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WCO launches new Harmonised Tariff Schedule – HS 2022 

The World Customs Organisation (WCO) has released the latest and seventh edition of the Harmonized System (HS) nomenclature which came into force on January 1, 2022.

HS is used globally for the uniform classification of goods and serves as the basis for Customs tariffs and duties across the world.

HS codes are also used for the compilation of international trade statistics (including Intrastat in the EU). If you are an importer or exporter or involved in cross-border transactions, then you will need to review and change your existing impacted HS codes or need to start using new HS codes after January 1, 2022.

What is the WCO?

WCO (formerly known as the Customs Co-operation Council) was established in 1952 to facilitate efficiency and consistency for customs administrations and global trade. Today, 183 Customs Administrations are part of WCO, covering 98% of world trade.

Key reasons for the 2022 changes

Every five years, the WCO reviews and updates HS codes. As technology changes and products become obsolete or experience a significant increase in production, the WCO categorises them accordingly. Codes that are obsolete due to lack of use are removed and new codes for higher-interest items added. The new HS2022 edition includes some major changes to the HS with 351 sets of amendments.

Some of the key reasons and changes include:

1. Low trade volume for some commodities

For example:

Globes with heading 4905.10 will be deleted
Copper metal chains with heading 7419.10 will be deleted
Nickel-Ion accumulators with heading 8507.40 will be deleted.

2. New technology
For example:
“Machines for additive manufacturing” Heading and Chapters 8485.10 to 8485.90 are added for 3D printers and related parts.

“Smartphones” and Chapter 8517.13 is added.

3. Compliance requirements / monitoring
For example:
“8514.11” and “8514.19” are created to monitor the dual-use products (i.e. goods, software and technology that can be used for both civilian and military applications and which may be subject to additional trade controls)
“8525.81/2/3/9 are created to monitor television cameras, digital cameras, video camera recorders etc.
4. Simplicity

For example:

Garments of chapter 6201 were constructed based on the type of garments followed by material. But going forward, the type of garment will not be a distinguishing factor and only the type of material will have different HS codes which eliminate 4 HS-6 codes out of 8.
5. Goods specifically controlled under various Conventions

For example:
specific chemicals controlled under the Chemical Weapons Convention (CWC)
certain hazardous chemicals controlled under the Rotterdam Convention
certain persistent organic pollutants (POPs) controlled under the Stockholm Convention.
fentanyls and their derivatives as well as two fentanyl precursors (at the request of the International Narcotics Control Board)
gases controlled under the Kigali Amendment of the Montreal Protocol.

Relationship between old and new HS
Businesses will need to review their current customs classification policy and understand how the old codes will map into the new HS 2020 codes. There are three main mappings between that reflect the changes:

1. One-to-one mapping

For example:

4015.11 is deleted and mapped to 4015.12 as a new code by adding some medical consumables in the description.
2. Many-to-one mapping

For example:

6201.11 and 6201.91 will merge to 6201.20.

3. One-to-many mapping
For example:
8109.20 will split into 8109.21 and 8109.29
8462.21 will split into 8462.23, 8462.24, 8462.25, 8462.26.

4. Scope of heading changes and gets splits into multiple chapters/ headings

This is probably the most challenging type of change for business. For example:
Heading 8438 has been narrowed by excluding machinery for the extraction or preparation of microbial fats and oils and subheading 8479.20 has been expanded to cover machinery for the extraction or preparation of microbial fats and oils.
When did these changes take effect globally?

Not all countries have migrated to the new HS 2022 nomenclature on January 1, 2022, based on prior experience we are expecting this whole migration to take at least six months for most countries.

However, more developed nations have already started implementing the changes. The European Commission has already published the latest version of the Combined Nomenclature which is applicable from January 1, 2022 across the EU member states.

Therefore, the new CN will be application for classification of goods:

at importation or exportation
when subject to intra-EU trade statistics e.g. Instrastat declarations.

 What should businesses do?

Businesses should review their customs classification policy and identify if any changes are needed based on HS 2022. In addition, they should review the mapping and correlation tables.

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Customs

National Assembly summons Customs, CBN, Finance Ministry, Webb Fontaine over unutilised scanners at ports

The Eyewitness reporter
The joint committee on Customs and Excise of the National Assembly has summoned the Comptroller General of the Nigeria Customs Service, Col.(retd) Hameed Ali to appear before it to explain the controversial contract for the provision of scanning machines at the ports and why they have not been functional despite enormous resources committed into their procurement.
To join the Customs boss for questioning are the Governor of the Central Bank of Nigeria (CBN) Mr Godwin Emefiele, and the Minister of Finance,  Mrs Zainab Ahmed as well as the officials of Webb Fontaine, the IT providers.
The apparently angry members of the joint committee, who gave the directive during their investigative hearing on Sunday in Abuja, said they were miffed by the non-utilization of the scanners procured at huge costs by the federal government.
According to Francis Alimikhena, the Joint Committee Chairman, the national assembly will not brood absenteeism or representations from those summoned as the matter is of utmost economic importance to the country.
“We do not want to see any representation. We want to take a decision about Nigeria. This is about the revenue of the country.”

“We want to see the minister, the CG customs, the CBN governor, President of the National Association of Government Approved Freight Forwarders (NAGAFF),” declared the committee chairman.

“We do not want to see any representation. We want to take a decision about Nigeria. This is about the revenue of the country. Webb Fontaine is essential in this matter. They have made serious money in this country.”

Mr Alimikhena said the contract was given to Webb Fontaine by the Finance Ministry to provide the IT infrastructure for the NCS for scanning.

Not happy with the development, he frowned upon the absence of the Minister, the CBN governor and other stakeholders involved at the Sunday investigative hearing.

He however asked that the customs, CBN, ministry of finance, Webb Fontaine and other invited stakeholders to appear before the committee at the next hearing slated for Thursday, September 29th, 2022, warning that the committee would not attend to any representatives as the issue at stake involved revenue generation to the country.

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Customs

Customs collects N1.7trn  revenue in 8 months

CGC, Ali

 

–embarks on aggressive revenue hunts to meet target

The Eyewitness reporter

The Nigeria Customs Service has collected a whooping sum of  N1,755,386,486,390.02  as revenue in the first eight months of the year spanning January and August.

The service made the highest monthly earnings of N241,903,781,854.46 in August as the service intensifies its aggressive revenue drive to meet the expectations of the Federal Government which has come to rely on the revenue from the service to fund its critical project.

This follows the diversification of government to non-oil sectors and expands its tax base due to the dwindling revenue from the oil sector.
The revenue in the first eight months of 2022 is N363,436,321,614.95 higher than N1,391,950,164,775.97 the customs collected in the corresponding period of 2021.

Abuja has increased its focus on non-oil revenue sources, prompting higher expectations from revenue collection agencies such as the NCS, Federal Inland Revenue Service (FIRS), Nigerian Ports Authority (NPA), Nigerian Maritime Administration and Safety Agency (NIMASA), among others.

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Customs

Why we adopted direct auction sale for scrap vehicles—-Customs

seized vehicles waiting to be auctioned

 

The Eyewitness reporter
The Nigeria Customs Service has explained the reason why it recently disposed of scrap vehicles under its control through the direct auction sale method.
In an exclusive interview with our reporter, the National Public Relations Officer (NPRO) of the Service, Deputy Comptroller Timi Bomodi, explained that no sane person could purchase those damaged vehicles for use except those who melt them into metal as raw materials.
” Yes, the vehicles we auctioned through direct sales were all scraps. They are vehicles used by smugglers which are purposely built for their nefarious activities.
“These vehicles are damaged beyond repairs and the service could not upload such vehicles on its auction portal to the general public.
“That was why we sold them directly at very ridiculously low prices to iron smelting companies who will melt them into iron.
“These vehicles litter all our commands in the country and are constituting an environmental nuisance.
“So we needed to evacuate them from those places for the safety of our officers who are constantly being faced with the danger of attacks from snakes and other dangerous reptiles which hide under the cover of these scrap vehicles”, Bomodi declared.
He said his explanation was meant to clarify what he described as false information and misconception being peddled to the public by auctioneers.
The auctioneers have accused the Customs of branding about 6000 seized vehicles as scraps before selling them off at cheap prices to their cronies.
The aggrieved auctioneers have further claimed that the Customs conducted the auction of the vehicles without open competitive bidding as it’s enshrined in the Bureau of Public Procurement (BPP) Act, 2007.
“So far, about 6,000 vehicles have been sold to their cronies through the so-called direct auction allocation.
“The vehicles, which could have fetched the government huge revenue, were sold as scraps at giveaway prices.

“We all know that it is a ploy to enrich their favoured contractors at the expense of the government.

” The government is being denied the revenue it would have realised from open competitive auctions.
” If this government is serious, the Comptroller-General of Customs, Hameed Ali should be answering tough questions from either the Economic and Financial Crimes Commission (EFCC) or the National Assembly by now,” the Auctioneers claimed.
They further alleged that instead of selling the confiscated goods through public auctions as mandated by the law, the NCS had been selecting the dealers it sells to.
“What the BPP Act says
Section 55 (3) (5) of the BPP Act stipulates that open competitive bidding shall be the primary source of receiving offers for the purchase of any public property offered for sale.
“For the purposes of this Act, public property is defined as resources in the form of tangible and non-tangible assets (ranging from serviceable to the unserviceable).

“According to a letter from the NCS to a company, AMEX West Africa Limited and dated March 25, 2022, with reference number: NCS/ADM/MGT/012/S.2/C, signed by the Chairman, Direct Disposal of Scraps Committee, Comptroller A.D Sanusi, titled, ‘Direct auction allocation of scrap vehicles and other items,’ it was indicated therein that 338 vehicles were sold for N3,380,000 through direct auction allocation in Abuja.
It read, ‘’I am directed to inform you that the Comptroller-General of Customs, acting on the provisions of Customs and Exercise Management (Disposal of goods) Act, CAP C46, Laws of the Federation of Nigeria, 2004, hereby allocates the under-listed 338 lots of various scrap vehicles domiciled at Katsina State Area Command to your company as auction sales for the purpose of disposal, smelting and fabrication into raw materials for production valued at N3,380,000 only.

“All vehicles disposed of must be evacuated from the premises within 10 working days after payment or risk forfeiture.

” Furthermore, you are to note the following: Application for replacement of allocated vehicles would not be entertained. All allocation letters transferred or sold by the allottee to a third party shall be at the buyer’s risk.’’
However, Bomodi stated that the auctioneers were only being mischievous and clever by half in their claims as the vehicles auctioned through the direct disposal method were actually scraps and not branded as such.
He disclosed that Customs still conducts open bidding auction exercises on its auction portal.
“The last time we conducted the auction of serviceable vehicles on our portal was early this year and another round of the exercise will soon be conducted” he disclosed.

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