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Customs, agents, dealers row over new vehicle import valuation system

By Sulaimon Salau
06 March 2022   |   2:55 am
Nigerians may need to brace up for higher cost of vehicles, as concerns mount that the prices of imported vehicles into the country will skyrocket,

[FILES] Imported vehicles

Imported vehicles at the car park
• Comptroller-General of Customs, Hameed Ali
• President, NCMDLCA, Lucky Amiwero

Nigerians may need to brace up for the higher cost of vehicles, as concerns mount that the prices of imported vehicles into the country will skyrocket if the new Vehicle Identification Number (VIN) automated valuation system is introduced by Nigeria Customs Service (NCS) sails through.

Already, the agents, freight forwarders, car dealers and the Customs have been at loggerheads over the new system, thereby obstructing smooth clearance of imported vehicles, with over 12,000 vehicles currently trapped at the seaports.

Importation of vehicles through the Nigerian ports has become a herculean task in the past few weeks, as the clearing agents and freight forwarders protest the introduction of an automated VIN valuation system.

Clearing agents had earlier grounded operations at PTML terminals and Five Star Logistics – the two Roll On Roll Off (RORO) terminals at the Tin-Can Island Port Complex.

The vehicle dealers in Lagos and Oyo states have joined the protest against the VIN valuation policy, describing it as anti-people.

According to the agents, the VIN valuation system had raised the duty payable on imported vehicles by almost 300 per cent, making it difficult for them to process the clearance of their vehicles from the seaport.

Already, about 12000 imported vehicles are currently trapped at the seaports as agents continue to down tool in protest of the policy. The trapped vehicles attract daily demurrages estimated at about N600million.

President of National Council of Managing Directors of Licensed Customs Agents, Lucky Amiwero, told The Guardian that the new valuation system contravenes the Customs and Excise Management Act 20 of 2003 based on the transaction value method.

He said: “You don’t have VIN valuation in the Customs laws, what we have is transaction value. For example, you go and buy a computer at $90 from America and you brought it to Nigeria, they said you should pay $500 dollars. That is what they are trying to do. What they are doing now is going to affect everybody. And that is why the car dealers have joined the protest.

“Customs is an implementing agency, they don’t make policy. What they are doing is illegal. If you are doing something on trade facilitation, it should not affect the value of goods. Customs did not have right to make any policy on value. They are currently under the Ministry of Finance, and the ministry cannot approve something, which does not comply with the law, because the VIN valuation has no basis in the law.

“They are only trying to use the VIN valuation to increase revenue because the government has told them to bring N3 trillion revenue this year. Are they importers? They should stop the policy immediately,” he said. Amiwero, has therefore signed a petition to President Muhammadu Buhari to intervene in the controversial VIN valuation system.

The petition stated that the VIN valuation by Customs contravenes the Customs and Excise Management Act (CEMA) 20 of 2003 based on the transaction value method.

It reads in part: “As the Chairman, sub-committee of the Reconstituted Presidential Task Force on the Reform of Nigeria Customs Service, on the treatment of valuation of vehicles, it was observed by the committee that the present ex-factory price is a component of Brussels Definition of Value (BDV), which is not in agreement with the provision of Customs and Excise management (amendment) Act 20 of 2003, that is supposed to be based on the purchase price (negotiated price with a buyer and seller of motor vehicles to have transaction element.

“The present ex-factory price has no negotiated component as purchase price, which is the transaction value by the importer, it lacks legal process in the criteria as contained in the treatment of Motor vehicle of Paragraph 1-6 of the Customs and excise Management (amendment) act 20 of 2003 and cannot be used but reviewed to contain features of the elements of Transaction/purchase pricing on Motor vehicles.”

Amiwero added that internet pricing is not accepted for the valuation of goods. “The internet price is not a negotiated price and not admissible as transaction price or purchase price, which has no negotiating capability, as there is no buyer and seller to attract the element of the transaction, which negates the doctrine of transaction value, and can not be used, which is clearly illegal and not acceptable as transaction value,” he stated.

But the Customs Public Relations Officer, Deputy Comptroller Timi Bomodi, described the protesting agents as ‘hypocrites’. He said the clearing agents protesting the introduction of VIN Valuation do not care about automation, simplification, harmonisation or even transparency in the system.

Bomodi said some of those who oppose the VIN regime was the same set of people who demand the automation of Customs processes.

“They demand standardisation but prefer randomised values. They demand simplification of trade processes but prefer a little complication here and there. For this lot, the contradiction in their demands makes sense so long as it translates to the payment of the least tax to the government. Their propensity to give advice but not to take it smacks of hypocrisy and should be called out by well-meaning Nigerians,” he said.

Bomodi argued that “In recent times, the consensus among clearing agents on the valuation of used vehicles appears to favour a harmonised value system that is consistent across all Customs platforms in Nigeria. They insisted that the same make, and model of cars should be made to pay the same amount of duty. These agents also demanded the discontinuation of the discounted value method, which allowed for the subjective considerations of officers in the Customs Valuation Unit who rely mainly on the book value of vehicles discounted at a fixed rate over time.

“In 2022, their prayers have been answered. NCS introduced VIN-Valuation as a fully automated tool devoid of human interference, capable of aggregating values from countries of export, consistent in make and model of cars for the purpose of assessing duty. This system uses Artificial Intelligence (AI) to pull together trade data representing a range of values consistent for each car make and model using the Vehicle Identity Number (VIN).

It is totally devoid of human inputs by NCS officers and enables easy and fast assessments necessary to process duty payments. Indeed, time-motion studies confirm a maximum of SIX hours between automated assessments and release of cars using VIN-Valuation,” he stated.

Vice President, Association of Nigerian Licensed Customs Agents (ANLCA), Dr. Kayode Farinto said: “I read with consternation the submission of the National Public Relations Officer of Customs and I pity Nigeria, asking myself, at what point did we get it wrong in this part of the country.
 
“It is sheer hypocrisy to condemn the position of few freight forwarders that exposed the level of non-professionalism in the management of Nigeria Customs Service but because anything goes in this part of the world,
 


“First and foremost, every freight forwarder was tired of giving bribes, inhuman treatment by men of NCS on the road, whenever they take delivery of their vehicles and the fact that there was no uniformity on duty payable on same categories, year of manufacture and even with same cubic capacities of vehicles, hence we all clamour that something urgently needed to be done on this issue,” he said.

He said that the VIN valuation is outrageous, it encourages corruption, lacks predictability, transparency, shortchanging government revenue and it does not help Nigerian economy.
 
“Permit me to digress because I was frontally campaigning for this in the last few months and it will interest Nigerians to know that the Comptroller General of Customs immediately keyed into our demand and directed that a Committee of Stakeholders be set up (which must include the Customs brokers and Customs officers) to meet and look into how this can work in the interest of the nation.
 
“However, some members of the management team vowed that it would never happen due to the pecuniary gain that would elude them if this process is allowed to come to fruition. And they never allowed the Committee to be inaugurated let alone be set up. I stand to be corrected because I remember that we wrote a series of letters reminding them of the need to set up this Committee but it was tactically avoided.

 
“Hence, the recent happening in the industry because, up till now, we have it on good authority that only a few analogue officers came up with values and data inputted in the VIN Valuation and even forgot due to lack of knowledge to put into consideration that legal notice 30, which is a law that allows every used vehicle to enjoy rebate as per year of manufacture. This rebate ranges from 10 to 50 per cent reduction on duty payable,” he explained.
 
Meanwhile, the Managing Director of Nigerian Ports Authority (NPA), Mohammed Bello Koko, enjoined the Customs agents to sheath their swords and embrace dialogue in resolving all their complaints against the new method of computing Customs tax on imported vehicles.
 
The NPA boss explained that any disruption in the supply chain would lead to higher cost and longer delivery times for shipments, adding that such a situation reflects negatively on the bottom line of all players involved in port business, including government agencies.

The National President, Association of Motor Dealers Of Nigeria (AMDON), Ajibola Adedoyin called for immediate suspension of the controversial VIN valuation system, describing it as fraudulent.

He, however, threatened to take legal actions if the policy is not suspended. Adedoyin said that the NCS automated VIN Valuation is full of errors and fraud, with a tendency of taking people back to the era of smuggling used vehicles into the country.

He said the implementation of the VIN Valuation would also make life unbearable to Nigerians, thereby destroying the gains recorded in the transportation sector. Adedoyin also said that using the VIN Valuation, in summary, contravenes the Customs and Excise Management Act 20 of 2003, which talks about transaction value (purchase price), which is the price agreed by the seller and buyer, adding that Customs has no right to impose value, which is not in line with the Customs and Excise act.

He noted that it is not possible for vehicles that come from different countries and arrive at the ports to have the same value considering the different commercial levels and freight costs.

“We, therefore, demand the immediate suspension of the VIN valuation system designed by Customs and review of same in consideration of the Nigeria Customs Act. We also demand investigation and prosecution of those involved in this fraud, which has caused panic and destabilisation of businesses at Nigerian ports.
   
“The NCS are witness to the fact that members of AMDON have been supportive of all government policies that would eradicate smuggling of used vehicles, as we have demonstrated in all our meetings with the Customs management and we have always pledged our support to the NCS in every area that would bring development to the country,” he said.
 
President, Shippers Association of Lagos State Lagos, Chairman (SALS), Jonathan Nicol said about 12000 vehicles are currently trapped at the ports due to protests that followed the controversial policy. He said those vehicles are already accumulating demurrage and terminal storage charges amounting to over N600million.
 
Nicol said: “The VIN regime must be discarded and be suspended immediately. They must make sure that all the trapped vehicles are given accelerated clearance from the ports without major demurrage because the challenge was not created by importers.”

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