Rice Quota Controversy: Importers Sue NCS Over Shut Premises
EVEN with the denial of indebtedness by rice importers, the Nigeria Customs Service (NCS) insisted last week that rice importers’ warehouses would remain sealed until they pay a total duty of over N34b. One of the companies had gone to the court to seek redress on the matter.
The management of some of the companies refuted allegations of indebtedness, saying that they did not exceed the import quota given them by the government last year
NCS said affected companies could approach the law court for redress, if they are so bitter about its action. .
The Service Image Maker, Wale Adeniyi, a Deputy Comptroller, who led the team that sealed off the warehouses in Lagos last week, justified the action, saying the companies abused the privilege to import rice into the country at concessionary duty rate of 30 per cent, against the 70 percent official rate.
He said concession was given them to close the gap between demand and supply, as many of them claimed they would not be able to meet local demand with their local production.
According to him, the rice producers, who were allowed to import so as to close the shortfall in supply, used the opportunity of the quota given them to flood the market and stockpiled their warehouses with the imported commodity.
“They were given allocation at concessionary duty rate of 30 percent, against the official 70 percent because of the supply chain deficiency. But they allegedly exceeded the quota and they are going to sell in the same market with others, who paid 70 percent duty to bring in the commodity.
They have to pay the duty and levy on the excess of their quota in the interest of our economy. We cannot allow them to break the rules of our country. Many of them are operating outside Nigeria where they play the game in accordance with the laws. So why will they not obey our own laws. These people wanted to ship in rice they can sell for three years from now. When we got to their warehouses during our operation, we saw several tones of rice, they were even rebaging them before we drove them out of the warehouses. “According to Adeniyi, some of the companies before now claimed that the quotas given to them were to be carried over to 2015.
“The documents conveying the quotas were explicit. The quotas were meant to bridge a supply gap. 1.3 metric tons was estimated to be what Nigeria needed to bridge the supply gap in 2014 and that it should be imported in a concessionary way. It was stated that any of the companies that exceeded the quota would have to pay what others, who didn’t get concessions would pay, and that is 70 per cent duty. So they imported 750,000 metric tons in excess, and when we told to go and pay, they are now saying it is retroactive, it is carried over. We don’t have any document telling us that the waiver is carried over.”
An authoritative source said the Service is also planning to seal the Intercontinental hotel, which is sharing the same premises and ownership with one of the companies in default of import charges.
“We had planned to seal off intercontinental hotel. We could have sealed it off yesterday, but we took note of the fact that they are into international businesses and there might be guests in the hotel. We will still send a notice for urgent payment to the management again before we move in to seal off the hotel. This is not a threat.
The Nigeria Customs Service had last Tuesday shut down business operations at four companies over alleged refusal to pay a combined debt of N23b as import duty and charges on rice they imported into the country between last year and March this year.
But some of the companies denied that they exceeded their import quota. They said the Nigeria Customs Service was out to harass them, in spite of “what we have tabled in the recent past. We understand that they have the national responsibility as an organ of government, but they refused to listen to anybody, said former minister of industries and erstwhile President, Manufacturers Association of Nigeria (MAN), engineer Charles Ugwu.
“Ebony Agro has not exceeded the rice import quota given it, and I took a full page in the papers to explain this and written to Customs with full documentation.
Putting things in perspective, he said, “Ebony Agro Industries in Ikwo, Ebonyi State and Tara Agro in Adani, Enugu State are both rice mills and are Federal Government projects under the Private, Public Projects financed by the Bank of Industry (BOI), adding that they were not personal properties to warrant the tendencies to cheat or defraud the government.
Exonerating his companies in the matter, he said, “government gave quota to rice mills and for the two companies under the same management, 15,000Mt to Ebony Agro and 21,000Mt to Tara Agro, a total of 36,000Mt in 2014. However, the import faced several difficulties due to the Ebola virus pandemic in the West African sub-region, which made it difficult to get ships from the Far East to load for Nigeria.”
According to the former Minister, when a ship was finally secured and agreed to load 25,000Mt of rice in one Bill of Lading, recorded under Ebony Agro, but since there are two milling companies, the goods were split in two: 15Mt and 10mt for Ebony Agro and Tara Agro respectively. The companies still have a balance of 11,000Mt, which is yet to be brought into the country.
Continuing, he said, “We have not exceeded our quota, since there is still a balance of 11,000Mt, but Customs insists we pay duty on the import brought in through Ebony Agro, which it regards as excess. As the Chairman of both companies, we use the common facilities to manage the business in the most convenient manner; if you look at our CO7 and CO2, you will find that we are the same investors,” Ugwu said.
The Director, Stallion Group, Mr. Harpreet Singh, a major importer of rice into the country, told The Guardian that he was out of the country at the time of contact.
Singh, in a telephone conversation expressed dismay at the manner the Service went about sealing its warehouses.
“It is not like this in any first world country; treating investors like this will not send the right kind of message to the world. There are procedures to follow and resolution mechanisms, which can be used and not by shutting down the businesses,” he lamented.
The corporate affairs manager of Olam farms, Mr. Ade Adefeko, refused to speak on the matter on Friday, saying it could be subjudice as the campany had taken to legal recourse on the matter.
On May 26th, 2014, a new rice policy was approved by former President Jonathan to encourage investments in local rice milling and production through the introduction of an import duty differential on rice (brown or polished)
The policy was meant to turn importers into investors so as to commence local production and become part of the drivers of the local content in the rice industry. This is to contribute in part to the expectation of increased rice paddy production in Nigeria, leading to the achievement of rice self-sufficiency.
To encourage greater domestic investments in rice, the rice policy was designed to encourage expanded cultivation of commercial rice farms and establishment of new integrated rice mills. To ensure this, existing rice millers and new investors in rice milling and paddy production with verified Domestic Rice Production Plans (DRPP) were granted import duty concession of 10 per cent and levy 20 per cent, while other importers without local production capacity were to import at 70 per cent duty rate.
It was clearly stated that any beneficiary who imported rice above these approved quantities would have to pay to treasury the higher levy of 60 per cent and duty of 10 per cent for the excess quantity of import.