Listen to story here
In a landmark judgment with far-reaching implications for international trade and customs administration in Nigeria, the Lagos Division of the Court of Appeal has ruled against the Nigeria Customs Service (NCS) over its controversial Vehicle Identification Number (VIN) valuation policy, declaring that automated systems cannot override statutory provisions governing customs valuation.
The judgment, delivered in Appeal No: CA/LAG/CV/1070/2022 between Sea Empowerment and Research Centre Ltd/GTE and the Nigeria Customs Service, is being described by stakeholders as a major victory for importers, freight forwarders, manufacturers and traders impacted by rising duty assessments linked to the VIN policy.
News Diet gathered that at the heart of the dispute was the NCS’ introduction of the VIN valuation policy in February 2022, an automated platform designed to assess customs duties on imported vehicles. Customs had presented the system as a transparency-driven reform aimed at reducing human interference and improving efficiency in cargo clearance.
However, the implementation quickly drew backlash from clearing agents and importers, who alleged that the automated system imposed rigid duty assessments based on pre-programmed benchmarks rather than the actual purchase price of vehicles, resulting in inflated charges.
The controversy eventually escalated into a legal battle, with the appellants questioning whether Customs could lawfully deploy an automated system to sidestep valuation procedures established under both domestic law and global trade rules.
Reacting to the judgment, counsel to the appellants, Dr. Emeka Akabogu SAN, whose firm handled the matter at both the trial and appellate courts, described the decision as a triumph for constitutionalism and the rule of law.
“The judgment is not just a victory for importers, manufacturers, traders, project coordinators and freight forwarders; it is a victory for constitutionalism. It sends a clear message to all regulatory agencies that they cannot automate away the law. Digital transformation must be built on the foundation of statutory compliance,” Akabogu said.
The legal battle had initially suffered a setback in July 2022 when the Federal High Court dismissed the suit on technical grounds, ruling that internal administrative remedies had not been fully explored and suggesting the matter was premature.
However, the Court of Appeal overturned that position, holding that the lower court erred in law and breached the appellants’ right to fair hearing by declining jurisdiction over questions bordering on the legality of a government policy.
In its ruling, the appellate court reaffirmed that customs valuation must follow the mandatory sequence prescribed under Section 45 of the Customs and Excise Management Act (CEMA), now reflected in the new Nigeria Customs Service Act.
The court stressed that the transaction value, which is the actual price paid for imported goods, must remain the primary basis for assessment unless transparently rejected through evidence-based procedures.
Legal analysts say the judgment significantly curbs what critics described as “algorithmic governance” in customs administration, making it clear that automated systems cannot supersede statutory obligations.
Beyond the automotive sector, the ruling is expected to influence customs valuation practices across imported goods, while aligning Nigeria more closely with global trade standards and similar judicial positions taken in Uganda and Kenya on automated customs assessments.
