The NCS Act, 2023 precisely section 69 clearly stipulates that the primary basis for Customs value of goods shall be the transaction value which it defines as the price paid or payable for goods when sold for export to the Federal Republic of Nigeria
The recent developments in the Nigeria Customs value modus operandi is taking us years back when values were allotted to imported goods or consignments with total disregard for the actual transaction value. This phenomenon is referred to as benchmarking, despite the fact that it was wrong then, nothing could be done about it because our laws particularly the then Customs and Excise management Act (CEMA) was not explicitly reflective of Article VII of the GATT but with the emergence of NCS Act, 2023; such value administration has not only become obsolete but also illegitimate.
The NCS Act, 2023 precisely section 69 clearly stipulates that the primary basis for Customs value of goods shall be the transaction value which it defines as the price paid or payable for goods when sold for export to the Federal Republic of Nigeria but in recent reality, it has become a common practice by officers in the service to pry into the systems and discretionarily challenge and alter the invoiced transaction value of these goods upwardly without regards for the damming consequences of such actions on the merchants, the economy and security fabric of our dear country.
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The authors of the Pre-Arrival Assessment Report of goods has become so vast in value of goods that they rely on third party websites to allot values indiscriminately to imports and they have been able to fix values for raw materials which prices fluctuates based on several indices of production, they disregard the actual transaction value as invoiced by the manufacturers or buying houses overseas and issue their own value, this they do with the claim that it's a directive from a higher authority in the system.
The Customs as an organization is suggestive of the fact that all the importers of raw materials are not honest in the declaration of their values there by willfully committing the crime of under invoicing when in actual sense they are the ones actually establishing and directly sponsoring the crime of over-invoicing which in itself does more harm than good. The point of view of the officers perpetrating this act is that they are trying to boost government revenue but rather they are giving unscrupulous organizations the lacuna to carry out capital flight and such fund can be used to sponsor terrorism while at the same time the capital that are supposed to be invested within would have been taken out to be develop other economies.
More so, this action is illegal because it is at variance with section 69 of the NCS Act 2023 as earlier mentioned and illegality tends to breed nothing good other than negativities and since the prices of these raw materials are subject to human control, personal aggrandizement has become the other of the day, the prices allotted to each companies and individuals for certain items is dependent on their relationship the officers and what they are able to give.
Presently, the declared values for items like Polypropylene Homopolymer, Polypropylene Copolymer, Random Copolymer, High and Low Density Polyethylene and the likes are hovering between 1,000.00 to 1,200.00 USD per metric ton as fixed by these officers instead of the market price that is presently around 800 to 950 USD per metric ton depending on whether they are able to source directly from the manufacturers or other third party buying houses and these prices also vary with the sales contracts between the importers and the said buying houses.
The best way of verifying prices of the goods especially raw material for manufacture that is presently being affected by the deliberate value tinkering by the customs is to use the invoice directly from the manufacturers (the ex-factory price); this is very simple, we have local importers that has the resources and purchases these materials directly from the manufacturers, it is their value that should be used as a basis to gauge other values at or about the same time of importation instead of officers to use discretion and very high and speculative prices gotten from third party websites that has no relationship with either a buying houses or the manufacturers.
The officers at PAAR Ruling Centre has no reason whatsoever to uplift the value of items and whoever gave such directive should immediately rescind it, it is counterproductive and also spurring massive extortion as well as creating an unbalanced playing ground for importers who do not know who they can contact within the system to negotiate, handout and get a relief from the high value. In addition this unwholesome practice is creating a bad impression of the Nigeria Customs to the international community since the person behind these business are selling out our country in the bad light of the such dastardly imbroglio.
The management board of the Customs should take the advantage of AI to ward off human discretion and the limitation inherent with human knowledge and allow technology make the clearance system a better success, they should stop the present random benchmarking by officers especially at pre-arrival stage and allow the importers the right to challenge value opinions of officers at post clearance level if necessary.
The massive investment in infrastructure done by the government on the customs is being weakened by the indecisive stance of those in authority except they are deriving certain benefit from the present arrangement. Until September 2023, we had the price verification system (PVS) engineered through the trade window, this system helped to eliminate deficiencies that is associated with customs valuation, it also put a plug on both under-invoicing and over-invoicing as well as reduced the massive extortions associated with value issues in the system and since it was abrogated a lot officers have become valuation experts relying on third party websites and their discretion to allot value to goods disregarding legitimate and attested invoices from manufacturers and traders.
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The Manufacturers Association of Nigeria (MAN) are not helping matters, they have become complicit on these issues, despite all the stakeholders meeting they hold and discussion that follows nothing seem to change. We would have expected them to take pro-active measures like writing the Customs management and giving them ultimatum to stop such illegalities since it affects practically a vast majority their members and if the Customs refuse do the needful, the Customs should be taken to court, the laws are clear and should be adhered to irrespective of whose guts is hurt.
To the DG of Manufacturers Association of Nigeria (MAN) some of us are available if they are willing to fight and protect rights of their members and to the CG of Customs we are equally willing to expose the high handedness of some of his officer especially the ones that tend to malign the good image of the Nigeria Customs Service robbing the service of accolades it deserves for good works.
I implore the Comptroller General of the customs to act swiftly in addressing this one out of many issues that has fundamentally affected both the image and operation of the customs department.
*Mr Tokunbo O Olubodun (08023342608)
