15 July 2012

Nigeria: Customs in Daring Measures to Meet N1 Trillion Revenue Target

In a bid to ensure that it meets the N1trillion revenue target for the year, the Nigeria Customs Service (NCS), has swooped on importers, visiting warehouses and auto markets, to investigate whether the owners followed due process by paying appropriate duties on their goods, reports Francis Ugwoke

With less than six months to the end of the year, the Nigeria Customs Service (NCS) is currently under intense pressure to meet the N1trillion revenue target given to it by the federal government for the year. Determined to meet their revenue targets, the Customs Commands in Lagos have introduced stern measures to check revenue leakages. Both Apapa and Tin Can Island Ports Commands have so far not been able to meet their targets as at June this year, although officials expressed optimism that they would make it before the year runs out. The two commands are the biggest revenue spinners for the Customs Service. This is because of the volume of trade in the area. To check revenue leakages as a result of fraudulent practices that may have denied the Customs money that would have accrued to it, the Federal Operations Unit (FOU) of the Customs is beaming a searchlight on importers and manufacturing firms to investigate payment of appropriate duties on their goods.

Revenue Records

As at June this year, there were doubts that Apapa and Tin Can Island ports as the biggest revenue earners for the Customs would meet their targets going by the figures so far generated. The two commands were given N576 billion target for the year. A breakdown shows that Apapa was given N312 billion, translating to a N26 billion monthly revenue. Similarly, the Tin Can Island was given a target of N264 billion, translating to N22 billion monthly revenue. However, the two commands have so far generated the sum of N241.5 billion. While Apapa Command generated the sum of N138 billion, the Tin Can Island generated N103.5billion. The figures show an improvement on what was realised last year during the same period, but short of the targets for the half year. For instance, Tin Can realised N90.4 billion during the same period last year. From the figures so far, the commands have to struggle to realise N334.5 billion to be able to meet the N576 billion targets. Although, there are doubts that this target will be met, officials of the Customs Command told THISDAY that they were optimistic about making up the balance.

The Public Relations Officer of Tin Can Island, Mr. Chris Osunkwo, told THISDAY on phone that his command has put everything in place to ensure that the target is met. Similarly, the Public Relations Officer of Apapa Customs, Mr. Timi Bomodi, also told THISDAY over the telephone that the command had no fear about meeting the target for the year.

Policing Fraudulent Importers

In a bid to ensure that they meet their targets, the two commands have been insisting on payment of appropriate duties by importers. Realising that many importers under-declare their goods, the commands, it was gathered, have been issuing importers with Debit Notes (DNs) to make up for all the under-valued goods. It has been the tradition of importers to under-declare, conceal or undervalue their goods in order to evade payment of appropriate duties. Although, the malpractices are discovered during examination, the importers still have their way by negotiating on what to pay as DN.

However, it was gathered that following the seriousness with which the leadership of Customs attaches to meeting the revenue target, officers are careful in giving ridiculous DNs to importers. A source said that customs officers who are discovered to have glaringly compromised on the issue of DNs to importers would have themselves to blame. And to avoid being singled out as a scape-goat, officers of the commands have been strict in issuing appropriate DNs. It was gathered that apart from appropriate DNs, those who have bad cases have had their goods seized. For instance, in Tin Can Island Port, which is regarded as notorious for various trade crimes, the Command has so far seized 37 containers made up of trade goods and vehicles. Osunkwo told THISDAY that among the items seized between January and June this year were under-declared vehicles, furniture, used tyres, cosmetics, shoes and bags with duty paid value of N160.2million. In Apapa, the Customs PRO said the seizures recorded as at June this year were 12, made up of trade goods. He said importers who had their goods impounded were those who chose to go contrary to trade laws.

Duty Benchmark as a Measure against Undervaluation

As at January this year, the Customs Service introduced a uniform duty rate known as duty benchmark. The idea was to ensure that no importer would cheat the government in duty payment through under-declaration, under-invoicing and outright concealment. However, the benchmark was suspended following a directive from the Presidency after importers and customs agents protested that the policy was illegal. The Comptroller-General of Customs, Alhaji Inde Dikko Abdullahi, had told THISDAY in an exclusive interview that the benchmark policy was "an envisaged trade experimental tool aimed at correcting a highly discrepant trade environment. As such, the benchmark was targeted towards this direction of corrective measures, hence, it was advisory and subject to fine-tuning"

Abdullahi had also explained that the policy was targeted at stabilising and promoting a "transparent, secure, predictable, fair, equitable and competitive trade environment". He added: "The benchmark has the capacity to reduce the incidences of frivolous and trade malpractices". Since the suspension of the policy, most of the customs commands have warned that they would enforce relevant sections of the Customs and Excise Management Act (CEMA) to check cases of under-valuation, concealment and under-declaration. This has put importers and freight forwarders in a dilemma. Now, the freight forwarders are lobbying in high quarters for the return of duty benchmark, a development that led to the constitution of a committee that is currently working on the issue.

Searchlight on Importers by FOU

The Federal Operations Unit (FOU) of the Customs, an enforcement arm of the organisation, in a bid to ensure that importers follow due process in their international trade transactions, has for sometime been visiting warehouses, auto markets and factories to investigate evidence of duty payments. The Public Relations Officer of the Ikeja Command, Mr. Uche Egesieme, told THISDAY that the Command had visited many warehouses and auto markets as a result. Egesieme who explained that the measure was to discourage importers from being involved in fraudulent practices, however, could not say how many companies or individuals have been indicted for any act of duty evasion on their consignments. A top Customs officer said what the FOU is doing is part of the post-clearance audit by the Custom, adding that every importer should be ready to answer queries on his goods even five years after delivery. The officer also disclosed that the target is to reduce the incidence of duty evasion by importers, either through claims of waivers, under-declaration, under-invoicing or outright concealment. "When we achieve this, it translates to more revenue for the Customs and the Federal Government," he said.

Lamentations of Freight Forwarders

Following the stern measures to check fraudulent practices, freight forwarders have been lamenting over the high DNs being issued on under-valued goods. A freight forwarder, Mr. Augustine Okesanya, said the DNs being issued by the Customs in Lagos were too high. "What they give as DN is so much that the importer can hardly make profit," he said. But the President of National Association of Government Approved Freight Forwarders (NAGAFF), Mr. Eugene Nweke, said the only thing that could solve the problem of high DN on any import was for the importer to do the right thing. Nweke said freight forwarders cannot be complaining of high DN when in the first place they rejected the introduction of duty benchmark, which according to him, would have saved importers from the problem. He explained that duty benchmark settles so much, as the importer would not have to settle anybody after paying his duty. He expressed optimism that duty benchmark which may be reintroduced as committee is currently working on it would address all issues affecting importers of trade goods.

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