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Customs Clarifies On Alleged Increase In Duty, Agents License Fees

Customs Clarifies On Alleged Increase In Duty, Agents License Fees

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The attention of the Nigeria Customs Service has been drawn to on-line news reports of a meeting which took place at Rockview Hotel Apapa, Lagos on Monday 26th September 2021. The meeting was purportedly called by members of freight forwarding associations and Customs Licensed agents, including executives and members of Association of Nigeria Licensed Customs Agents ( ANLCA), National Association of Government Approved Freight Forwarders (NAGAFF), and three other associations.

Among other things they were reported to have complained about an intended hike in license fees, arbitrary increases in Customs duty, hikes in the values of Pre Arrival Assessment Reports issued to importers, the conduct of Valuation officers, uncertainty or inconsistencies in tariff classifications for certain goods, frequent alerts, and the illogic of government giving revenue targets to Customs especially in an era of trade facilitation.

As a responsible government entity, the Nigeria Customs recognises and acknowledges the rights of Nigerians to freely organise,  assemble and associate for the purpose of articulating group goals, visions, and objectives. While congratulating these associations for the bold step they have taken to present a single face in canvassing for the betterment of the maritime industry as a whole, we will, for the benefit of the Nigerian public like to correct the numerous misrepresentations about the NCS contained in their release by stating the following.

There has been no attempt to arbitrarily increase the license fee of Customs Licensed Agents. It is important to note that the fees payable by Customs Licensed agents are as approved by law outlined in section 156 of CEMA as amended. The only recurse to a revision in fees can only be as dictated to by extant laws. 

Arbitrary increase in Customs duty. There are two main avenues for the adjustment of duty payable to government that a Customs officer can legally activate. Where the transaction value declared for an item is questionable and where the classification of the item is wrong. The former refers to the declared CIF value, while the later concerns the HS code for that item. Part II of the Common External Tariff prescribes ‘General Rules for the interpretation of the Harmonised System’.

There are six rules in total  and they provide clear, unambiguous guidelines for the classification of all goods under the CET. These rules are not subject to the interpretation of Customs officers alone as they are captured in simple English for the enlightenment of all persons equipped with the proper understanding of that language. In addition to the interpretative rules are chapter headings and the explanatory notes which are designed to further highlight grey areas both of inclusions and exclusions as deemed appropriate for classification purposes. 

The issue of value has also been comprehensively addressed in the WTO Agreement for Customs value adopted in Article VII of General Agreement on Trade and Tariffs, 1994. This agreement provides a Customs Valuation method  primarily based on the transaction value of the imported goods, also known as either the price

ACTUALLY PAID or PAYABLE for the goods when sold for export to the country of importation. 
In addition to the transaction value, WTO prescribes 5 other methods that can be applied successively. So the transaction value is followed by ;* The transaction value of identical goods* The transaction value of similar goods* The deductive value method* The computed value method* The fall-back method. 

In applying these rules for Customs valuation, the Service has noticed frequent attempts by importers, and, or their agents to falsify transaction values in order to evade the payment of correct duties. Indeed in recent times there has been sharp increases in shipping cost across the globe occasioned by the effects of the pandemic refs:https://www.wsj.com/articles/container-ship-prices-skyrocket-as-rush-to-move-goods-picks-up-11625482800https://amp.scmp.com/economy/china-economy/article/3147013/chinas-shipping-container-costs-hit-all-time-highs-andhttps://www.reuters.com/business/china-us-container-shipping-rates-sail-past-20000-record-2021-08-05/

Above links from Reuters, Wall Street Journal and others can be easily verified. 
The cost of freight alone is one out of three components which when added up, defines the value for duty. The others are the cost of the product itself and the insurance payable for the goods in transit, otherwise known as the CIF value. Where the value of the goods remain constant, but the freight rate changes, it will have an effect on the total CIF value of the goods assessed for duty.

In this case the transaction value must be a true representation of the actual monetary component of the exchange. In addition to this is the increase in exchange rate. Where all other components of value remain constant, the exchange rate alone can trigger increases in value for duty. 

It is therefore curious to observe individuals insisting on retaining the same historical values contrary to abundant current evidences. What the Nigeria Customs Service has been inundated with are fictional representations of this monetary component which bear no resemblances to present realities. In truth  a good number of Customs agents and importers have been connected to this unwholesome practice. 

We live in a world where authenticating documents submitted for the validation of Customs has been made easy by technology. The NCS has at its disposal the historical records of all imports/exports, importers/exporters and a comprehensive index of values submitted by importers themselves.

The Service has numerous resources at its disposal for the verification, authentication, and adjustment of submitted data. Often, when confronted with the truth, importers and their agents go through the typical routine of denial, anger, bargaining, and finally acceptance. 

We understand the frustration of some of these agents as reports reaching Customs Headquarters indicate a radical change in the trajectory of business practices at our ports and borders. This penchant for cutting corners as exemplified in false declarations and illegal deductions in Customs values are constantly checkmated by diligent officers intent on facilitating legitimate trade only. 

As agents of government we can only live to the billings and briefs issued to us by our supervising ministry. Revenue collection being one of our duties, is one to which we are wholly committed as attested to by our ground breaking achievements in current and previous years. We owe no organisation any explanation in our commitment to collecting revenue for government.

However, we are also mindful of the impact our actions can have on legitimate traders, that is why we have provided avenues for the expedited clearance of goods under fast track and other facilitative channels for businesses with unblemished records. We have also provide avenues for dispute resolution using the mechanism of post clearance audits. 

The Service takes serious exceptions to attempts by individuals or associations to intimidate, or blackmail its officers in the course of their official functions. While complaints and feedback are encouraged from agents and other members of the public, we reiterate our right to determine for ourselves frameworks for effective and efficient performances within the ambit of the law and executive orders.

The security situation in the country demands a dynamic approach to effective border management. The deployment of our assets are as dictated by intelligence and the risk profiling mechanisms of the Service. Those without skeletons in their cupboards have absolutely no reason to be afraid. 

Finally, the NCS awaits the success of their recommendations to government regarding revenue targets to Customs, so we can  concentrate on trade facilitation and anti smuggling activities alone. As always, our resolve for fulfulling our mandate is matched only with our determination for success and we remain totally focussed in this regard.

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