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Customs: The Many Sides of Self-Imposed N1.4Trillion Revenue Target

21 Apr 2013

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Customs Comptroller-General, Dikko Inde Abdullahi

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.

Tags: Business, Nigeria, Featured, Customs

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