THE LEGALITY OF THE IMPOSITION OF IMPORT DUTY ON PERSONAL BELONGINGS

Introduction

On Wednesday, May 13, 2020 the Federal High Court of Nigeria (Abuja Judicial Division), per Honourable  (Mr.) Justice J. T. Tsoho, CJ, in the case of Kehinde Ogunwumiju, SAN v Nigeria Customs Service Board  and Anor[1], delivered a landmark judgment, holding that the demand and collection of customs and other import duties by the Nigeria Customs Service on the personal luggage of the Plaintiff which were not shown to have been intended for sale, barter or exchange, was unlawful.

In the light of the above, this treatise seeks to briefly examine and shed some light on the relevant sections of the Customs, Excise Tariff, ETC. (Consolidation) Act[2] interpreted in the said Judgment.


[1] Kehinde Olamide Ogunwumiju, SAN v Nigerian Customs Service Board and Nigeria Customs Service – Suit No: FHC/ABJ/CS/1113/2019 (Currently unreported)

[2] Cap C49, Laws of the Federation of Nigeria, 2004.

Exemptions from Import Duty

The Customs, Excise Tariff, ETC. (Consolidation) Act (“The Act”), provides that “goods specified in the Second Schedule of the Act shall, subject to the conditions set out therein, be exempted from the Custom Duty Rate Column of the First Schedule of the Act” [1], which primarily reflects the duties payable on goods imported into Nigeria.

Paragraph 7 of the Second Schedule to the Act, specifically provides as exemptions from import duty the following:

7. Passenger’s Baggage

(1)   Personal and household effects, the property accompanying a passenger

(2)  Personal and household effects, the property of a passenger landed at any Customs Port, Customs Airport or Customs Station within two months from the arrival of the passenger or within such further period as the Minister, to the extent permitted by the Minister, and subject to any conditions imposed by it; and

(3)   Personal and household effects, excluding jewelry, photographic equipment, and other luxurious goods of a citizen of Nigeria who had been resident in a place outside the limits of the jurisdiction of Nigeria for not less than 9 months 

Provided that ‘baggage’ shall not be intended to include any goods intended for sale, barter or exchange.

In the instant case, the Plaintiff had travelled to the United States of America where he purchased a Louis Vuitton laptop bag for a retail price of $1,823.20 and upon his return to Nigeria, his luggage was searched by officers of the Nigeria Customs Service at the Nnamdi Azikiwe International Airport, Abuja, who upon seeing a Louis Vuitton laptop bag, insisted that the Plaintiff must pay import duty, Value Added Tax (“VAT”) and other related charges in respect of the said bag. Consequently, and notwithstanding the Plaintiff’s protest against such demand, he was asked to pay the sum of N156,955.20 to satisfy these charges before the said Louis Vuitton laptop bag was released to him. Being dissatisfied with the demand and collection of these fees by officers of the Nigeria Customs Service, the Plaintiff proceeded to institute a civil action against the Nigeria Customs Service and its Board (“Defendants’). The Plaintiff sought for the Court’s determination of some legal questions, chief among is, on whether or not in view of the provisions of Section 8 of the Act and Paragraph 7 of the Second Schedule to the Act, he is liable to pay import duty and other related charges in respect of the Louis Vuitton laptop bag which is his personal effect to the Nigeria Customs Service.  The Plaintiff also sought for declarative and monetary reliefs against the Defendants, inter alia:

a.      A Declaration that in view of the provisions of Section 8 of the Customs, Excise Tariff, Etc., (Consolidation) Act and Paragraph 7 of the Second Schedule to said Act, the Plaintiff is not liable to pay import duty and other related charges to the Defendants in respect of his personal effect (Louis Vuitton lap top bag).

b.      A Declaration that the decision and action of the Defendants to demand and collect from the Plaintiff Import Duty and other related Charges in respect of his personal effect (a Louis Vuitton lap top bag) is unlawful, null and void.

c.       A Declaration that the Plaintiff is not liable to pay Value Added Tax (VAT) to the Defendants in respect of his personal effect (A Louis Vuitton lap top bag).

d.      A Declaration that the decision and action of the Defendants to demand and Collect from the Plaintiff Value Added Tax (VAT) in respect of his personal effect (a Louis Vuitton lap top bag) is unlawful, null and void.

e.      An Order directing the Defendants to refund the total sum of N156,  955. 20k  in import duty, Value Added Tax (VAT) and other charges which was unlawfully demanded and collected from the Plaintiff by the 2nd Defendant upon his arrival at the Nnamdi Azikiwe International Airport, Abuja on the  24th  June,  2019.  (Breakdown: Duty – N111 5 0.20, S/C 7% – N7, 806.41, GSS 1% N5, 576.01, CTLS 0.5%- N2, 788.01, VAT 5% – N29, 264.57)

f.        An Order directing the Defendants to pay to the Plaintiff, N15,000,000.00 as general damages.

g.      An Order directing the Defendants to pay to the Plaintiff N15,000,000.00 as exemplary damages.

h.      Interest on the Entire Judgment sum at the rate of 10% per Annum from date of Judgment until the Judgment sum is fully realized or  liquidated.

The Court upon entertaining submissions from the Plaintiff’s Counsel, found the provision, “the property accompanying a passenger”, as contained in item 1 of Paragraph 7 of the said Second Schedule to be outlandish and generally inapplicable, since same had subsequently been qualified in item 3 as well as the proviso , except same were categorized as personal and household effects, which were neither luxury goods, nor intended for sale, barter or exchange. The Court also held that the nature and quantity of the baggage or goods will also be significant in considering whether such goods fall under the exemptions or not. Consequently, the Court held that there was no justification for the officers of the Nigeria Customs Service to infer that a single Louis Vuitton laptop bag in the personal baggage of the Plaintiff was intended for sale, barter or exchange. Furthermore, in the reasoning of the Honourable Court, the bag itself was not a complete gadget by itself, but only a component of an item or gadget. The Court adjudged the conduct of the Defendants as being unreasonable, arrogant, arbitrary and an oppressive use of power. Reliefs a, b, c, d, e and h above were thus granted by the Court, and while the claim of general damages was refused, exemplary damages of N5,000,000 was awarded against the Defendants for their unreasonable, arrogant and oppressive abuse of power.

It should be noted that neither the Nigeria Customs Services nor its Board, filed a defence to the suit, despite the fact that there was evidence that the Plaintiff’s Originating Summons and multiple hearing notices, notifying them of the suit were served on them. It would have been quite interesting to see the arguments and the legal basis the Defendants would have proffered, had they defended the suit.

It is however, worthy to note that the judgment did not specifically address or interpret the term “luxurious goods”, and the specification on time, which can be found in the exclusion from exemption, of ”jewelry, photographic equipment, and other luxurious goods of a citizen of Nigeria who had been resident in a place outside the limits of the jurisdiction of Nigeria for not less than 9 months, as contained in Paragraph 7 (3) of the Second Schedule  cited above. It is conceivable that the term “and other luxurious goods” may be interpreted to mean items in the classes of jewelry and photographic equipment which were mentioned before it (on an application of the Ejusdem Generis rule of interpretation). While this is understandable, taking into consideration the claims of the Plaintiff and the Defendants’ failure to challenge same and to file a defence, it is hoped that this grey area will be determined by the Court in no distant time.




Conclusion

It is noted that this is an applaudable position of the law which for all intents and purposes, is valid, binding and subsisting, unless successfully set aside on appeal. It therefore brings great relief to Nigerian travelers and the likes, who are on a daily basis imposed with these charges, on their personal effects not meant for sale.

For further information on the foregoing (none of which should be construed to be an actual legal advice), please contact:

Chinedu Anaje

Managing Partner
Contact

Ekene Ugbede

Associate
Contact

Download full article by filling this form

More Articles

REGULATION OF KEY PLAYERS IN THE NIGERIAN PENSION INDUSTRY: AN APPRAISAL OF SECTION 77 OF THE PENSION REFORM ACT 2014

The Nigerian pension industry stands as a critical pillar in the nation’s socio-economic landscape to ensure the financial security of millions of retired citizens. A key feature of the Nigerian Contributory Pension Scheme (“CPS”) that has aroused commendation is the bifurcation of the management and custody of pension funds between licensed Pension Funds Administrators (“PFAs”) and Pension Fund Custodians (“PFCs”), respectively.

FINANCING RENEWABLE ENERGY PROJECTS IN NIGERIA

As the name indicates, renewable energy refers to energy that is generated from natural sources which replenishes itself at a rate higher than the rate of consumption. They are also referred to as clean energy. Examples of this class of energy include solar energy, wind energy, geothermal energy, hydropower, and bioenergy. In contrast to renewable energy, fossil fuels are non-renewable sources of energy that are limited in nature and contribute to carbon emissions which harm the ozone layer.

RECAPITALIZATION OF COMMERCIAL BANKS: WHAT DOES THIS PORTEND FOR THE PENSION INDUSTRY?

RECAPITALIZATION OF COMMERCIAL BANKS: WHAT DOES THIS PORTEND FOR THE PENSION INDUSTRY?

Nigeria’s economic headwinds over the years have culminated in hyperinflation, macroeconomic variability, and instability in the exchange rate. As part of the approaches to tackle the economic instability bedevilling the country and bolster the country’s economy to be more resilient, solvent and in tune with the aspirations of the Federal Government of Nigeria , the Central Bank of Nigeria (“CBN”) issued a circular mandating commercial, merchant, and non-interest banks to shore up their capital base. This recapitalization exercise is backed by Section 9 of the Banks and Other Financial Institutions Act, 2020 (“BOFIA”) which empowers the apex bank to, from time to time determine the minimum paid-up share capital requirement of each category of licensed banks operating in Nigeria.