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Freight

Controversy trails new Customs VIN-valuation system for imported cars

SINCE the Nigerian Customs Service (NCS) introduced its new valuation system identified as the Vehicle Identification Number (VIN) in January, stakeholders in the industry have continued to criticise the innovation.

The VIN is incorporated in the National Vehicle Registry (VREG) established by the Federal Ministry of Finance, Budget, and National Planning. The NCS is implementing it, and it is a centralised database for all vehicles in Nigeria.

Through the registry, vehicular information such as ownership, specifications, and history of each vehicle in the country could be established.

Also, it is expected to solve the problem of customs duty evasion, vehicle theft, vehicle-related crimes, and ineffective vehicle insurance coverage due to the lack of a centralised vehicular information system.

The VIN Valuation Portal for imported vehicles. Photo Source: VIN valuation portal.

 

How the VIN works

After registering on the VREG, licensed freight agents could click on the “Add a single VIN.”

This would prompt the user to input the unique 17-digit vehicle identification number as well as the vehicle HS code. The HS code could as well be selected from the drop-down menu.

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Besides, agents could do multiple VIN registration, but this would have to be uploaded through an excel worksheet. Users simply need to select the “click to upload excel” button after filling the sheet.

Once the VIN is decoded, the agent receives a confirmation. The confirmation proves that valid a VIN has successfully been inputted. This could as well be re-verified on the final confirmation page.

After this, the vehicle owner’s Tax Identification Number (TIN) is included, the TIN is again verified in real-time, while the payment is subsequently made.

Moreover, a One-Time Password is generated and sent to the clearing agent via email.

The OTP is verified after filling the OTP in the ‘Enter OTP’ field, the user clicks ‘verify OTP’ and this activates the ‘make payment button.’

It generates an invoice through which multiple payments could be made. After a successful payment, it generates the VREG e-receipt which could also be used to view the VREG certificate through a quick link.

Payment confirmation section on the VIN platform.

Through the V-Reg User Guide on the platform, users could read further on the step-by-step usage. But at the crust of the discourse are concerns of freight forwarders popularly known as “clearing agents.”

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They are recognised under the aegis of the Association of Nigerian Licensed Customs Agents (ANLCA), the National Association of Government Approved Freight Forwarders (NAGAFF), Association of Registered Freight Forwarders of Nigeria (AREFFN), and African Association of Professional Freight Forwarders and Logistics of Nigeria (APFFLON).

As of Monday, February 21, some of the clearing agents had disrupted normal port activities at the Lagos ports due to the demonstrations.

This was after the expiration of a 72-hour notice from the concerned registered freight forwarding operators at the terminal of Ports and Terminal Multipurpose Limited (PTML), and Tin Can Island port in Lagos.

Imported vehicles, as a result, had entered demurrage. And the NAGAFF had since pulled out of the protest.

The disturbing concerns vary from clearing agents’ alleged exclusion from the project planning process, supposed higher tariff up to about 300 percent increase from the regular, and alleged aggregation of wrong data for the initiative.

Others were issues of rebates on old vehicles, based on a depreciation value system that ought to be considered in the Artificial Intelligence (AI) driven tariff system for the imported vehicles.

Some further argued, with the policy, a foreign used car purchased at about $5,000 could require as high as $14, 000 to clear at the port. This claim was unproven.

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But the Vice President of ANLCA Kayode Farinto described the VIN initiative as outrageous and such that could further encourage corruption at the ports.

Farinto alleged the freight forwarders were excluded in the design process despite their repeated efforts to work in alliance with the Customs.

The associations, he argued, had been at the forefront of pushing for the VIN valuation. This was to reduce supposed corrupt practices of the Customs officers at the nation’s port. And this justified why inputs from the association should have been considered, hence, need for further review of the process, he stated.

“It will interest Nigerians to know that the Comptroller General of Customs immediately keyed into our demand and directed that a Committee of Stakeholders be set up (which must include the Customs brokers and Customs officers) to meet and look into how this can work in the interest of the nation.

“However, some members of the management team vowed that it would never happen due to the pecuniary gain that would elude them if this process is allowed to come to fruition. And they never allowed the Committee to be inaugurated let alone be set up. I stand to be corrected because I remember that we wrote series of letters reminding them of the need to set up this Committee but it was tactically avoided,” he told The Sun newspaper.

“Hence, the recent happening in the industry because, up till now, we have it on good authority that only a few analog officers came up with values and data inputted in the VIN Valuation and even forgot due to lack of knowledge to put into consideration that legal notice 30, which is a law that allows every used vehicle to enjoy rebate as per year of manufacture. This rebate ranges from 10 to 50 percent reduction on duty payable.”

An executive of NCMDLCA, Abayomi Duyile, shared similar concerns over the rebates, depreciation value system which he said were missing in the portal. He was more concerned about the increasing tariff of old vehicles which ordinarily, he said should not be the case. These and many others were the flaws he pointed out in the portal.

“If you calculate what we paid for vehicles last year, by this year, it is supposed to have reduced based on depreciation, let us assume you paid N500,000 for a 2010 Benz last year, and this year they are asking you to pay N1.5million, this is outrageous. These vehicles are old about 13 to 15 years of age and you are expecting us to pay several millions of Naira to clear them? We want full implementation of the customs law that gives us 50 per cent for five-year-old vehicles.”

In the era of ‘Compromise’ where NCS uses logbook

Prior to the policy, findings by The ICIR show that Customs work through a particular logbook prepared by the federal government authorities.

It supposedly contains the names of vehicle brands, years, and other relevant information with their matching duty tariffs upon arrival at the ports.

But, the allotted sums are considered ridiculously high, hence, freight agents would usually work in connivance with custom officials to reduce the car levy based on certain peculiarities of the vehicles such as physical conditions of the imported automobiles, The ICIR gathered.

In most cases, this may involve a foreign used vehicle known as ‘tokunbo’, so also, vehicles previously involved in accidents popularly called ‘accidented’ in Nigeria and so on.

“For instance, the normal duty for a foreign used 2010 Toyota Corolla could be N3 million but most Nigerians are not ready to pay that huge sum because you probably bought the car at cheaper sum or the almost same amount.

“So, paying N3m or more as duty is not logical.

“The Customs too are aware of this. So, the NCS compromises the normal levy based on the fact that it is a used car imported into the country. That kind of agreement does exist and at the end of the day, they bargain for N1 million or N1.35 million,” a source who is into the business told The ICIR.

At the end of the day, the Customs officer may rake N350, 000 from the agreed sum while N1 million goes into the government coffer, the source claimed further.

“That system is corrupt. At least, nobody is arguing that. And things are flowing, the masses are quite comfortable with the system, unlike this new portal.”

Meanwhile, the NCS Public Relations Officer Deputy Comptroller Timi Bomodi while talking to The ICIR implied that the experiences of the clearing agents were part of the bedrock that necessitated the new policy.

Regardless, the implication of the new policy is that Nigerians may not necessarily need to consult a clearing agent or compromise Customs officers at the port before a vehicle is cleared.

What is required, based on new findings, is to visit the VIN- valuation website, get the vehicle chassis number, bill of laden of the vehicle, the VIN, and other important details, and input them into the VIN-valuation portal.

Another source claimed the tariff is now fixed and could not be bargained. “What is in the logbook is currently what is listed on the portal,” he added.

Import tariff generated from old data captured in Customs database – NCS

The NCS Public Relations Officer Deputy Comptroller Timi Bomodi refuted several allegations in his reaction while speaking with this reporter in an interview while urging Nigerians to embrace the new technology.

He said contrary to their concerns the new system is giving a uniform value unlike the previous norm, and the discounted value was captured in the system.

He also acknowledged complaints of alleged extortions made by the freight agents and their demand for the innovation. But, he insisted relevant stakeholders were consulted thrice.

The data infused into the new system, he disclosed, were sourced from an existing pool of data (old transactions) domiciled in the Customs database.

Bomodi told The ICIR on Monday, February 28, that prior to the new policy, duty values for used cars are usually calculated based on deductions from their original value which is calculated based on a fixed annual value. This process, he noted was the same as the old practice and captured in the VIN-valuation system.

“Stakeholders were consulted on three different occasions. Anybody that says they were not consulted is not telling the truth. They were consulted.”

“The system that is introduced also embraces the standard. And the only difference is that there is no human interference.”

“While they will go to meet someone to give them an assessment based on whatever consideration they will put up, this is just a machine, and there is nobody to sweet talk…the system will give you what is spelt out having factored in the discounted amount from the original value,” he proffered.

E-valuation system inactive for individuals, corporate bodies

While it is true that the system has become active, The ICIR checked through the portal, and the options for individuals and corporate organisations were inactive as of the time of filing this report.

The portal is also expected to allow recognised licensed agents to register and conduct their businesses.

 

VIN Valuation option for individuals and organisations unavailable. Photo Source: VIN Portal

Regardless, findings from the Customs show once the users input a VIN into the VIN valuation portal, it recognises the type of vehicle being imported, when it was imported, the make, the model, and the engine capacity.

According to Bomodi, the VIN valuation uses the generated data to allocate a monetary value (tariff duty) based on historical data aggregated from what was initially captured into the NCS system as the appropriate value for that vehicle.

This reflected the AI dimension where previously verified transactions are used to generate the duty for each car.

“The data is taken from a range of data from previously verified transactions. Just look at it, If you say, a particular car used to be X amount, some two, three years ago, and somebody wants an assessment of value based on discounted rates from two or three years ago, is it not a simple, straightforward thing to keep discounting a percentage of that value on a fixed rate over that period and then get the actual value,” he explained insisting the new development was encompassing.

“The only difference is that there’s nobody to start pleading or begging to reduce one thing or the other. It is a machine. The machine will give you the exact thing an approximation of what it should be.”

The ICIR attempted to verify the current duty levy for Corolla, which is presumably the popular brand used for taxi service. But, in his reaction, the Customs spokesperson emphasised the VIN valuation remains the only source to ascertain the right value. He did not give any actual sum.

“You bring your 15-year-old Corolla into the country; it cannot be the same thing as if you are bringing a 10-year Corolla or a five-year-old Corolla or even two years or three years. They are different things, and if you input the VIN number of that vehicle, you will automatically get the information associated with that vehicle. The machine will assign the appropriate value for that product, make and model of that vehicle. It does that.”

VIN-valuation still insufficient

The general assumption is that once a vehicle passes through the VIN-valuation process where monetary value has been ascertained, payments made and receipts generated, agents should be able to move with the vehicles, But that is not the case; based on The ICIR findings, a customs official would still do a physical evaluation.

The freight forwarder, according to the Customs, would need to do an on-spot examination to ascertain that the documentary information provided is actually what was on the ground.

“Once you make a declaration, somebody still has to go and examine it physically to see that what this person has on paper is what it is…if he is satisfied, if the declaration matches his examination, there’s nothing to do again.”

“To the customs, we have two things. You have your documentary statement of intent, but that has to be backed up. Because customs cannot release without inspection, it is a critical role. You have two ways of examination. It is either you do a physical examination or do a non-intrusive examination, and in the case of cars or used cars where you have to do a physical inspection of the car just to make sure that what you have documented matches what is seen physically,” Bomodi added.

The custom reaffirmed that with the new system, clearing agents should be able to clear their vehicle consignments within six hours of payment and at most two days. “And this is what the system is designed to achieve, to facilitate speedy clearance and reduce costs for importers and agents.”

This human phase, the agents believe will still give room for corruption.

The ICIR had earlier reported that a meeting between NCS,  agents, freight forwarders and car dealers ended over the VIN ended in a deadlock.

Some of the stakeholders who spoke to The ICIR on the sideline of the event said NCS officials refused to acknowledge the problem of devaluation confronting them and lamented the consequential loss of income.

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