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Importers decry delays, demurrage as Destination Inspection faces threat

Abdullahi Dikko Inde, CG of Customs
Abdullahi Dikko Inde, Customs CG

03 April 2014, Lagos – The Destination Inspection (DI) scheme introduced about eight years ago after the abolition of the pre-shipment inspection, appears to be under threat with the logjam currently being suffered by importers and freight forwarders at the nation’s seaports.

Investigations at the Lagos ports revealed that importers and freight forwarders have been disconcerted since the Nigeria Customs Service (NCS) fully took over the goods inspection regime a few months ago from Cotecna, SGS and Global Scan as service providers.

Their grouse stems from the long delays they contend with during the processing of their documents before being issued with the Pre-Arrival Assessment Report (PAAR) without which they cannot clear their goods at the ports.

The delays, which many importers complained take months in some cases, also translate to huge losses to the importers who have to pay demurrage to terminal operators and shipping companies after the initial one-week grace period granted them after the cargo has arrived at the ports.

However, top officials of the customs service who spoke to THISDAY alleged sabotage from elements within the system and others who have vested interests in the DI scheme.

But investigations carried out at the ports showed that many importers and freight forwarders see their goods spending months, sometimes over three months, before they can take delivery.

It was gathered that the problem is in the PAAR, which replaced the Risk Assessment Report (RAR) issued by the former service providers.
PAAR is a document, which the customs service explained, encompasses information about the cargo, the country of export and value of the goods.

The documents help the service to determine what measure to take when the owner comes for clearance, whether to subject the cargo to full physical examination, documentary examination, scan or take any other action.

Under normal circumstances, the process of getting the document ought to have been completed before the arrival of the goods, making it easier for the importer to take his goods early without incurring demurrage.

This is unlike RAR issued by the former service providers, which the importer or his agent had to get as soon as the goods had landed.
The improvement in PAAR over RAR is that the importer gets the documents ready before his goods arrive.  This way, he is saved the risk of demurrage, but the reverse, THISDAY checks revealed, has been the case.

Instead, in most cases, the importer or his agent spends weeks or months after his goods have arrived waiting for the PAAR, during which he would have incurred considerable demurrage.

As a result, many agents have expressed a preference for the reintroduction of RAR used by the former service providers.
This problem has created a lot of disaffection between importers and their agents, as the latter on collecting the required amount necessary to clear the goods, and paying duties, may be faced with demurrage payments that incur the wrath of importers.

Some importers, in some cases, have blamed the problem on their agents and have contended that they should be the ones to pay the demurrage since the agents were expected to have concluded work on the PAAR long before the arrival of their goods.

However, customs sources have heaped the blame in the delays at the ports on the doorsteps of the former service providers, who according to some officials, left a backlog of 99,000 RARs which had to be cleared before the various commands of NCS could start processing their own PAARs for importers.

It was gathered that the customs service had since cleared the 99,000 RARs and generates a substantial number of PAARs on daily basis.
But findings revealed that the problem with the PAAR regime is that as they are being generated, the transmission of the documents has proved to be a major obstacle, as importers wait for weeks or months before they get the document.

Investigations further showed that the problem has been turned into a major racket by some unscrupulous customs officers who are being accused of collecting N50,000 on each Bill of Lading  to fast-track the issuance of the PAAR.

Importers and their agents, who spoke to THISDAY, disclosed that bank officials  who collect the documents from agents and forward them to customs service for the issuance of the PAAR are also aware of this.
As a result, some importers and agents have had to induce some customs officers for assistance if they wanted to get the PAAR in good time.

In fact, it was gathered that there is an existing syndicate which specialises in  processing the documents for importers and agents once they are paid.

THISDAY checks also revealed that the customs headquarters in Abuja which is worried about this development, has tried to monitor officers charged with the responsibility of issuing the PAAR.

But it does not appear that the effort to check the racket is yielding any fruit as more and more desperate importers are ready to offer bribes to clear their goods from the ports rather than incur demurrage.

To address the problem, importers and their agents are currently calling for a return to the Provisional Release introduced earlier, as a result of the same delay suffered by importers, but which was stopped since February 14 when it was discovered that the customs service was losing revenue daily due to the measure.

Under the Provisional Release, an importer is allowed to take his goods while going ahead to process PAAR.  He is required to pay some duty and take delivery, but could be issued Debit Notes (DNs) later if his PAAR is out and an examination shows underpayment of the duty.
Under this regime, the worst hit by the arrangement was the Apapa seaport in Lagos, which was said to have lost so much in the two months it was in place.

For instance, Apapa seaport recorded N19 billion and N17 billion as revenue in January and February, respectively, in contrast to N20.8 billion and N19.8 billion respectively in the same period last year.
Last December, Apapa, which has a monthly target of N28 billion, recorded N20 billion, as a result of which the officers of the  Apapa Customs Command were accused of failing  to scrutinise the  documents  submitted by  some unscrupulous  importers  under the Provisional Release.

This was not the same for the Tin Can Island Customs Command whose revenue was impressive following the strict measures it adopted to check abuse of Provisional Release by importers and their agents.
For instance, the command generated N21.5 billion and N21.6 billion in January and February 2014, respectively, as against N16.3 billion and N16.2 billion in the same period in 2013.

The command had also generated N23.2 billion in December 2013, against N16.9 billion in the same period of 2012.

When contacted, the customs Public Relations Head, Mr. Wale Adeniyi, a Deputy Comptroller, could not be reached as his phone was switched off.

But customs sources, who did not want to be quoted, argued that introducing Provisional Release would mean succumbing to pressure from importers and agents, including some unscrupulous officers, who want to continue perpetuating fraud by all means, apparently referring to the losses suffered at Apapa port.

The Tin Can Island Customs Controller, Mr. Jibrin  Zakare,  who spoke to THISDAY, however said the service was equal to the task as far  as the Destination Inspection regime  was concerned.

Zakare traced the problem associated with the PAAR in Lagos to sabotage, adding that the service upon taking over the Destination Inspection in December last year, had to clear the backlog of 99,000 RARs left behind by the former service providers.

He maintained that so far, there has been improvement, adding that what was being experienced was simply a teething problem since the customs service has just taken over DI compared to the former service providers who spent about eight years on the scheme.

Zakare, while  assuring the public that most of the problems were being tackled by the management of the customs service, called on importers and agents to always submit correct documents that would speed up the processing of their jobs.

He said any document that has a problem would be rejected by the system, adding that this was among the challenges the customs service had been contending with.

On their part, leaders of the customs agents associations at the ports and other importers who spoke to THISDAY blamed the challenges encountered with the issuance of the PAAR on importers, customs agents and Web Fountain, the consultant responsible for providing the information technology platform for the customs service to run the DI scheme.


– This Day

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