Court red flags Customs’ CoPF remarks on vehicles case

• Court of Appeal bench raises concern Customs Additional Director General may have misled CoPF by claiming settlement talks were underway despite contrary position before Court
• Judges say statements to Parliament could amount to contempt of court if found to be untrue; Attorney General directed to obtain clarification from Customs
• Judgement in vehicle import detention dispute fixed for 18 Sept.; clarification on CoPF remarks due on 23 July

The Court of Appeal has directed the Attorney General to obtain an explanation from a senior Sri Lanka Customs official after expressing serious concern over statements made to Parliament’s Committee on Public Finance (CoPF) regarding ongoing Court proceedings in the high-profile dispute over the detention of more than 1,000 imported vehicles at Port of Colombo.

The issue arose when a three-judge bench comprising Court of Appeal President Justice Rohantha Abeysuriya and Justices Pradeep Hettiarachchi and Frank Gunawardena heard a series of writ applications last Friday (10) challenging Customs’ treatment of vehicle imports financed through cross-border Letters of Credit (LCs).

With the Court’s permission, a video recording of the CoPF proceedings held on 25 June was played during yesterday’s hearing. At that meeting, CoPF Chairman MP Dr. Harsha de Silva questioned an Additional Director General of Customs over the prolonged detention of vehicles at Colombo Port and sought an explanation for the delays in releasing them.

Counsel Nishan Premathiratne, appearing for one of the petitioners, submitted that the Customs official had informed the CoPF that a settlement was being discussed before the Court of Appeal and that the only outstanding issue related to the computation of demurrage.

However, counsel argued that the statement directly contradicted the position taken before the Court, where the Attorney General, appearing for the respondents, had informed the Court that no settlement discussions were taking place and that the matter should proceed to judicial determination.

Counsel further submitted that the contradictory positions reinforced the petitioners’ argument that Customs had failed to establish a legal basis for continuing to detain the vehicles, while Parliament had been given a different account of the status of the litigation.

The Court expressed extreme concern over the apparent inconsistency, noting that the Attorney General had clearly informed the bench that there was no settlement under discussion.

The bench also raised serious concern that, if the statements communicated to the CoPF were untrue, they could amount to contempt of court.

Without making any finding on the issue, the judges directed the Attorney General to summon the relevant Customs officials and obtain an immediate clarification regarding the statements made before the CoPF. The matter has been fixed for mention on 23 July for that purpose.

The Court also concluded oral submissions in the substantive challenge concerning Customs’ treatment of cross-border LCs.

Among the issues raised by petitioners was the contention that Customs is now releasing vehicles without requiring certification of import documents, despite previously relying on the absence of such certification to justify detaining imports.

Counsel further argued that the relevant Gazette Notifications do not define or identify the term cross-border LCs and that the regulations should therefore be applied uniformly to all forms of LCs, as had been the practice for many years prior to the present dispute.

It was also submitted that Customs itself determines and accepts vehicle valuations based on documentation from the country of original export when assessing duties, making its challenge to the validity of cross-border LCs inconsistent with its own valuation methodology.

Having concluded several days of oral submissions, the Court directed all parties to file written submissions before reserving judgement for 18 September. The matter will next be mentioned on 23 July for the Attorney General to clarify the statements made before the CoPF.

For the petitioners in the connected cases, President’s Counsels Ikram Mohamed, Sanjeeva Jayawardena, and Faiszer Musthapha appeared and made submissions.

The petitioner in CA Writ 847/25 was represented by Counsel Nishan Sydney Premathiratne, with Shenali Dias and Vikum Jayasinghe, on the instructions of Gamindu Karunasena.