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Customs frets over new verification mechanism

Nigeria Customs Service (NCS) has contended that the introduction of e-valuator and e-invoicing for import and export by Central Bank of Nigeria (CBN) to curb sharp practices in the port should have been jointly reviewed to make it acceptable to stakeholders, BAYO AKOMOLAFE reports

In 2021, the Central Bank of Nigeria (CBN) in a letter dated July 8, informed the Nigeria Customs Service (NCS) that it would deploy a mechanism for verification of prices of goods before allocation of foreign exchange at the point of e-Form M registration. In the scheme, all imports and exports operations require the submission of an electronic invoice (e-invoice) authenticated by the authorised dealers’ bank on the Nigerian Single Window portal – Trade Monitoring System (TRMS). In addition, the system expects to operate on a Global Price Verification Mechanism (GPVM) guided by a benchmark price in order to block revenue loopholes, thefts and other sharp practices perpetrated by importers, exporters and customs agents. The benchmark price is the actual spot market obtainable at the consummation of invoicing value of the good.

Relevance

However, less than one year, Customs complained that the policy, which seeks to benchmark the price of imported and exported cargo, had raised objections from critical stakeholders within and outside the industry. For instance, the Service’s Public Relations Officer, Deputy Comptroller Timi Bomodi, said that Customs should be the final authority on valuation, saying that CBN embarked on the introduction of the policy without first seeking NCS’s opinion.

Defence

The President, National Council of Managing Director of Licensed Customs Agents (NCMDLCA), Lucky Amiwero, had entertained the fear that the introduction of the scheme by CBN was a contravention of the Customs and Excise Management Act (CEMA). Specifically, Amiwero explained that the new system was in breach of CEMA Act 20 of 2003 on the valuation of goods, and CEMA Act C 45 of 2004 for the procedure of import regulation and export. Based on this, Bomodi said that CBN and Customs should have jointly reviewed the policy to seek a middle of the road approach, not only to make it acceptable to stakeholders, but to meet global trade best practices. According to him, the practice world over was to domicile adjudication on Customs values for import and export within the Customs administration of every country. Bomodi said: “It has come to our attention that there are reports suggesting the Nigeria Customs Service (NCS) has acquiesced to the introduction of the e-valuator and e-invoicing for import and export businesses in Nigeria by Central Bank of Nigeria (CBN). “We wish to state that this is incorrect. The service still stands by its earlier submissions on the matter as was clearly communicated to the House of Representatives Joint Committee on Customs and Excise, Banking and Currencies on March 3, 2022.” The spokesman stressed that the joint committee had directed that all agencies with defined roles in the supply chain should meet to harmonise procedures with particular reference to resolving the issue of value for trade purposes. Bomodi stressed that NCS was up to its statutory functions and had a vibrant valuation unit under the tariff and trade department, whose roles, among others, include the proper interpretation of WCO/WTO rules and agreements concerning the valuation of goods. Bomodi stressed that Nigeria, being a member of the World Customs Organisation (WCO), World Trade Organisation (WTO) and a signatory to international trade treaties, including Article VII of the General Agreement on Tariffs and Trade was constrained to abide by the principles contained in the policy.

Contention

He further explained that evoicing policies of every country must at all time fit into the global trade conventions and protocols, adding that Article VII stipulates that the value for customs purposes of imported/ exported goods should be based on the actual value paid or payable for them. This, he further explained, was commonly referred to as transaction value, adding that the agreement prescribed five other methods for arriving at Customs value where the transaction value is unacceptable. He said: “They are transaction value of identical goods, the transaction value of similar goods, Deductive value method, computed value method, and fallback method, applied sequentially. The NCS as a government agency aligns with the WTO Agreement on Customs Valuation (ACV) as it aims for a fair, uniform and neutral system for the valuation of goods for Customs purposes. “This conforms to commercial realities and outlaws the use of assumed values for customs purposes. It is our view that the use of benchmarking in valuation as proposed by the CBN policy will negate the aim of the ACV and result in disputes, delays and uncertainties.

New approach

“The WTO Trade Facilitation Agreement (TFA) remains the Service’s principle guide for trade facilitation. Therefore, NCS is always seeking new approaches to enable the expedited clearance of goods from our ports by adopting new technologies, harmonizing and simplifying our procedures all of which is purposely designed to reduce cost.” In addition, he said that this would be guided by the inputs of the relevant aspects of the parliament, who also have a say in the matter.

Last line

There should be a joint approach by government agencies to address trade facilitation that will be acceptable to stakeholders in line with global best practices.

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