Federal High Court affirms that import duty does not apply on passengers’ personal effects

Federal High Court dismisses FIRS application for stay of execution on VAT judgement

Dear All,

A Federal High Court (FHC), sitting in Abuja, has ruled that payment of import duty on goods/personal effects contained in a passenger’s baggage is unlawful. This ruling was delivered in the case of Kehinde Ogunwumiju SAN Vs Nigeria Customs Service & Anor[1]. The Nigeria Customs Service (NCS) had demanded and collected import duty and other related charges from the Plaintiff in respect of personal effects i.e. a Louis Vuitton laptop bag brought into Nigeria in passenger baggage.

In determining the case, the FHC stated that under Section 8 and Schedule 2 of the Customs, Excise Tariff, Etc. (Consolidation) Act, personal effects contained in a passenger’s baggage are exempt from import duty provided that the personal effects are not intended for sale, barter or exchange. 

The FHC also noted that NCS could only lawfully demand and collect import duty and other related charges on personal effects if it can establish, vide clear and credible evidence, that the personal effects are meant for sale, exchange or barter.

The Nigeria Customs Service (NCS) had in October 2019 stated that imported items above N50,000.00 would attract import duty, as they would be deemed as merchandise in baggage i.e. goods for sale, which are imported in a traveller’s baggage. The FHC, however, has found this assertion to be inaccurate, as the extant laws do not specify a threshold for determining merchandise in baggage.

The decision of the FHC, in this case, is consistent with extant laws and general global practice, where personal effects – regardless of value – are not subject to import duty and related taxes. It is, therefore, a welcome development to see the courts move quickly to correct this practice of using an indicative value to determine merchandise in baggage.

This notwithstanding, there is a genuine issue of tax evasion by travellers who bring in merchandise in personal baggage. These travellers claim the merchandise are personal effects and gain an unfair advantage over contemporaries bringing in the same merchandise vide the seaports – where these goods are more likely to have duties and other related taxes imposed on them. 

This ruling throws a positive challenge to NCS to develop a legitimate approach to arrest potential revenue leakage for passengers who choose the route of personal effects to avoid import duty and level the playing field for competition.

[1] FHC/ABJ/CS/1113/2019

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