Legal Framework for Addressing Customs Decisions & Obtaining Expedited Processing Under the NCS Act 2023: A Practical Guide for Import-Export Firms

1. Introduction:

Imagine a scenario where a Nigerian company, Fineboy International Limited (FIL), has entered into a contract with a Chinese supplier to import and supply urgently needed goods. Time is of the essence as these goods are essential for fulfilling contractual obligations to its clients. However, upon the arrival of the goods in Nigeria, FIL encounters hurdles related to tariff and valuation decisions made by the Nigeria Customs Service (NCS). This scenario underscores the critical importance of efficient customs dispute resolution and expedited processing for companies involved in import and export operations in Nigeria.

In such situations, importers like FIL must navigate the complexities of customs procedures while ensuring the timely delivery of goods to meet contractual obligations. Understanding the dispute resolution and appeals procedures provided in the NCS Act for addressing administrative decisions of the NCS and the prevailing practices outlined in the Enhanced Customs Clearance Procedures (ECCP) is essential for stakeholders facing challenges in customs clearance processes. This resource provides practical guidance on how import-export businesses can address disputes, expedite processing, and mitigate risks in customs operations.

2. Brief Introduction on the NCS Act 2023

The Nigeria Customs Service Act 2023, assented to in April 2023, stands as the cornerstone legislation governing customs matters within Nigeria. This comprehensive legal framework delineates the operations, powers, and functions of the NCS, shaping the landscape for importers, exporters, and all stakeholders involved in cross-border trade. Before its enactment, the NCS operated under a patchwork of outdated regulations, including the Customs and Excise Management Act (CEMA) of 1958. At the helm of this intricate system under the NCS Act, is the Comptroller-General of Customs. As the highest authority, the Comptroller-General orchestrates the administration, policy formulation, and implementation that drive the Nigeria Customs Service toward efficiency, compliance, and seamless international trade.

3. Enhanced Customs Clearance Procedures (ECCP) Overview:

The ECCP as published on the NCS website contains an introduction stating that the procedures outlined in the document may be subject to change owing to improvements in the system. The ECCP outlines the prevailing practices for customs clearance in Nigeria which stakeholders need to pay attention to. Key highlights include:

• Preparation of SGD: Declarants prepare a Single Goods Declaration (SGD) based on information derived from relevant documents, such as Bill of Lading/ Air Waybill/ Road Waybill, Packing List, Permit (where necessary), Insurance, Form “M”, etc.
• Payment at the Bank: After preparing the SGD, the importer proceeds to the designated bank with the assessment notice to pay the customs duty., with the bank confirming payment electronically to the NCS.
• Request Release: Post payment, the importer requests the release of the consignment from the NCS system, which is subject to either scanning or physical examination. The NCS system will not permit the release of goods if an outstanding duty has not been fully paid.
• Customs Control and Release: The NCS system determines the level of scrutiny for the consignment, categorized into Green, Blue, Yellow, or Red risk outcomes. Once “Customs Cleared,” the consignment can be claimed at the Terminal Operator, and a Customs Officer at the gate will confirm the exit of the consignment.

The ECCP includes a note that highlights the standard practices for resolving disputes and situations where an importer needs to speed up clearance procedures:

"The NCS system will not authorize the release of goods if any outstanding duties remain unpaid. However, should a discrepancy arise, it will be recorded in the Inspection Act, and the declaration will be amended accordingly. If a dispute persists, then established dispute resolution mechanisms come into play. These may involve allowing the importer to clear their goods under bank indemnity, submitting an application for a tariff/valuation decision to the Tariff and Trade Department of the NCS, appealing to the Honorable Minister of Finance, the World Customs Organization (WCO), or, as a last resort, taking the dispute to a court of competent jurisdiction."

4. Dispute Resolution and Appeals Procedure under the NCS Act:

Only until recently, there was no formal appeal procedure for dissatisfied individuals wishing to challenge the administrative decision of the NCS. With the New NCS Act of 2023, there is now a formal procedure outlined in Sections 269- 273 of the NCS Act. Also, recall that the ECCP discussed above indicated that if a dispute persists, then established dispute resolution mechanisms come into play. The established dispute resolution mechanisms refer to the formal procedure outlined in Sections 269-273 of the NCS Act.

Section 269 of the NCS Act grants individuals impacted by decisions or alleged omissions by the Service the right to request written reasons for such actions within a reasonable timeframe. It establishes the right to appeal against decisions relating to goods' classification, valuation, determination of origin, and the application of customs and excise laws affecting them directly and individually. The section mandates that appeals must be lodged in writing, specifying grounds, and accompanied by evidence within 30 days from the date of the decision or omission. Furthermore, it allows for additional time for evidence submission if such evidence wasn't reasonably available at the time of the initial appeal, ensuring a structured process for lodging appeals while emphasizing the necessity of grounds and evidence for effective redress.

In Fineboy International Limited's (FIL) scenario, the company can follow these steps to address the disputes related to tariff and valuation decisions:

• Receipt of Written Reasons (Section 269): FIL can request written reasons for the NCS's tariff and valuation decisions within a reasonable period.
• Lodging an Appeal (Section 269): Within 30 days from the decision date, FIL can lodge a written appeal, specifying grounds and supported by evidence.
• Initial Application to Service Command (Section 270(a)): FIL submits the initial appeal to the relevant Service command, expecting a response within 21 working days.
• Further Appeal to Comptroller-General (Section 270(b)): If unsatisfied with the Service command's decision, FIL can appeal to the Comptroller-General within 30 days.
• Escalation to World Customs Organisation (WCO) (Section 270(c)): Further escalation to the WCO can be requested if dissatisfied with the Comptroller-General's decision.
• Further Appeal to Court of Competent Jurisdiction (Section 270(d)): As a last resort, FIL can file a further appeal with a court of competent jurisdiction.

Note that lodging an appeal does not automatically stay the execution or implementation of the decision (Section 271(1)). A stay of execution pending appeal based on certain conditions outlined in Section 271(2) may be requested.

4. Challenges and Risks in Customs Dispute Resolution:

While the formal appeal procedure provides a structured framework, stakeholders may encounter challenges such as:

• Time-consuming Processes: The appeal process may lead to delays in goods clearance and additional costs.
• Adversarial Relationships: Should the dispute be escalated to the Courts, it may strain the relationship between stakeholders and the NCS.
• Uncertainties in Outcomes: The appeal procedures may not guarantee a favorable outcome, leading to potential financial losses.
• Bribery and Corruption Risks: In dealing with public entities, stakeholders are often faced with bribery and corruption risks, especially where they are required to speed up administrative processes or obtain some concessions and preferential treatment.

Practical Solutions: To mitigate these risks, stakeholders can consider the following strategies:

• Negotiation: Engage in constructive dialogue with the NCS to seek amicable resolutions and expedite processing.
• Compliance: Ensure compliance with customs regulations and maintain accurate documentation to support appeals and negotiations. Be aware of corruption risks and prepare to mitigate these risks and uphold compliance.
• Voluntary Guarantee: In situations where every minute counts, opting for the bank indemnity route as suggested in the ECCP can speed up the clearance of goods. This approach can alleviate concerns about potential delays caused by formal dispute resolution processes. Often, when pressed for time, parties may find themselves more willing to compromise and engage in malpractices.
• Expert Assistance: Seek assistance from licensed customs brokers/Agents or legal experts to navigate complex customs procedures and address disputes effectively.

5. Utilizing Voluntary Guarantee Mechanisms for Expedited Processing:

Sections 97-98 of the NCS Act allow import-export businesses to submit voluntary guarantees to potentially expedite customs processing. In FIL's scenario, where timely clearance is crucial, the company can explore the following steps:

• Assessment of Situation: Assess the feasibility of providing a voluntary guarantee to expedite clearance based on the urgency of goods delivery.
• Selection of Suitable Guarantee Form: Choose an acceptable form of guarantee outlined in Section 98 (such as cash deposits, guarantor undertakings from financial institutions or insurance entities, or other approved methods specified in regulations), ensuring compatibility with customs procedures.
• Submission of Guarantee: Provide the selected guarantee to the NCS, signaling the intention to expedite processing and minimize delays.
• Monitoring and Follow-Up: Maintain regular communication with the NCS to monitor the progress of customs processing and ensure timely clearance of goods.

6. Conclusion and Future Outlook:

Efficient customs dispute resolution and expedited processing are essential for import-export businesses to meet contractual obligations and maintain competitiveness. By leveraging formal appeal procedures, voluntary guarantee mechanisms, and prevalent practices outlined in the ECCP, companies like Fineboy International Limited can navigate regulatory complexities effectively and promote trade facilitation in Nigeria.

I hope this resource assists businesses seeking to resolve administrative disputes and expeditiously clear their goods to meet their pressing obligations.

For further inquiries or assistance, feel free to reach out.

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