We’re not owing duties on rice importation – Stallion Group

The company, in a statement on Saturday, said the clarification became necessary following reports that the its subsidiaries failed to pay the mandatory charges to the Federal Government through the Nigeria Customs Service.

It said Popular Farms and Mills Limited and Masco Agro Allied Industries Limited, which imported rice into the country had paid the mandatory charges of N17 billion to the NCS.

The statement reads in full: “The attention of Stallion Group has been drawn to media reports referring to the House of Representatives yesterday directing that a Committee be constituted to investigate alleged duty evasion on rice imports in 2014.

“1. This statement from the Stallion Group is issued in response to that call:

“i. Stallion Group firmly denies having committed any fraud or evaded any due obligations of import duties as alleged. Popular Farms and Mills Limited and Masco Agro Allied Industries Limited being subsidiaries of Stallion Group imported 595,539 & 54,500 metric tonnes of Rice,and fully paid a total duty and levies of N17 Billion at the prevailing duty and levy rates as approved by Mr. President for millers under the new National Rice Policy contained in Circular No. BD/FP/TT/50/1/99 of 8th July, 2014.

“ii. Our rice production companies (Popular Farms and Mills Limited and Masco Agro Allied Industries Limited) are contending that legally the retrospective duties being demanded by the Nigeria Customs Service are not payable and will adhere to any final judgment made by the country’s rule of law and due process.

“iii. The rice companies have also issued a bond to secure Nigeria Customs from any potential proven obligation; therefore there is no question of any fraud or evasion. Our companies have not sought or received any “waivers” as misunderstood by some.

“iv. Stallion is a pioneer in the fully integrated rice value chain in Nigeria with existing operating capacities of 430,000 metric tonnes, backward integration operations, a countrywide distribution system and firm investment plans to reach a targeted production of 1.50 million tonnes of rice within the next 3 years.

“v. As an early starter since 2007, the group has played a key role in enhancing local rice production in the country, complementing the efforts of the Federal Governmentthrough its Agricultural Transformation Agenda.

“vi. The appropriate Ministries of the Federal Government have duly certified the group’s rice companies, as bonafide investors and integrated rice millers with proven backward integration programme.

“vii. Our companies have presented all documents and facts to the all the relevant ministries and authorities with its position with full transparency and compliance to the requirements.

“viii. Likewise, we will present all the information/documentation to the proposed Committee constituted by the Honorable House of Representatives and assure the fullest cooperation.

“ix. We are a law-abiding group with international operations in several countries that strictly comply with all applicable law, rules and regulations. Stallion will never evade or avoid any lawfully due obligations in any of its business transactions in any country.

“x. We remain committed and undaunted in our resolve to support the Government to achieve its lofty resolve to grow the economy particularly in the enhancement of the rice value chain and the quest for self-sufficiency and food security.

“2. Section 11 of the Customs, Excise TariffEtc (Consolidation) Act No. 4 of 1995provides as follows:

“Notwithstanding the provisions of section 12 of this Act, the President may on the recommendation of the tariff review board by order;

“(a) impose, vary or remove any duty or levy;

“(b) add to or vary any of the schedules;

“© delete the whole or any part of any of the schedules;

“(d) substitute a new schedule or schedules thereto.”

“3. In exercise of his powers under section 11, with effect from 26 May 2014, thePresident amended the duty rate on rice under HS Code 1006 as follows:

“(a) for investors with rice milling capacity and verifiable backward integration program shall attract 10% duty rate and levy of 20%.

“(b) other importers would import at duty rate of 10% and levy of 60%

“4. The above approval was communicated toCustoms, other agencies of the Federal Government and members of the trading public vide Ministry of Finance Circular No BD/FP/TT/50/1/99 dated 8th July,2014.

“5. Acting on the above approval, a number of millers that satisfied the stipulated criteria proceeded to import substantial quantities of rice for which duty and levies were duly charged and paid. The duty applicable to Popular Farms and Mills Limited and Masco Agro Allied Industries Limited was that applicable to millers as the companies own rice mills in Kano, Lagos and Makurdi with cumulative milling capacity of 430,000 metric tonnes per annum.

“6. The circular issued by the FederalMinistry of Finance did not categorically state that there would be quota allocations to the millers. It merely stated that Importation of Rice by millers shall attracts 10% duty rate with a levy of 20% and will be limited to the national supply gap to be determined by a committee (for a period of four years).

“7. The millers therefore proceeded to import rice and to pay duty and levy at the prevailing rate of 10% and 20% respectively. In view of the amendment of the duties and levies on rice, the NigeriaCustoms Service immediately started accepting declarations from importers of rice by virtue of section 37(1) and (2)(a) of the Customs and Excise Management Act Cap C45 2004 which mandatesCustoms to charge duty at the prevailing rate being the rate approved by thePresident as stated above.

“8. The process continued until November 2014 when the Federal Ministry ofAgriculture and Rural Development came up with quota allocations to millers. At this time the millers had already imported substantial quantities of rice for which duties and levies were paid in accordance with the prevailing duty and levy rate.These transactions were certified byCustoms, payments were collected, goods cleared and released from Customs control.

“9. It was therefore with significant shock to the industry, when the Former Minister of Agriculture unilaterally conducted a rice allocation in December 2014 (7 months after the policy commenced), and then backdated the issuance of this allocation retrospectively to May 2014. It then communicated these to Nigerian Customs and Ministry of Finance as the official position of the Inter-ministerial Committee (which was misleading). As a result of this flawed process, Popular Farms and Mills Limited and Masco Agro Allied Industries Limited were then asked to pay extra duties (in addition to the earlier NGN17.15 billion already paid), under the claim they over imported during a period when no allocations were given by government. Essentially, the companies were asked to pay backdated duties on rice that had already been imported, distributed, and sold in Nigeria, between May and December 2014. They are asked to “pay duties again” for rice they had already paid duties upon.”