Smuggling illicit fags on the rise
Customs detect cigarettes worth Rs.600 million in
stock was taken out of the Rank Container Terminal in
officials examining the seized cigarettes
Last week the media had the opportunity to witness a major detection
of illicit cigarettes made in the recent past. It was conducted by the
Revenue Task Force(RTF) of the Sri Lanka Customs. RTF officials who
seized a 40 foot container carrying four million cigarettes, neatly
packed in cartons and packets were displayed to the media. Several other
high scale detections made since January this year has given rise to
serious doubt as to whether attempts to smuggle illegal cigarettes into
the country had escalated.
Although the container was opened and displayed to the media last
week, it arrived into the country about two months ago. A vessel named
APL Coral set sail from Hong Kong carrying the long container among
hundreds of other containers to Sri Lanka via Singapore. The cargo
carrier arrived at the Colombo Port on July 2, 2014 and after necessary
clearance, the container was unloaded from the vessel with a number of
other containers carrying various types of cargo.
The RTF which has a long standing reputation among the special units
in the Department for thwarting many unlawful attempts to smuggle
various contraband into the country, such as dangerous narcotics,
textile and cosmetics and valuable metals was alerted about a particular
container that arrived in APL Coral. Customs Superintendent G B Gnanaraj
who is attached to the RTF received reliable information about a
container loaded with illicit cigarettes being sent to the country in
the aforesaid vessel.
Once the container was unloaded into the Port it was sent to the Rank
Container Terminal in Orugodawatta, where the RTF usually conducts
inquiries relating to suspicious cargo.
Although there was credible information that the container was
carrying illegal cigarettes, Customs officials decided to wait and
observe until a consignee turned up to clear the consignment.
Superintendent Gnanaraj who was tipped off by an anonymous informant,
took immediate action to inform his superiors Director RTF K D Nicolas
and Deputy Director Siripala Edirimanne.
Senior officials gave instructions to isolate the container from the
rest and leave it intact until somebody came to claim the goods.
The consignment which had been declared as Industrial Chilling
Machines, had been sent from a consignor in Hong Kong was addressed to
two local consignees.
The addresses of two local companies had been stated in the Cusdec
(Customs Declaration) from where the representatives will come and clear
the cargo. One company was Wijeya Industries in Rajagiriya and the other
was R M J Industries in Panchikawatta.
RTF officials waited almost a month and then realised that for some
reason or other, nobody was clearing this consignment. They had by then
started an inquiry to find the authenticity of the addresses and found
that companies mentioned in the Customs Declaration did not exist. As
suspected, false details of the consignee had been stated in the Cusdec
and this confirmed the fact that there was illegal consignment in the
Yet, officials waited for sometime expecting the consignee to turn up
at any moment to release the consignment and follow it up to reveal a
major smuggling syndicate.
Having waited more than two months, Customs officials decided to
prise open the container to see what was inside.
Instructions received from the Customs Director General Jagath P
Wijeweera,RTF officials opened the container in a closed door
environment. Although the opening of a container suspected to be
carrying contraband is exhibited to the media, Customs officials are
apprised of the contraband earlier. If such a container contains
hazardous elements like radioactive material or poisonous gases it will
not be safe for public viewing.
Proving that they had received valuable information leading to a
successful detection, the RTF found a large stock of illicit cigarettes
inside the 40 foot container, if by any chance it found its way into the
country under the very nose of law enforcement authorities, it would
have caused a considerable loss to the tax earnings as well as to the
health of unsuspecting smokers.
Nine 4X4 foot wooden chests were brought out of the container using a
forklift. It contained four million sticks of cigarettes in 200, 000
packets (each 20 sticks) in 20, 000 cartons (each 10 packets).
It was a brand named Top Mountain which is by law illegal to be sold,
stored or smoked in Sri Lanka. Officials said that this particular brand
which is popular in middle eastern countries had been seized on many
They found that the consignment of illegal cigarettes even consisted
of fakes of the same brand. While the lettering of the usual brand was
‘Top Mountain’ there were some other packets which bore the name ‘Top
Mountaain'. Pictorial warnings were depicted on the regular brand, the
fakes did not carry them. After carefully examination the stock was
handed over to the Customs Central Registry to be destroyed.
Superintendent Gnanaraj said although there were no consignees to
claim the contraband the inquiry will not cease. The RTF has commenced a
special investigation into the case where they have already recorded
statements from the local shipping agents who were in charge of the
cargo. He said it was the first time that a stock of illicit cigarettes
had arrived from Hong Kong. In the past illicit cigarettes had arrived
from Dubai and China. The RTF had already sought the cooperation of the
Hong Kong Customs to identify the consignor and details of the consignee
who was to receive this package.
It is suspected that since several major illegal consignments were
seized this year, the international syndicates have changed the
originating port to mislead local Customs officials. It is a common
practice followed by Customs officials that once something illegal is
detected, the sea route of that consignment is carefully monitored and
looked into in future instances if suspicions are aroused.
It is now identified that in most instances of smuggling heroin into
Sri Lanka is carried out through the Pakistan and Indian shipping
routes. Vessels that come through these routes are then subjected to
Also another suspicious fact was that all the wooden boxes in the
consignment bore the label 'Transshipment', which is normally be pasted
on cargo that is unloaded at a port of transit to be taken away by
another vessel to a different destination. Once the cargo is labelled as
'Transshipment' and sent to a warehouse fora temporary period, it is
highly unlikely for Customs officials to go through the consignment as
it is in transshipment and will not enter into the country. But there
have been instances where such cargo with transshipment labels were
found to be smuggled into the country from temporary warehouses by shady
clearing agents and wharf clerks.
Explaining instances where bulk loads of illicit cigarettes was
smuggled into the country, Customs Spokesman Director Leslie Gamini told
the Sunday Observer that there had been several significant cases
detected this year where fags worth over Rs.600 million was seized. The
last detection of four million cigarettes was valued at Rs.100 million,
approximately pricing one cigarette at Rs.25. Usually the detected
illegal cigarettes are valued according to the current street value of a
cigarette in Sri Lanka.
Although locally manufactured cigarettes are sold at Rs.28 or Rs.30
(depending on the brand) most of these smuggled cigarettes are sold at a
lower price to attract demand.
According to Treasury statistics, a cigarette being sold at Rs.28 at
present is subjected to a government tax of close to Rs.23.The
production cost of a stick is roughly about Rs.4 and some cents. It is
learnt that local individuals responsible for such illicit business had
been purchasing these illicit fags for at least Rs.5 a stick. They then
sell it at a lower price such as Rs.20 to Rs 25 earning a massive
profit.The revenue the government loses when such contraband enters the
local market is massive.
A senior official attached to Ceylon Tobacco Company(CTC) who spoke
on account of anonymity said that the bulk of such illicit cigarettes
entering the country cause a grave loss of revenue to the Government as
well as to authorised tobacco and cigarette manufacturers in Sri Lanka.
When such substandard and perhaps fake products are being sold at low
prices, consumers would eventually distance themselves from the locally
According to Director Leslie Gamini, the Customs RTF has publicised a
range of foreign cigarettes which are banned in Sri Lanka. They have
identified certain illicit brands like Top Mountain, Team, Arsenal and
Gold Flake which are commonly seized at seaports and airports.
Importation of cigarettes is banned in Sri Lanka according to the
Tobacco Tax Act No. 08 of 1999 except for duty free importation for
purposes like distributing among diplomatic missions in the country and
to be sold at duty free shops at the departure lounge of the airports.
Even foreign tourists and perhaps locals returning from overseas
unknowingly bring foreign brands of cigarettes which is illegal
according to the law. Although this law is not being implemented by the
authorities it is illegal to smoke a foreign brand in the country
whether somebody purchased it or received as a gift.
According to Customs statistics, the RTF had seized 6.84 sticks of
illicit cigarettes in 2013 valued at Rs.171 million. In 2014 from
January 01 to date the RTF had seized 24 million sticks of illicit
cigarettes valued at Rs.600 million which is a large amount considering
the fact that it was for nine months. Some of the major detections were
in January, February, March and June when the largest in local history
was reported which was 4.5 million sticks of cigarettes valued at Rs.126
Director Gamini said that these seized stocks will be handed over to
the CTC to be destroyed. Sometime ago when illicit cigarettes were
seized they were sold at public auctions. But this law was changed by
the Treasury several years ago and the CTC was ordered to pay a kind of
a reward of 80 cents per stick of illicit cigarette to the Customs and
then handed over to the CTC for disposal.
The seized cigarettes are destroyed by the CTC in the presence of
Customs and Excise officials in a controlled environment. The fags
bought by the CTC are crushed in a special grinder or crusher and the
residue will be sent to a private cement manufacturing company in
Puttalam or Trincomalee to be destroyed in gas burners.