Customs Clearance

The sequence for a commercial import is broadly settled.

The importer opens a Form M through an authorised dealer bank on the trade portal, describing the goods, their value and their classification, before shipment. The form is validated by the bank and by Customs.

Where the goods fall within a regulated category, the applicable product certification is obtained, such as the conformity assessment certificate for goods subject to standards control, or the regulator's approval for food, drugs and similar products.

The supplier issues the final invoice and packing list, and the shipping documents are raised consistently with the Form M.

Customs issues an assessment report before arrival, confirming the classification, the customs value and the duty payable.

On arrival, a licensed customs agent files the goods declaration, duty and the associated levies are paid, and the goods are subject to examination, whether by scanning or physically.

On release, the goods are taken from the terminal, and terminal and shipping charges are settled.

The charges are more than the duty alone. Duty is assessed under the applicable tariff, and value added tax, the inspection scheme charge, the regional trade levy, the port development surcharge and any product specific levy are added.

Most clearance problems come from three sources and they are avoidable.

The first is document inconsistency. The Form M, the invoice, the packing list and the bill of lading must describe the same goods, in the same quantities, at the same value, with the same classification. A discrepancy between them produces a query, and a query produces delay while demurrage runs.

The second is classification. Goods are classified under a tariff code that determines the duty rate, and importers and Customs frequently disagree. An importer who classifies to obtain a lower rate and is reassessed pays the difference plus the cost of the delay. The answer is to establish the correct code before the Form M is opened, not to argue about it at the port.

The third is valuation. Customs assesses the value for duty, and where the declared value appears low relative to comparable goods, an uplift follows. Underdeclaring produces a reassessment, a penalty exposure and a delay that costs more than the duty saved.

Demurrage is the reason all of this is expensive. Shipping line demurrage and terminal storage accrue daily and independently of who is right. An importer who is correct on classification and takes three weeks to prove it has usually lost more than the disputed duty.

The agent matters too. Only a licensed customs agent can file the declaration, and the licence should be verified. Importers lose money to people who take clearance funds without the standing to do the work, and the goods sit while the charges run.

The practical discipline is therefore to prepare properly before shipment, budget for demurrage as a real cost rather than an exception, and settle classification and valuation questions in advance.

Three connected things that importers frequently blend together.

Customs duty is the charge itself, assessed on the customs value of the goods at the rate applicable to their tariff classification, alongside VAT and the various levies.

Customs clearance is the process of declaring the goods, having them assessed, paying and obtaining release. It involves the bank, Customs, a licensed agent and the terminal.

Incoterms allocate responsibility between the buyer and the seller for delivery, risk, cost and who handles export and import clearance. They decide who does the clearing and who pays, not what is charged.

An importer buying on delivered duty paid terms has passed clearance to the seller. One buying on cost, insurance and freight terms clears the goods themselves and pays the duty, which is the position most Nigerian importers are in.

The process is document heavy and unforgiving of inconsistency, which penalises small importers without experienced support.

Disputes about classification and valuation are resolved slowly relative to the rate at which demurrage accrues, so being right is often not enough.

Costs beyond duty are substantial and are frequently omitted from an importer's landed cost calculation.

And the importer remains responsible for the declaration even where an agent filed it, so a bad agent creates an exposure that belongs to the importer.