Understanding Customs Law in Sri Lanka: A Complete Guide

Sri Lanka’s customs law governs the import and export of goods, ensuring compliance with national regulations, promoting trade facilitation, and protecting the economy. This guide provides a comprehensive overview in a clear, point-by-point format.

1. Overview of Customs Law in Sri Lanka
   • Customs law regulates the movement of goods across Sri Lanka’s borders.
   • Governed by the Customs Ordinance, which dates back to 1869 and has undergone numerous amendments.
   • Enforced by the Sri Lanka Customs Department, under the Ministry of Finance.
2. Key Responsibilities of Sri Lanka Customs
   • Collection of customs duties, taxes, and other levies.
   • Prevention of smuggling and illegal trade activities.
   • Facilitation of lawful trade and promotion of economic growth.
   • Enforcement of trade agreements and regulatory compliance.
3. Customs Duties and Taxes
   • Includes Import Duty, Value Added Tax (VAT), Port and Airport Development Levy (PAL), and Cess.
   • Duty rates depend on the Harmonized System (HS) Code classification of goods.
   • Tariff concessions are available under Free Trade Agreements (FTAs) and special schemes.
4. Prohibited and Restricted Items
   • Certain goods are prohibited from import/export, including narcotics, counterfeit goods, and endangered species.
   • Restricted items, such as firearms, require specific licenses or permits.
   • Lists of prohibited/restricted items are regularly updated by the Customs Department.
5. Customs Declaration Process
   • Importers/exporters must file a Goods Declaration Form (CUSDEC) with accurate details.
   • Supporting documents include the commercial invoice, packing list, and bill of lading.
   • Declarations are verified for compliance before goods are cleared.
6. Customs Valuation
   • Follows the World Trade Organization (WTO) Valuation Agreement to determine the transaction value of imported goods.
   • Adjustments are made for insurance, freight, and other associated costs.
   • Incorrect valuation can lead to penalties and delays.
7. Customs Inspections and Examinations
   • Physical inspection or scanning of goods may be conducted to prevent fraud or smuggling.
   • High-risk shipments are prioritized for inspection based on risk assessment criteria.
   • Compliance ensures smoother clearance and fewer inspections in the future.
8. Penalties for Customs Violations
   • Violations, such as misdeclaration, smuggling, or underpayment of duties, result in severe penalties.
   • Penalties include fines, confiscation of goods, or legal proceedings.
   • Repeat violations can lead to blacklisting or suspension of trading licenses.
9. Dispute Resolution and Appeals
   • Importers/exporters can appeal against decisions or penalties imposed by customs.
   • The first appeal is filed with the Director-General of Customs.
   • Further appeals can be made to higher judicial bodies, such as the Court of Appeal or Supreme Court.
10. Reforms and Digitalization
    • Sri Lanka Customs has adopted digital platforms like ASYCUDA system for online submissions and tracking.
    • Efforts to improve efficiency include electronic payments, automated risk assessment, and trade facilitation measures.
    • Continuous reforms aim to align with global best practices and enhance trade competitiveness.

Understanding customs law in Sri Lanka is essential for businesses and individuals engaged in international trade. By following the legal requirements and leveraging available resources, stakeholders can navigate the system efficiently and ensure compliance.