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How we use audit to prevent revenue losses — Abba-Kura

By Eguono Odjegba

Mohammed Abba-Kura is the new Customs Area Controller, Apapa Command. In this chat with Vanguard Maritime Report before his deployment, he explained how the department uses the audit to prevent revenue losses and recover revenues already lost. Excerpt:


Can you give us an overview of the Customs Post-Clearance Audit (PCA) Unit, Zone A under your watch and how you achieve maximum compliance? 

I reported here in PCA Zone A on the 30th of January 2018. After taking over, I had to go back to Abuja to handover the Pre Arrival Assesment Report (PAAR) ruling centre to the then incoming Controller, Comptroller Yusuf Bashar. So effectively I resumed on the 6th of February. It’s entirely a new environment in the sense that we deal with consignments or declarations that have already been exited from the ports. So, in essence, we do targeting, profiling and once we profile and discover infractions or discrepancies, we normally write letters to the importers and their clearing agents.

If the response does not come within two weeks, we write them a reminder letter which is normally within a week. Some will not even respond until you block them from the system. Blocking them from the system is that you block them using the Tax Identification Numbers (TIN) of the agent as well as his importer so with that they will be compelled to come and answer the queries on those declarations. When they come, if it is the issue of the Harmonised System (HS) code, we show them based on their declarations in the system.

Blocking them is a strategy to enforce compliance as it prevents the blocked company from doing any transaction until pending issues are resolved. What they have declared, the inspection act done by the releasing officer and further research done on the exporter forms our guide in making decisions.

Profile of the importer himself, a look at the tariffs, look at explanatory notes, look at any other document are considered for them to see and we prove the underpayments to them. These are done for them to be convinced that their declarations were either not right or appropriate duties were not paid. So once underpayment is established we give demand notice (DN) for the shortfall to be paid.

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There is this issue of improper address or people who have relocated long after they made transactions, how do you track them? 

When I first resumed we had so many issues on this address matter.   I remember forwarding a list of about 60 importers and clearing agents that their addresses were not correct and the only way they come to respond is by this blockage approach. So I wrote a memo to headquarters with the list of those who have wrong addresses and I think it was handed over to License and Permit Department and Inspection Department for necessary action. The other challenges we faced on this wrong addresses was that letters could not be delivered if they cannot trace their current addresses. So there is no way you can get hold of them except you to block them.

Are you saying they are complying now because of the blocking strategy? 

Yes, they are complying with that. In fact, some of them as they are coming forward to answer their queries, you will see copies of letters that they wrote for a change of addresses. So after leaving here that is when they will write the letter to headquarters for a change of address. Compliance level is increasing.

How do you resolve disputations between the PCA and importers and their agents? 

Yes, that one is there if you look at the World Customs Organisation(WCO) standard working procedure for post-clearance audit, it gives the person being audited rights. He has rights and we respect their rights. We can say we are arguing HS code for a particular item, he will disagree. He can write to CGC complaining that PCA identified that he has been carrying his consignment on a particular HS code and PCA is insisting on a different HS code. You know HS Codes determine the percentage of duties to be paid. Wherever the HS Code changes, duty to be paid, may very likely change too. So once he writes that letter to headquarters, it will go through the normal channel. CGC will minute to DCG Tariff and Trade and she will minute to the Controller Tariff, so Controller Tariff will sit down look at it and classify correctly. Sometimes it is sent back to us for our own input.

In other words, it is the Customs headquarter that is the final judge?

Yes, because the Tariff department is the department having the responsibility of settling disputes on tariff classification and they are the custodian. They go to WCO periodically to attend meetings on tariff disputes, not only within Nigeria. Disputes are coming from all Customs administrations in different member countries.

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If there is an issue that cannot be resolved even within the headquarters, it can be forwarded to WCO. They have a technical team on that, it normally sit periodically and look at things and classify them properly. Once they do the classifications, they send it to all administrations because the world is dynamic and a lot of things are being invented every day. Some things you think that can be classified on a particular HS code may not be on that HS code appropriately. They will have to get a correct HS code for it. For instance, if you buy an explanatory note, an explanatory note is a set of documents or set of books that give further explanations on items classified in the tariff, it will give you the vivid and exact description of an item.

Sometimes if people come here they will say no “we have been importing this particular item for a long time so it has to be on 5% duty rate because we are manufacturers”.   Being a manufacturer does not automatically entitle you to enjoy five per cent duty rate. Your raw material is another man’s finished products and your finished product is another man’s raw material. That is how it moves. I was very happy when I came here. I had this dispute with a particular company like I said the people being audited have rights, I will not mention the company’s name. I showed them their underpayment, they disagreed and took the matter to headquarters, as part of their rights. Luckily after going to the headquarters, they got a reply that was not in their favour.

I told them that they are going to pay to the last dime. They thought I was joking, that I was not serious about it. I blocked them from working until they paid a substantial part of it and it was huge. It was about N2.3b. They finished paying by January this year because after they paid an instalment of N1.2b, I allowed them to continue their work and they paid the rest gradually.

What is the place of technology in all this; is there anywhere you use computers?   

Yes, we use technology. That is why I said in the course of profiling we use the system. You know each declaration has its own Customs number.That is what we called C number, so with that particular C number in the process of profiling you can use the importer’s name to profile his activities, you can use HS code to profile all those that import that kind of items you can use the name of the consignment to confirm the frequency of imports.

Post-clearance audit appears to be silent in the scheme of Customs operations. We want to know what has been the collaboration like with other units of the service.

You see, the issue here is an audit, you cannot see us coming out like those working in the field either revenue or enforcement officers. We don’t work like that, we go back some years to profile declarations.

Like how many years? 

It depends

Is PCA merely out for those who made a genuine mistake or those who played down on standards? 

The issue is that ignorance of the law is not an excuse. Sometimes it can be a genuine ignorance and sometimes it can be deliberate. As an officer, you cannot know everything. Wherever you find yourself as an officer that wants to perform, definitely you must develop yourself. You must optimally read and do researches on various items being imported and processed For example if you did not read chemistry you may not work effectively on chemicals being imported at the beginning as a customs officer but if you decide to develop yourself, you can be as good as somebody who studied chemistry or even an expert. Your knowledge of the chemicals, their classification based on particular composition will increase and you will know some things as if you read chemistry. It’s not possible to know everything at a go. Knowledge increases with time and customs operations cannot be an exception.

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