Rip-off by the Customs Service

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In order to encourage local manufacture of vehicles to enhance job creation and save foreign exchange, the federal government introduced the automotive policy with the attendant high duties and levies for imported vehicles, but the high charges have created a loophole for the Nigeria Customs Service to take advantage of, writes Chinedu Eze

Car dealers and Nigerians whose newly bought cars were seized by officials of the Nigeria Customs Service (NCS) are groaning and complaining to anyone who could possibly and urgently solve their problems, hoping for succour from the government of the day.

Sporadic but consistent incidents that have taken place, especially since last year is the seizure, harassment and sometimes shooting of people who bought new cars by customs officials who mount blockade at various major roads in the country.

THISDAY investigations reveal that most often customs seized cars, even the ones with necessary documentations, which duties have been paid on, the owner is forced out of the vehicle and may be allowed to take his personal belongings and the car taken away; unless he pays whatever duty they want him to pay at that moment. Sometimes, when customs officials take such cars away the owner may not get them again.

Informed source told THISDAY that since the introduction of automotive policy, which was aimed at encouraging local vehicle manufacturing there has been increase in tariff by government to discourage importation of fully manufactured vehicles, so customs levied 35 per cent duty and 35 per cent levy on imported vehicles. What this means is that if you import a car at whatever price, you will pay a 70 per cent of the cost as tariff.

Customs deducts these charges not from the actual price of the particular car but from a given $56, 658, which is the organisation’s baseline that determines its charges. So no matter how much the car dealer bought the car, the charges are based on the customs $56, 658.

An informed source familiar with the import business and customs activities told THISDAY that the automotive policy is not working but some individuals and organisations are using it as conduit to bring completely manufactured vehicles, pretending they are bringing in completely knocked down parts (CKD) to assemble or manufacture cars locally, they are actually importing vehicles at five per cent duties charged for CKD, so they cheat government by paying five per cent duties, then they frustrate the plan by government to ensure that in the foreseeable future about 70 per cent of vehicles used in Nigeria would be manufactured locally.

“They import what they call semi-knocked down and pay five per cent duties and we pay 90 at our own price. We buy Toyota Prado SUV from Dubai and pay the cost of freight but customs doubles the charges for us and we pay as high as N18 to N19 million duties on one Prado. They said this is to discourage assembled cars in Nigeria, but how many people are manufacturing vehicles in Nigeria? It is only Innoson; others are pretending they are manufacturing or assembling vehicles but bring in fully manufactured vehicles and per only five per cent duties.

“You cannot buy any vehicle from Lagos and leave the state. Customs will seize it on the road. Customs has 16 check points from Lagos to Benin; from Benin by-pass to Asaba they have eight, there are three check points between Owerri and Port Harcourt, between Benin to Warri there are four check points and between Warri to Port Harcourt there are six check points,” the source told THISDAY.

The source also said that between Ibadan to Ife there are four check points and between Ife and Akure there are three.

“But do you know the irony? There are extremely very few checkpoints in northern part of the country. In fact, you cannot get up to eight checkpoints in the whole north. You can cross check this I am telling you. There is one checkpoint from Enugu to Onitsha, four from Enugu to Port Harcourt, two from Umuahia to Uyo; all these are waiting for those that bought new vehicles. They clamp down on vehicles manufactured from 2014 till date. They know how to find the actual price of these vehicles and other necessary information. Just take in the chasis and identity number and put them on the internet and all the information you need will be there. But customs will not do that; rather they will ask you to get the information, to bring all the documents to trace the profile and provenance of the vehicle. So all the companies that claim to produce vehicles locally are just deceiving government; it is only Innoson that is producing vehicles here,” the source said.

The source stressed that by not abiding to international rules Nigeria Customs Service is frustrating easy way of doing business in Nigeria.

“Recently an expatriate bought a new Prado SUV and as he was driving the car to the site where he was working, customs stopped him and seized the vehicle. You cannot imagine how frustrated and disappointed he felt. Also a clergy who was going for a burial ceremony was stopped that way and the car taken away from him.

“We used to pay N9, 223, 500.00 as vehicle duties, now that amount has doubled because of the low value of the Naira. For example, early last year the duty we paid for a Prado is this: import duty, N390, 6018; comprehensive inspection supervision scheme, N111, 601; National Automotive Council fee, N3906018; surcharge, N273, 422; Ecowas Trade Liberalisation Scheme (ETLS), N55, 801, VAT, N970, 646; total: N9, 223, 506. But this was in 2015. What is unfortunate about all these is that it is customs that determine the price of the vehicles from their books, but while they placed their price at $56, 658 for Toyota Prado, we bought that vehicle at $34, 000, but customs will use their own amount to calculate the duties. The duties above were paid when exchange rate was N194 per dollar, but now the exchange rate is double that of last year. So there is no way business can grow,” the source said.

Another informed source who spoke to THISDAY observed that Nigeria is fond of introducing laws that are difficult to implement and people by-pass such laws by bribing their way out, thus making money for those who implement those laws at the expense of government.

“When customs officials stop you at a check point and ask you to pay N18 million as duties, you will be very happy to give them N5 million, so they, as individuals, are making huge money from Nigerians and it is even worse now despite the campaign against corruption. The major problem with them is that they are contributing in slowing the nation’s economy. They are contributing in the current unemployment. They are contributing in the closing down of businesses. Many of us have hope that things will be positively different under this administration, but I can tell you, what customs is doing is severely hurting businesses,” another source told THISDAY.

The source noted that the immediate past Comptroller General of Customs, Abdullahi Dikko had warned customs officials not to mount roadblocks on the highways but that warning seemed to be ineffectual. The source also observed that customs officials know everything about where both the new vehicles and second hand vehicles, popularly known as tokunbos come from. Dikko was said to have threatened to punish those officials who stay on the highway to collect monies and seize people’s cars.

In March last year, shortly before the new administration took over, Dikko had warned that customs should stay away from roads in the hinterland. He reminded them then that the ban on roadblocks and checkpoints by customs personnel in the hinterland within the country was still in force, adding, “It is not dignified and it is not in our character to mount road blocks in the hinterland.”

It is the view of many observers that the most effective way Nigeria Customs Service can carry its job is to go to the sources from where such vehicles come and insist that all duties are paid before the vehicles move to the shops. It is the same way customs go to the open market to seize wares, which obviously came through the borders where they are stationed all the time.

The source advised customs to sensitise the public so that they would know what every citizen in the country should expect about vehicle purchase. This will enable them to know what is expected of them in terms of vehicle documentation, adding that this would not only stop the embarrassment when they are suddenly stopped on the way but they would be able to know what to expect when they are buying a new car.

THISDAY spoke to the Head of Public Relations of Customs, Mr. Wale Adeniyi who said that despite the automotive policy there are no separate charges for new and old vehicles and noted that those who import cars do not complete the payment of duties, adding that customs cannot impound any vehicle which correct duties have been paid.

Adeniyi also said the law empowers customs to stop vehicles on the road anywhere, noting that some of the vehicles are smuggled.

On the proliferation of checkpoints in most part of the southern part of the country, he said that such are also there in the north, adding, “There are warehouses in Sokoto, Katsina and Kaduna and if you go there you will see vehicles stopped during patrol movement. Smuggled vehicles are kept in those warehouses.”

Like all paramilitary government agencies, the law may have given customs the elbow-room to abuse their rules and take it a notch higher to exploit innocent Nigerians; but when challenged they tweak the rules to cover their malfeasance.