Authorized foundation for the valuation of imported automobiles in Nigeria | Dentons

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Introduction

The Nigeria Customs Service (the “NCS”) not too long ago introduced the suspension of the deliberate car identification quantity (“VIN”) coverage for the valuation of imported automobiles. The suspension was communicated in a round dated 7th March 2022 (the “Round”) and is efficient for a interval of 30 days, commencing from Tuesday 8th March 2022.

The Round nevertheless clearly states that the VIN valuation protocol continues to be operational however the truth that licensed clearing brokers are fiercely against the coverage. Given the controversy surrounding the implementation of the VIN valuation coverage, you will need to look at the authorized foundation for the valuation of imported automobiles in Nigeria.

The VIN valuation coverage – Transient background

The VIN valuation system was launched for the aim of allocating normal values to all automobiles coming into Nigeria. Based on the NCS, the system robotically determines the worth of import obligation payable on a car instantly the car goes via a devoted scanning machine. The targets behind the introduction of the automated scanning system are to extend effectivity, facilitate commerce and eradicate human contact that breeds corruption and inefficiency in cargo clearance processes in Nigeria. The targets of the VIN valuation coverage are little doubt laudable.

Regardless of these laudable advantages, the VIN valuation coverage has been fiercely opposed by clearing brokers and different stakeholders concerned in transport and importation of automobiles. The main objections are the legality of the coverage and the truth that the automated scanning system will considerably enhance the import obligation payable on imported pretty used automobiles by greater than 200% (2 hundred p.c).

Car valuation – Authorized framework

The Customs and Excise Administration Act No. 20. 2003 (“CEMA” or the “Act”) supplies the authorized framework for the valuation of imported items, together with motor automobiles. Particularly, Part 45(1) of CEMA supplies that the place customs obligation is chargeable on imported items by reference to their worth, the worth of such items shall be decided primarily based on the parameters set out within the First Schedule to CEMA, and obligation shall be paid on that worth as decided.

With respect to the valuation parameters, Paragraphs 1 – 6 of the First Schedule to CEMA lays down 6 (six) parameters for figuring out the customs worth of imported items. First, the overall place is that the customs worth of products purchased or imported to be used in Nigeria can be decided primarily based on the transaction worth of the products.1 Nonetheless, the place the customs worth can’t be decided primarily based on transaction worth, the Act supplies that the transaction worth of an identical or comparable items2 shall be utilized.

Different valuation parameters offered below CEMA for figuring out the customized worth of imported items embrace the sale worth of the products, the computed worth or the cheap worth – these strategies are to be utilized the place the transaction worth of the products or the transaction worth of an identical or comparable items can’t be utilized.

It is very important observe that Part 45 of CEMA and the First Schedule to CEMA domesticates Article VIII of the World Commerce Group’s (“WTO”) Normal Settlement on Tariffs and Commerce 1994 (“GATT 94”), which stipulates that the first foundation for figuring out the customs worth of imported items shall be the “transaction worth”. “Transaction worth” is outlined as the value really paid or payable for the products when offered for export to the nation of importation.3 The WTO settlement on customs valuation goals for a good, uniform and impartial system for the valuation of products for customs functions — a system that conforms to industrial realities, and which outlaws using arbitrary or fictitious customs values.

In view of the place of CEMA and GATT 94 on the valuation of imported items, the argument is that the VIN-linked valuation system launched by the NCS is predicated on an arbitrary valuation parameter and is due to this fact opposite to the provisions of the First Schedule to CEMA. Provided that CEMA is the extant Act that regulates the administration and assortment of customs obligation, the NCS can’t introduce a valuation system exterior the ambit of CEMA.

Conclusion

It’s instructive to notice that any valuation parameter adopted by the NCS for the therapy of imported automobiles or another imported items that’s opposite to the provisions of CEMA and different relevant legislations will possible be declared unlawful, null and void and consequently be put aside if challenged in a court docket of legislation. Given the clear provisions of CEMA on parameters for the valuation of imported items (together with automobiles), it’s due to this fact essential for the NCS to re-examine its place and be sure that the VIN valuation system is aligned with the extant provisions of CEMA. This can little doubt extinguish the present controversy and facilitate the conclusion of the laudable targets of the VIN valuation coverage.

  1. Paragraph 1, First Schedule to CEMA
  2. Paragraphs 2 and three, First Schedule to CEMA
  3. Article 1 of GATT 94



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