Ripples over Amendment of the Customs Act

08 Apr 2012

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Senate President, David Mark

of the Customs Act

In a move to amend the Customs and Excise Management Act, the Nigerian Customs Service is seeking greater autonomy and new statutory functions that will erode those of other agencies in the trade sector. But industry stakeholders are apprehensive about the far-reaching implications of some of the amendments to the Act, which has passed the second reading in the National Assembly, Francis Ugwoke reports

A bill which is currently before the National Assembly to seek an amendment to the Customs and Excise Management Act (CEMA) under which the Nigerian Customs Service was established is generating controversy and bad blood among the concerned industry stakeholders. CEMA is described as too outdated with most of the provisions unrealistic in view of new trends in international trade.

CEMA, which was signed into law in 1958, was later amended in 1970. But the amendment in 1970 is considered as nothing much to write home about since it simply had to do with change of currency, from pounds sterling to naira in respect of fines and fees that to be imposed on importers. But as it moves to amend the Act, the customs service as the sponsor of the bill, has†incurred the wrath of some agencies in the system by indirectly seeking to take over their statutory roles.

Power to Conduct Lab Tests

The changes which the customs management wants in the new bill, according to observers, could render these agencies irrelevant. Part 3 of the bill reads, “The Customs Service shall maintain a laboratory to conduct scientific testing and analysis of samples and in the event that such laboratory does not have the resources†or personnel to conduct testing and analysis for particular purposes, the customs service may utilise the services of a government or commercial laboratory.”

For the Standard Organisation of Nigeria and the National Agency for Food and Drug Administration Control, the above amendment would expectedly be bothersome. The two organisations already have laboratories where they carry out their tests on goods imported into the country. In fact, in an effort to enhance their monitoring and detection capabilities, both agencies, in recent times, have encouraged private investment in more laboratory equipment and techniques.

However, the customs bill which seeks powers to conduct scientific tests and analysis, in the view of stakeholders, directly or indirectly, will erode this statutory function of the two organisations. Instructively, SON and NAFDAC were among the agencies that were evicted from the nation’s ports and border stations on†the orders of the federal government last year. Although government had directed that the two agencies should be invited by the Customs Service when the need arises, indications are that the agencies have been left out of the loop by the NCS.

By implication, explained an observer, if the clause is included in the bill, the powers of both organisations will be usurped and could render them irrelevant. The other contention, they added, is that there will be a conflict of functions in which the victims could be importers and manufacturers. With a workforce of over 15,000, many believe that rendering both agencies irrelevant will not be in the best interest of the†national economy.

Inspection Services

Another clause that is raising eyebrows is the prohibition of pre-shipment and post-shipment inspection services for the Customs Service. The bill reads “The use of mandatory pre-shipment or post shipment inspection services for Customs purpose is prohibited. Any existing mandatory pre-shipment or post-shipment services used by the Customs Services or the Government in connection with the classification and valuation of goods or other customs control matters shall be terminated not later than December 2012.”

Explaining the implications, a trade expert said that the Customs Service wants to carry out these pre-shipment and post-shipment services without engaging any agency. The opinion of industry operators is divided on this matter. For instance, observers believe that direct inspection conducted by the Customs Service will save the nation several billions of naira that is currently spent as fees paid to these agencies. On the other hand, it could also impact the nation negatively because of the thousands of jobs that will be lost if the contracts of the pre and post-shipment agencies are terminated.

Role of Manager and Administrator

Under the new bill, which has passed the second reading in the National Assembly, the Customs Service is also seeking to be made the administrator and manager of all international trade activities. These include duty valuation, payment, collection, security, commodity product testing, import prohibition and waivers.

Part 3 of the proposed legislation, state, “The Customs Service may from time to time, employ consultants to provide services and advise on the adoption of new customs control measures, and for other purposes, provided that a consultant shall not be authorised to carry out customs control measures.”
Observers were of the view that the implication†of the clause is to grant the NCS autonomy on all matters pertaining to international trade.

Stakeholders React

While stakeholders who spoke to THISDAY on the new legislation were in agreement that there was a need to amend the Customs Act and bring it in line with current realities, they called on the National Assembly to guard against being lured or pressurised into including some of the provisions in the bill.

For instance, they argued that those provisions through which the Customs Service was seeking to erode the powers of other established agencies like SON and NAFDAC should be expunged for obvious reasons. “They cited the subsisting statutory conflicts between Nigerian Ports Authority, Nigerian Maritime Administration and Safety Agency, Nigerian Inland Waterways Authority in the shipping sector, which should be avoided at all cost.

A shipping expert and lawyer, Mr. Solomon Adesina maintained that it will be counter-productive to pass a new Customs Act that clash with the statutory powers of the two organisations. He said if the proposed bill is passed as is, it would conflict with the laws establishing NAFDAC and SON. “According to Adesina, “We don’t want a situation where the new Act would conflict with the provisions establishing SON and NAFDAC.”
He added, “What the Customs Service is seeking is unhealthy because it is praying the National Assembly to grant it powers to erode the powers of other agencies. If the bill is passed, there will be considerable conflict and those who will suffer are importers, manufacturing agencies and Nigerians.”

He called on the legislature to use its wisdom to expunge such provisions because of their negative  implications, adding that the Customs Service should continue to use the services of NAFDAC and SON as the need arises.

Besides, he believed that it will amount to a waste of public funds setting up new laboratories for functions already being performed by other agencies. He called on the Customs Service to invite both agencies in such areas it lacks capacity as directed by the Economic Team headed by the Finance Minister, Dr. Ngozi Okonji-Iweala.

On the issue of the quest for pseudo-autonomy which the Customs Service is seeking, freight forwarders were of the view that the National Assembly should also tread with caution.Chairman, Apapa Chapter of Association of Nigerian Licensed Customs Agents, Mr. John Ofobike, noted that while autonomy is good, it has its pitfalls. He said granting the NCS autonomy may be to the detriment of importers, adding that the management may introduce import duty rates that may not be the best for the economy. He stated that such autonomy will mean that it becomes difficult for government to control whoever is in charge of the organisation.

Another freight forwarder, who did not want to be named, added that looking at the ports industry, granting the Customs Service autonomy could worsen the corruption in the system. He said with such enormous powers, officials could emasculate importers, grant waivers to friends and cronies or for self interest indiscriminately. He added that there was also the possibility that once autonomy is granted, the issue of revenue targets could be comprised with no seriousness attached to improving revenue. “If you have a bad leader, once he is no longer answerable to the government, his actions will be self serving,” he said.

He added, “Right now the NCS is under pressure to meet targets so that its officials can retain their jobs. But if the leadership of Customs Service knows that it cannot be sacked (that is, it is tenured) by the government because it is autonomous, it will relax and take decisions that may not be in the best interest of the organisation. The reverse is that case if he is aware that his job is at stake if fails to perform.” He added that the ports industry is a revenue spinner that government can ill-afford to play with so that it is not misused for personal gains.

On the issue of inspection services, a customs broker, Chief Martin Ogbodo, was of the view that the legislature should allow the status quo to remain, adding that what government can do is to retain the power to fire and hire any inspection agent found wanting. Ogbodo argued that since Nigeria was not the only country that has introduced inspection services, the policy should be retained. He argued that the good side of the policy is the jobs the companies create, as well as value addition to the Customs Service as it cannot do everything, more so with the magnitude of corruption in the system.

Tags: Business, David Mark, Nigeria

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