IN THE COURT OF APPEAL OF THE DEMOCRATIC SOCIALIST REPUBLIC OF SRI LANKA In the matter of an Application for an order in the nature of a Writ of Certiorari under and in terms of Article 140 of the Constitution of the Democratic Socialist Republic of Sri Lanka.

CA (Writ) Application No: 2196/2002

1. Free Lanka Trading Company Limited.

2. Joseph Kenny, Executive Director.

3. Athula Srinama, Wharf Manager. 4. Nalin Wijeratne, Wharf Executive. 5. Bertram De Silva, Stores Manager.

All Petitioners at Free Lanka Trading Company Limited, Prince Alfred Towers, No. 10, Alfred House Gardens, Colombo 3.

PETITIONERS Vs.

1. S.A.S.W.Jayatilake, Director General of Customs.

1a. P.S.M.Charles, Director General of Customs.

2. U. Liyanage, Assistant Director of Customs.

All Respondents at Customs Department, Customs House, Bristol Street, Colombo 1.

RESPONDENTS Before: Arjuna Obeyesekere, J / President of the Court of Appeal Counsel: Gamini Marapana, P.C., with Navin Marapana, P.C., Uchitha Wickremasinghe and Janani Peeris for the Petitioners Milinda Gunatilake, Senior Deputy Solicitor General for the Respondents Argued on: 6^th July 2020 Written Tendered on behalf of the Petitioner on 2^nd July 2019 Submissions:

Tendered on behalf of the Respondents on 9^th October 2019 Delivered on: 30^th March 2021 Arjuna Obeyesekere, J., P/CA The 1^st Petitioner, Free Lanka Trading Company Limited is a private limited liability company. The Petitioner states that inter alia it is engaged in the importation of wines, spirits and essences to Sri Lanka, the sale and distribution of liquor including Beehive Brandy and the export of liquor to India and Maldives. The 2^nd – 5^th Petitioners are employees of the 1^st Petitioner.

The Petitioners state that for a long period of time, the Gal Oya Development Board held the franchise to manufacture Beehive Brandy in Sri Lanka and that Beehive Brandy Essence was imported to Sri Lanka during that time by the Gal Oya Development Board. On its liquidation, the sugar plantation and factory had become an independent enterprise known as Hingurana Sugar Company Limited.

The Petitioners state that in 1997, the 1^st Petitioner became the franchise holder for the sale and distribution of Beehive Brandy in Sri Lanka. The 1^st Petitioner had accordingly entered into an arrangement with M/s Adet Seward of France, who was the license holder for Beehive Brandy worldwide, to import Beehive Brandy essence. The 1^st Petitioner had also entered into an agreement with Sri Lanka Distilleries Limited for the manufacture of Beehive Brandy. The Beehive Brandy manufactured on its behalf by Sri Lanka Distilleries Limited was sold and distributed by the 1^st Petitioner.

The Petitioners state that Sri Lanka Customs granted the 1^st Petitioner a Bond facility by permitting the use of a bonded warehouse facility at No. 168, Negombo Road, Peliyagoda. The agreement between the 1^st Petitioner and the 1^st Respondent, the Director General of Customs setting out the terms of operation of such Bond facility is marked ‘P3a’. In terms thereof, goods imported by the 1^st Petitioner are cleared by Sri Lanka Customs with the duty payable stamped on a form known as ‘To Bond Entry’. The goods are thereafter required to be transported to the Bond and stored inside the Bond. When the goods stored therein are required for local manufacture or sale, the 1^st Petitioner is required to raise a form known as ‘Ex Bond Entry’ and obtain the written permission of Sri Lanka Customs to clear the goods. Customs duties are paid only at the point the ‘Ex Bond Entry’ is raised. The goods are permitted to be taken out of the Bonded warehouse after the payment of duty and after the Bonding Division of Sri Lanka Customs has approved the ‘Ex Bond Entry’.

The Petitioners state that on 16^th May 2001, the Revenue Task Force of Sri Lanka Customs had checked the goods stored at the above Bonded warehouse of the 1^st Petitioner and the records maintained at the head office of the 1^st Petitioner. The Petitioners state th