Six years after the expiration of the Destination Inspection (DI) contract formerly handled by private companies, the Federal Government through the Nigeria Customs Service (NCS) has failed to put an end to the collection of 1 percent Comprehensive Inspection Scheme (CIS) introduced at the beginning of the contract to pay for the services rendered by the DI service providers.
Businesses are crying out that the continued collection of 1 percent CIS charge alongside import duty on the same cargo means manufacturers bringing critical production inputs and other importers bringing finished products through the nation’s seaports currently pay double taxes to Customs.
“It is a deceitful aberration to take 1 percent CIS charge for a job Customs officers were trained to do. In other words, shippers are paying Customs twice,” said Jonathan Nicol, president of Shippers Association of Lagos State, in an interview with BusinessDay.
“Shippers are upset with the government policy because all the problems in the system are generated by the Federal Government that puts tags on the neck of all the agencies to bring billions of naira annually,” Nicol said.
The Federal Government, in line with the port reform agenda which started in 2006, had entered into contract with Scanning Service Providers (SSPs) including Cotecna, SGS and Global Scan saddled with the responsibility of approving Form M, issuing Risk Assessment Report (RAR) and scanning goods imported into Nigeria.
The contract, which was based on build, operate, own and transfer (BOOT) regime, allowed the DI agents to acquire multi-billion dollar mobile and fixed scanners for electronic examination of imports at the ports and border stations allocated to them. It also allowed for the collection of 1 percent CIS on imports by Customs, which was subsequently remitted to DI service providers as service charge.
At termination of the contract, the scanning machines were handed over to Customs, but the machines have not been functional till date as Customs chose manual and 100 percent physical inspection of cargo over putting the facilities into use to fast-track cargo examination at ports as it is done in other countries.
Meanwhile, Customs replaced RAR document issued on imports by DI agents with the present-day Pre-Arrival Assessment Report (PAAR), a cargo clearing tool introduced by Customs in 2013, issued on imports before the arrival of the cargo.
BusinessDay checks show that at the arrival of the cargo, importers pay 5 percent VAT computed by taking the Free on Board (FoB) and total Cost Insurance and Freight (CIF) value, together with 7 percent port development charge, 1 percent ETLs surcharge before getting the VAT.
Today, importers are still paying the 1 percent CIS charge when the scanning machines that are supposed to go with it are no longer functional in the ports and border stations, said Tony Anakebe, managing director, Gold Link Investment Ltd, a Lagos-based clearing and forwarding company.
“The 1 percent surcharge comes from FoB. For instance, if an importer’s goods is worth N10 million, he will pay 1 percent, which equals N100,000, multiplied by the volume of cargo that comes to the port per annum. This shows that Nigerian importers are losing a lot to CIS charge,” said Emma Nwabunwanne, a Lagos-based importer.
Anakebe, who questioned the continued collection of the charge, said the management of Customs needs to define the purpose and to whom the money is remitted, adding that importers need to know if the monies are paid to government, retained by Customs or given to unknown DI agent.
“Customs needs to scrap PAAR document and involve in 100 percent destination inspection scheme. They need to scrap the 1 percent CIS charge because shippers cannot consign a contract to Customs for the job they are trained to do. They went through the training school for one year on HS-Code, risk assessment and duty preparation. It is their statutory function to levy cargo. In addition to all these monies that they are making is the 7 percent of Customs annual revenue given to them by the government,” said Nicol of Shippers Association of Lagos State.
Nicol, who blamed government policies for encouraging corruption in the system, described Nigeria Customs as one of the richest agencies in Nigeria, even richer than Benin, Ghana and Togo.
“We want our goods, which are our lifeline, and the more Customs holds our goods, the more problem we have,” he said.
AMAKA ANAGOR-EWUZIE
