani Holdings (Pvt) Ltd., it was obvious that the said Revenue Protection Order did not include the said tyres that were to be imported by the SLTB, petitioner points out.

Petitioner contends the importation and clearing of new pneumatic tyres as parts or parts and accessories of motor vehicles would be wrongful and unlawful and violation the provisions of the Customs Ordinance.

Petitioner states in response to the bids called for, the petitioner quoted Rs. 27,100 for CEAT (made in Sri Lanka) including all applicable taxes, duties and VAT and for CEAT made in India, it quoted US$ 215 whereas the contestant party Steel Impex Industries Ltd. authorised representative of Apollo Tyres Ltd. of India quoted US$ 223 (without duties and other applicable levies).

It points out that the bid price quoted by Steel Impex Industries Ltd for Apollo Tyres was US$ 8.70 higher than that of submitted by CEAT Ltd. India.

It also states that the bid price quoted for CEAT Kelani was Rs. 27,100 and for CEAT India was Rs. 39,685 (inclusive of Customs duty, VAT and other compounded taxes) whereas the bid price quoted for Apollo was Rs. 41,290 (inclusive these taxes and levies).

It claims the bid price quoted by the petitioner for CEAT Kelani tyres was Rs. 5,700 less than the bid price quoted for Apollo tyres and Rs. 1,278 less for CEAT India tyres.

Petitioned impugns the Clause 9.1 of the Bid document had been inserted into the bid document with the sole intention of wrongfully and unlawfully favouring Steel Impex Industries (Pvt) Ltd. and not with a bona fide intention/objective of securing the lowest evaluated price bid through a competitive bidding process.

Petitioner also bring to the attention that it came into the possession of a writing purportedly written by the Director/Chief Executive Officer of the SLTB in supportive of Apollo Tyres but when the Director was demanded for withdrawal of the said writing by the Petitioner’s lawyer, it was replied by him that there had been no letter which had been issued by him.

Petitioner complains it is crystal clear that there are various interested parties within the SLTB that are seeking to make wrongfully and unlawfully promote/favour the purchase of Apollo Tyres at a higher price by making/issuing false and misleading comments/certificates/representations relating to the Apollo tyres and to discriminate and marginalise it.