According to the Excise Duty Special Provisions Act the customs department does not have power to collect such taxes.
But since 1990, the tax has been levied on companies, and several companies have challenged before the courts on the tax issue.
As per verdicts given four cases filed by companies, the Customs Department had to pay back Rs. 1600 million to those companies.
Recently all these have been revealed when Vasudeva Nanayakkara summoned the Department of Customs in an inquiry conducted through the Committee on Public Accounts.
In 1994, a draft Bill was drafted to enabling the Sri Lankan customs to charge excise tax.
However, the bill has not been approved.
Chairman of the Committee on Public Accounts Lasantha Alagiyawanna, has instructed Secretary to the Finance Ministry to report on what delayed the draft bill and it is said that due to intervention of some racketeers the legislation had been deferred for 25 years.