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VIN valuation: poor Customs planning, implementation distort port operations

AMG Logistics

Vehicle Identification Number (VIN) valuation policy introduced by the Nigeria Customs Service (NCS) has distorted port operation and has led to withdrawal of service by clearing agents. YUSUF BABALOLA writes

All over the world, automation is believed to be the panacea to corruption, inefficiency and driving efficiency. Automation eradicates human contact and entrenches efficiency.

To this end, clearing agents have over the years charged the Nigeria Customs Service (NCS) on automation of all its processes especially vehicle clearance out of the port.

The call for automation of vehicle processes, according to clearing agents was to eliminate human interference that breeds corruption between clearing agents and Customs officers.

However, Customs heeded the demands of the clearing agents and created the Vehicle Identification Number (VIN) valuation which started operation in February.

The VIN valuation system was used for allocating standard values to all vehicles coming into the country. The system, according to Customs, automatically determines the value of import duty that an importer is expected to pay on a vehicle immediately after the vehicle passed through a dedicated scanning machine.

During the unveiling, Customs said the VIN is an automated system that would aid the valuation of imported vehicles that comes into the country through the seaports.

Customs described VIN valuation as a system that uses artificial intelligence to allocate appropriate value and taxes to vehicles using the Vehicle Identification Number.

But since the implementation of the policy, it has generated a lot of controversies that have led to protests and withdrawal of services by clearing agents at the Ports and Terminal Multiservice Limited (PTML) and Five Star Logistics Terminal at Tin-Can Island Port Complex, Apapa.

They claimed that the system is giving wrong and outrageous values to imported vehicles. According to the clearing agents, importers now needs about $14,000 to clear a used car of $5000.

After so many efforts to get the Customs to amend the anomalies in the system proved abortive, the Clearing agents on Monday protested the new policy, grounding operations at PTML terminals and the popular Car Park C at the Tin Can Island ports.

The agents lamented that 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 port.

They, however, argued that internet price is not permissible in determining a negotiated price and not admissible as transaction price or purchase price, which has no negotiating capability.

In a letter addressed to President Muhammadu Buhari, dated February 25, 2022, by the President, National Council of Managing Directors of Licensed Customs Agents (NCMDLCA), Lucky Amiwero said that as the Chairman sub-committee of the Reconstituted Presidential Task Force on the Reform of the NCS, 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).

According to him, this is not in agreement with the provision of CEMA (amendment) 20 of 2003, which is supposed to be based on the purchase price (negotiated price with a buyer and seller of motor vehicles to have transaction element).

He said, “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, adding that it is clearly illegal and not acceptable as transaction value.

“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,” he said.

“On the World Trade Valuation Agreement, he said that the adoption of the Agreement on the implementation of Articles VII of GATT establishes a positive system of Customs Valuation, based on the price actually paid or payable for imported goods.

“The valuation method provides for a fair, neutral system of Valuation, conforming to commercial realities and outlaws the use of arbitrary or fictitious value method system of valuation, the Brussels Definition of Value (BDV) which is “NOTIONAL” concept that is imaginary persons or Ghost rather than the actual person involved in the import transaction, which is currently imposed by the Nigerian Customs Service(NCS) on all imported goods.”

Also, the National Association of Government Approved Freight Forwarders (NAGAFF), also thumped down the VIN valuation policy saying, it will fuel the smuggling of vehicles at the nation’s border.

Musa who bemoaned the Customs valuation policy said if the policy is not fine-tuned, it will lead to high smuggling of vehicles as importers will prefer neighbouring ports to Nigerian seaports because of the high duty payment.

“The implication is if we fail to address this, not only will there be job loss but smuggling will increase because its a way of encouraging legitimate importers to go back to smuggling,” Segun Musa Said.

Musa who bemoaned the Customs VIN valuation policy said since it has become too expensive, importers who would have wanted to go through the due process will be frustrated into cutting corners.

“We appeal to Customs to have a human face in their dealings. The world is advancing and we should move with it because no one will wait for us. The world has gone beyond Customs officers doing manual operations but rather, online Customs. We as clearing agents should input, pay our duty and get a code that will be used to exit the cargoes from the port without any hassles.

He said that rather than encourage trade facilitation, the new policy would rather encourage smuggling in of vehicles by importers who want to run away from paying the new ‘outrageous duties’ imposed on imported cars to the government through Customs.

“This will push importers away, companies will shut down while jobs would be a loss, and the government will be using limited resources to acquire guns to fight smugglers,” he said.

However, the Customs Service is now set to retrace its step by engaging the clearing agents through town halls meetings across the country over the controversial VIN valuation policy.

Bomodi said the town hall meeting will be held in Lagos and other parts of the country saying, he’s optimistic the meeting will resolve the impasse once and for all.

“Clearing agents have been engaged at PTML and Tin Can Island and their leaders have been spoken to. We told them what the service intends to do going forward and we will carry out more enlightenment on this issue by next week. We will be in Lagos for a town hall meeting with stakeholders and hopefully, we will resolve this issue once and for all.

“And even before the service commenced the VIN valuation policy, we engaged the stakeholders but, am surprised by the number of feedbacks we got. I don’t get it and I hope some people feed on controversy and this is unnecessary.”

Speaking on resistance to the policy, Bomodi said, “when people react the way they do, it is expected because they have been acting in a particular way and its difficult to change. We expect that there is going to be a lot of resistance but definitely we want then to know that they are the ultimate beneficiary of a system like this.”

When asked when the strike is likely to be called off, Bomodi said as soon as clearing agents are tired, they will return to work.


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