Tourist Board Authorities in response to allegations that the duty free concessions given to the hotel sector was being abused said that no system was air-tight, but that they had taken very strict measures to ensure that the stipulations were met with.

Undisclosed sources allege that the duty free scheme is being abused and that many of the vehicles which are imported are four wheel drive luxury vehicles which would cost around Rs. 6-8 million with duty the duty being Rs. 1-2 million rupees. They add that the vehicles thus imported are not being used for the said purpose, and that guidelines were being totally disregarded.

They also allege that some of these vehicles have been sold on open papers on profit ranging from Rs 2-3 million.

In other cases they maintain that the vehicles meant for tourists are being used by directors and owners of hotel and travel companies and other unauthorised persons. The loss to the state as a result of this gross abuse they allege is running into millions.

The Chairman of the Board H. M. S. Samaranayake said that the Board's Development and Planning Division which overseas the importation of duty free vehicles scrutinises the applications submitted. ''We even go as far as to cross check the audited statements of earning to ensure that the stated number of tourists brought by the organisation is not exaggerated,'' he added.

In terms of the requirements set out travel agents would only be eligible for the duty concession if they have a valid licence under the travel agents code issued by the Tourist Board prior to December 1994 and if they had brought into the country a minimum of 200 foreign tourists. Tourist Hotels approved by the Board too would be eligible to import vehicles without the payment of duty for operational purposes. The number of vehicles which can be imported under the scheme in either case would depend on how big a business the particular company has.

Mr. Samaranayake said that the importation not only required an okay from the Board, but also from the Customs Facilitation Committee, a high-powered government body headed by the Director General of Customs and that even the Treasury had its own monitoring mechanisms to ensure that the conditions were complied with.

The document on the importation scheme also maintains that the vehicles imported under this scheme are subject to random inspection by the Board and that any aberration would require the payment of exempted duty and taxes.

Mr. Samaranayake added that it was a requirement for the vehicle to be registered under the name if the company and that the Commissioner of Motor Traffic had been instructed to ensure that the company logo is printed on either sides of the vehicle, before such vehicles are registered.

He clarified that the vehicles could be sold at the end of five years following the payment of the duty at depreciated value. ''We have taken very strict measures,'' he said. According to Tourist Board figures 38 vehicles have been imported in toto under this scheme. 108 applications have been received from the hotel sector and 101 from in- bound travel agents from January. Of these 103 vehicles for the hotel sector and 58 vehicles for travel agents have so far been approved by the Tourist Board as being eligible for importation under this scheme.