Importers, freight forwarders lament coercion and imposition of high duties through issuance of Debit Notes (DNs) by officers of the Nigeria Customs Service (NCS) in a bid to meet the self-imposed revenue target of N1.4trillion on the Service for this year as against N1trillion by the Federal Government, reports Francis Ugwoke
For the management of the Nigeria Customs Service (NCS), the past few years have been true demonstration of commitment to national economic development. The Service has in the past two years set out to impose revenue targets that are above the figures given by the government. In 2012, the Service was given a revenue target of N800bn, but it sent out words to various commands given them a target of N1.2trillion. At the end of the year, the Service surpassed the target given by the government with a revenue generation of N870billion. However, it failed to meet the N1.2 trillion target. This year, government based on the good outing last year increased the target to N1trillion.
Expectedly, the management of the Customs again set a target of N1.4trillion, N400billion more than that given by the government. Indications are that the Customs is targeting at least to realise more than N1trillion. But the targets have been given different interpretations by stakeholders, apparently because of the negative implication on international traders where the money is coming from. Each year of revenue target comes with stern measures that will make international trade difficult, one of the reasons why importers, exporters and their freight forwarders have been bitter with the Customs management on revenue targets. Last year, the management of the Service was said to have imagined the trade volume for the year and imposed a duty benchmark on very category of import. This was first to check undervaluation as well as to ease duty collection at the ports. If the policy was not dropped by the Presidency following outcry from importers and concerned freight forwarders, the Customs would have probably been able to realise more than its target, top officials had boasted to THISDAY. Government had cancelled the policy since it was against fair practice in the system which requires assessment of duties based on value declared by the importer which is a combination of a number of variables, including the country of import, pricing regime and quality of the items. The duty benchmark was such that no matter which country a container of any particular goods came from, there is a fixed rate of duty for such items.
Politics of Revenue Target
The current trend in the industry is that the cargo traffic is low, a development which the General Manager, Nigerian Ports Authority (NPA), Capt. Iheanacho Ebubeogu attributed to the global economic recession. Ebubeogu said that the poor cargo traffic report was simply a reaction to the general global economic trends, particularly the situation in Europe, adding that it has nothing to do with ports efficiency or security crises, including the piracy menace on Nigeria’ s territorial waters and Boko Haram nightmare . Ebubeogu was reacting to views from industry watchers who had also attrributed the poor traffic to diversion of cargoes to neighbouring countries in protest against high shipping charges by the terminal operators and shipping lines in the country. However, critics of the Customs revenue target said that the management failed to consider dwindling traffic in the ports while giving express order to Commands to meet high revenue targets. The critics accuse the management of playing to the gallery as a way of trying to please some top officials at the detriment of Nigerian importers. A visit to the ports indicates lamentations from freight forwarders whose importers have lost their consignments as a result of imposition of high duties, terminal and shipping charges. The result is that so many of them are waiting to negotiate with relevant offices to get them back as auction award after heavy ‘settlement’ that will go to private pockets. Those who are unlucky will lose their goods.
Revenue Targets as Nightmare to Importers
Freight forwarders who spoke to THJISDAY said that the implication of revenue targets given to various commands in the country is that importers are forced to pay duties not based on the value of their imports but on what the Valuation Officers feel is appropriate. Although the issue of duty benchmark is rested officially, freight forwarders are lamenting that this is being implemented by some officers in other ways. They point to the issuance of Debit Notes (DNs) to most importers on every consignment which duty had been calculated by the Destination Inspection Agents (DIAs). A one time top official of the Council for the Regulation of Freight Forwarding in Nigeria (CRFFN) told THISDAY that this attitude by the Customs leadership to please the government was responsible why some leaders of associations of customs agents decided late last year to support the extension of the contract of the DIAs at a time that Customs had prepared to take over. According to him, there may still be another extension.
He said “the present management of Customs is milking importers dry in order to please government. That is why there is high cost of living because the importers in an attempt to recover money spent at the ports raise prices of their goods either as finished products or raw materials”. He said that the management of the Customs need to understand that value of goods either in 40ft or 20 ft containers cannot be the same even if such items come from the same country, adding that this was the point that led to the suspension of duty benchmark.
Other Benefits Side of Revenue Targets
As much as revenue target is being criticized, industry watchers say it is one strong measure that can really check a lot of malpractices in the system. A retired customs officer who pleaded anonymity said that it forces commands to wake up to their responsibilities. According to him, officers will be careful negotiating ‘settlement’ for private pockets when revenue targets are yet to be met. He said that officers expecting so much from importers or their customs agents who have problem of undervaluation will understand that they cannot insist on settlement when appropriate duties have been collected through the issuance of DNs, a development he said leads to more revenue yields for commands.
He added that importers who are apprehensive of the stern measure of the Customs on appropriate revenue payment try as much as possible not to undervalue through fictitious invoices or simply under-declaration or concealment since such fraudulent practices would be discovered during examination and DNs raised on such goods.
Stakeholders Demand Caution on Revenue Target
Importers and freight forwarders who spoke to THISDAY cautioned the Customs against arbitrariness in their statutory responsibility. Freight forwarders who believe that the target is unrealizable because of the low economic trend that has impacted negatively on international trade warned customs against imposition of DNs that will end up wiping the gains of importers .
They said that Nigerian consumers will be the ones that will suffer the effect as importers will attempt to raise prices of such goods in order not to be at loss. A freight forwarder, Chief John Odibo told THISDAY that many importers have abandoned their goods at the ports because of the amount being demanded by the Customs as DN , adding that this is not the best for the country. Odibo said that some customs officers are using the issuance of DNs as a threat and mainly to extort them, adding that many importers in apprehension of losing their goods have been victims.