X-Raying the Nigerian Customs Service Act 2023: Legal Reforms and Challenges

CONTRIBUTOR: BETSEABASI ASUQUO

INTRODUCTION

The Nigerian Customs Service has, over the years, morphed from being a ‘tax collector’ to becoming a catalyst of economic growth and development in Nigeria.^[1] Being vital participants in the facilitation of international trade and cross-border security, the operations of the Service, no doubt, impact the nation significantly.^[2] It is thus, disturbing, that such a vital institution had hitherto operated under a legal regime for 65 years without significant amendment despite the changing dynamics of the Nigerian society.^[3] This resulted in an obsolete law regulating a vital sector of the Nigerian economy thus hampering their effectiveness, particularly as regards their legal status, management and funding arrangements, and duties, among other things.^[4] Consequently, it became evident that a legal restructuring is a necessary way out of the perceived incompetencies of the service.

The Nigeria Customs Act 2023 was signed into law on the 20^th of April 2023 and it repeals the Customs and Excise Management Act, the Nigerian Customs Service Board Act, as well as other customs and excise management legislations. The Act seeks to reform the administration and management of customs and excise in Nigeria to aid trade facilitation and improve economic growth.^[5] The Act establishes the Nigerian Customs Service as a legal entity to be governed by the Board under the supervision of the Minister of Finance. The Act also seeks to bring customs and excise management in Nigeria in tune with contemporary operations and international best practices and thereby facilitate international trade as well as provide a standard legal corpus for customs administration.^[6] Among other highlights, the Act takes cognizance of the deployment of technology in certain aspects of its processes, including electronic payment procedures, electronic documents, etc., and makes encompassing provisions for the improvement of the Service’s activities.

This article will examine the salient provisions of the Act while highlighting some of the legal reforms made to the Nigerian Customs Service.

AN OVERVIEW OF THE ACT AND ITS REFORMS

The Nigeria Customs Service Act, of 2023 establishes the Nigeria Customs Service^[7] outlining its functions and powers, which include the administration, management and enforcement of the provisions of the Act and other customs and excise laws, the administration of trade and fiscal policies of the Government as it relates to this Act, promotion of trade facilitation in line with international conventions and agreements relating to customs administration, prevention of smuggling, customs fraud and other violations under this Act, collection and accounting for revenue from customs duties, excise duties, charges, fees and special assessments as may be assigned by the Government, carrying out all border enforcement and regulatory activities required by law in collaboration with relevant agencies, etc.^[8]

The Act establishes a Governing Board for the Service, consisting of the Minister of Finance as Chairman, the Comptroller-General as Deputy Chairman, Deputy Comptroller-Generals, and representatives from various Federal Ministries.^[9] It provides regulations and penalties related to the importation and possession of goods, with a particular focus on smuggling^[10] and duty evasion,^[11] with penalties for individuals involved in importing goods contrary to prohibitions, including imprisonment and forfeiture of smuggled items. It further details the requirements and criteria for comprehensive guarantees provided for customs debts, including the need for demonstrated compliance with customs and tax requirements, regular use of customs procedures, and financial solvency.^[12] The Act also addresses the release of guarantees upon full and final payment of customs debts,^[13] as well as the appointment of customs representatives or authorized economic operators to transact business with the Service on behalf of individuals or entities.^[14]

The Act further provides for the temporary importation of personal effects of non-residents, outlining the items considered as travellers’ personal effects and the conditions under which they can be brought into Nigeria without declaration or security.^[15] It highlights the exemption of certain goods from duties and customs duties for travellers, with specified limits and regulations for importation for personal use.^[16] The Act emphasizes the importance of compliance with customs regulations and the consequences for non-compliance, aiming to regulate and control the importation of goods into Nigeria. Overall, the Act provides a comprehensive framework for the management and administration of customs and excise in Nigeria, outlining the powers, responsibilities, and procedures related to customs operations and trade facilitation.

With specific reference to the innovations of the Act, it is perhaps expedient to begin with the determination of the legal status of the institution. Prior to the enactment of the NCSA 2023, the Service was not a creation of a specific statute but being a department created by the colonial government and supervised by a board, which morphed into the entity it is today.^[17] However, the new Act provides a legal basis for the operations of the service, granting it a legal status of a corporate entity, while defining and expanding its powers and functions.^[18] Without an iota of doubt, these provisions enhance the institution’s confidence in carrying out its legal mandate as provided by the Act.

Moreover, the establishment of a management committee saddled with responsibility for the administration of the Service subject to the direction of the Governing board, reflects a commitment of the government to the effectiveness of the Service in implementing the provisions of the Act. Like a ‘grassroots’ supervisor, the Committee is mandated to coordinate the operations and administration of the Service in line with the dictates of the law while making recommendations in needed aspects to the Governing Board.^[19]

Going further, the Act made laudable provisions on the determination of the origin of goods.^[20] This is particularly important as, apart from using the same to determine the amount of customs duties to be paid, it is necessary to determine and apply relevant restrictions on the importation of goods into the country. This in effect will maintain the territorial integrity of the nation and avoid the dumping of substandard products in the nation.^[21] The Act further provides the criteria for determining the origin of a good dividing same into preferential and non-preferential rules which are dependent on the existence or otherwise of unilateral/ bilateral or international agreements.^[22]

Moreover, the Act takes cognizance of the use and deployment of technology in the operations of the Service. More specifically, it mandates the use of electronic data processing methods for any exchange of information between the Service and any person pursuant to the provisions of the law.^[23] This invariably, is an astute feature of the law as it takes cognizance of contemporary trends and global practices and it will practically ease communication with the Service, thereby enhancing its effectiveness. In giving effect to this, the Service is mandated to provide such electronic platforms in all its offices or other relevant places. Furthermore, it suggests the use of electronic means for the storage of information and the benefit of this, as opposed to the traditional means of storage, cannot be overflogged. In addition, it takes cognizance of and resounds the importance of the protection of confidential information, in line with the budding Nigerian data protection regime requirements.^[24] Finally, it mandates the Service to, in collaboration with other agencies, with the Service taking the lead, develop and maintain an electronic system which fast-tracks the operations of the Service or such activities of other agencies which may concern the Service.^[25]

Another notable provision of the Act can be found in Section 168 of the Act which recognizes and protects intellectual property rights in Nigeria. The said Section empowers the Service “to detain, arrest or seize any importation or exportation that infringes or contravenes the Copyrights Act.”^[26] The significance of this section is that the Service will be a vital institutional watchdog in the fight against IP rights infringements as such infringing goods would be prohibited from imports or exports as the circumstance may demand.^[27] This will in effect promote a safe environment for innovation and creativity in the nation as well as boost international trade as contracting states often prefer doing business with nations which have strong regulatory frameworks for IP protection.

In addition, the Act makes innovative business facilitation provisions by providing for authorised economic operators in addition to customs representatives provided under the old law.^[28] Thus, an authorised economic operator may either be designated a Customs Simplification Authorised Economic Operator or a Security and Safety Authorised Economic Operator.^[29] The principal aim of this is to simplify procedures in relation to clearance and certification or safety and security procedures as provided by the Act and address administrative hiccups in transaction cross-border business.

Apart from the above, the Act has been lauded for several other provisions such as the provision of more severe punishments for the violations of the provisions of the Act, as against the ridiculous penalties provided under the old law, the establishment of special economic zones,^[30] the provision of budgetary allocations and internally generated revenue, etc.^[31]

There is no gainsaying the fact that the activities of the Nigerian Customs Service greatly impact cross-border trade facilitation and economic growth in Nigeria. This is because their role under the modern regime is no longer restricted to revenue collection or generation but encompasses international trade management, cross-border security, environmental and health and safety protection.^[32]

The provisions of the Act have several implications for diverse aspects of Nigerian society. Cross-sectoral collaborations on the implementation of the Act will not only boost revenue generation and aid economic development, but it will also impact the health and safety of all Nigerians. For instance, collaborations with the Ministry of Marine Blue Economy will harness the diverse economic opportunities in the sector through the judicious use of marine resources in imports and exports. Also, collaborations with Agencies such as NAFDAC will prevent the import or dumping of substandard products in the Nation. Finally, adequate security measures can be assured for importers and exporters and will enhance international trade thereby increasing cash flow in the nation. It might however be expedient to state that the overall achievement of the Act is bringing import and export processes in Nigeria in tune with contemporary and international best practices.

CONCLUSION

The Customs and Excise Management Act has proven to be an old lion, the claws of which, could no longer hold its prey. As a 63-year-old law, its provisions were no longer adequate in the context of the dynamism which Nigeria has experienced. It was thus, pertinent to have a law which can effectively regulate customs and excise in Nigeria and NCSA 2023 has shown to be a viable replacement by its laudable provisions.

1. See Nigerian Customs Service, ‘Brief History of NCS’ (NCS Portal, Historical Information) available at https://customs.gov.ng/?page_id=497 accessed on the 8^th of May 2024. ↑
2. Olomu, Babatunde, David Oladimeji Alao, and Eyitayo Adewumi. “Border security issues and challenges of the Nigeria Customs Service.” International Journal of Latest Research in Humanities and Social Science 2.3 (2019): 10-19. ↑
3. Ibid. ↑
4. Ernest Nzor, ‘New Customs Act Will Boost Revenue Generation, says Adeniyi’ (THE GUARDIAN, 2023) available at https://guardian.ng/news/new-customs-act-will-boost-revenue-says-adeniyi/ accessed on the 7^th of May 7, 2024 ↑
5. See Section 3 of the Act. See also… ↑
6. See ‘Senate Passes Bill to Re-enact Customs Act, Establish NCS Board’ (NATIONAL ASSEMBLY NEWS POST, 2022) available at https://www.nass.gov.ng/news/item/1673 accessed on the 7th of May 2024. ↑
7. Section 1 of the Act. ↑
8. See generally, Section 4 of the Act. ↑
9. Section 7. ↑
10. See for instance, sections 45, 164, 233, 234, 237 etc. ↑
11. See sections 36 150, 233, 261. ↑
12. See part 11 of the Act. ↑
13. Ibid. ↑
14. Part 12 of the Act. ↑
15. Section 165. ↑
16. See Section 166 of the Act. ↑
17. See Nigerian Customs Service, ‘Brief History of NCS’ op cit. fn. 1 ↑
18. Section 2 of the Act. ↑
19. Section 14(7) of the Act. ↑
20. Section 78. ↑
21. Augustine S. ‘Understanding the New Customs Act 2023 and Its Implication on Trade’ (PRIMETIME REPORTERS, 2023) available at https://primetimereporters.com/2023/12/understanding-the-new-customs-act-2023-and-its-implication-on-trade/ accessed on the 8^th of May 2024. ↑
22. See section 79 – 82. ↑
23. Section 25 of the Act. ↑
24. Section 26. ↑
25. Section 28 of the Act. ↑
26. Ibid. ↑
27. Augustine S. op cit. fn. 20 ↑
28. Section 154 CEMA Cap C45 LFN 2004 ↑
29. Section 108 of NCS 2023. ↑
30. Section 134-141 ↑
31. See Section 18 & 19 of the Act. ↑
32. Augustine S. ‘Understanding the New Customs Act 2023 and Its Implication on Trade’ (PRIMETIME REPORTERS, 2023) available at https://primetimereporters.com/2023/12/understanding-the-new-customs-act-2023-and-its-implication-on-trade/ accessed on the 8^th of May 2024. ↑