Following President Muhammadu Buhari’s assent to the Finance Act 2020 on 31st December, 2020 and plans by the Nigeria Customs Service to begin implementation of the 5% levy on some categories of cars which is reduction from 35% implemented by the Federal Government of Nigeria since 2014, the Incorporated Trustees of Global Integrity Crusade Network (GICN) and other plaintiffs have commenced litigation seeking to strike down Section 38 of the Finance Act 2020 which gives legal basis to this policy.
It has been revealed that the Finance Act 2020 reduced tariff on the importation of Fully Built Vehicle (FBU) from 35% to 5% whereas import duty for Semi Knocked Down (SKD) remains at 10%. This means that all the businessmen who have invested in the assembly of SKD commercial vehicles including Tankers for which Nigeria has a history of competence beyond the New Automotive Industry Development Plan (NAIDP) will suffer. However, dealers in FBU can now import freely without recourse to Nigerian assemblers including body builders that have existed for generations.
In a suit marked FHC/ABJ/CS/157/2021 and filed on 10th February, 2021 before the Federal High Court, Abuja the NGO has questioned whether the President and Commander-in-Chief of the Armed Forces, Federal Republic of Nigeria who proposed Section 38 of the Finance Bill 2020 as an Executive Bill complied with Section 13 (1) of the Customs and Excise Tariff Etc (Consolidated) Act before doing so. Section 13 (1) requires the President to receive the recommendation of the Tariff Review Board before modifying tariffs, duties and levies.
It is noteworthy to state that the Tariff Review Board is very important in this process because its composition includes business and organizations whose interest would be directly or indirectly affected by any government policy on tariff, duties or levies modification. The NGO’s case is that this statutory condition precedent was not met by the Executive Arm of Government in proposing Section 38 of the Finance Act and this renders the Section null and void.
Curtis Partners, an Abuja based law firm which represents Plaintiffs, has since notified the Federal Government, National Assembly, Ministry of Finance and Nigeria Customs Service of the pendency of this suit as well as applications for Interlocutory Injunction while urging all parties to maintain status quo. Several players in the automobile sector are made parties to this suit, which is the first of its kind in the sector since the advent of democracy in Nigeria.
GICN by this suit desires to ensure, based on its registered aims and objectives, that due process is observed in the formulation and implementation of government policies. The NGO is also concerned about seeing to the sustenance of the huge gains so far made by Nigeria since the adoption of the Automotive Industry Plan in 1993 with the National Automotive Design and Development Council (NADDC) serving as the platform for its implementation.
The group pointed out in their Originating Summons that there is already over $2 Billion investment in the sector, which ought to translate into 6000 jobs, 18,000 indirect jobs and increase assemblage capacity to almost 500,000 vehicles per day if properly managed by the NADDC. This volume of investment is supposed to put Nigeria in a vantage position as full implementation of the African Continental Free Trade Agreement goes into full effect. On the flip side, all these could be lost because of this sudden policy somersault by the Federal Government of Nigeria.
When contacted for comment, Barrister Ayodele Akisanya of Curtis Partners noted that the matter is now subjudice and could not be commented on. He noted that this is a ground-breaking case in its own way and should interest every Nigerian because it touches on due process in law making and policy implementation.
As at Sunday, 15th February, 2021 the Nigeria Customs Service while speaking through its Comptroller-General, Mr. Hameed Ali, told News Agency of Nigeria (NAN) that it has received directive from the Ministry of Finance, Budget and National Planning to implement the reduced import levy on vehicles, which will begin before the end of February.