Nohena Insights · Valuation
Why a customs valuation query happens in Nigeria
A customs valuation query happens when the declared value of an import is inconsistent with reference data or lacks sufficient evidence, prompting NCS to request justification for the declared value.
Nohena · 12 October 2026 · 11 min read
Why a customs valuation query happens in Nigeria
A customs valuation query arises when the declared value of an import appears inconsistent with reference data or lacks sufficient supporting evidence, prompting the Nigeria Customs Service (NCS) to request justification. Understanding the triggers for a customs valuation query in Nigeria is the first step toward preparing declarations that anticipate and withstand scrutiny, reducing the risk of delays and costly uplifts.
The process of assigning a customs value is the foundation of an import declaration. It determines the amount of duty, value-added tax (VAT), and other levies payable. When the NCS questions this value, it introduces friction into the clearance process. Proactive compliance involves more than just filling out a form; it requires building a defensible case for your declared value from the outset. Decision support tools exist to help agents see their declaration the way a customs risk engine will, enabling them to prepare a lodgement-ready document pack before a query is ever raised. Nohena prepares a lodgement-ready declaration and document pack; the licensed agent lodges .
The legal basis for customs valuation
The NCS bases its valuation process on the Customs and Excise Management Act (CEMA) and aligns with the globally accepted framework of the World Trade Organization's valuation agreement. CEMA provides the domestic legal authority for the NCS to examine goods and documents to ascertain the correct value for duty purposes. This domestic law is harmonised with Nigeria's international commitments as a signatory to the WTO Agreement on Customs Valuation, formally known as the Agreement on Implementation of Article VII of the General Agreement on Tariffs and Trade (GATT).
This WTO agreement establishes a fair, uniform, and neutral system for valuing goods. It outlines six hierarchical methods that must be applied in sequential order. A query is often the start of a dialogue about which method applies and whether the evidence supports it.
Transaction Value: The primary method, this is the price actually paid or payable for the goods when sold for export to the country of importation. It is adjusted for certain elements like specific commissions or royalties. The vast majority of compliant declarations should successfully use this method.
Transaction Value of Identical Goods: If the first method cannot be used, customs will look to the value of identical goods imported at or about the same time.
Transaction Value of Similar Goods: If no identical goods data is available, the value is based on similar goods imported at or about the same time.
Deductive Value Method: This method uses the unit price at which the imported goods, or identical or similar goods, are sold in the greatest aggregate quantity on the domestic market, with deductions made for post-importation costs and profit.
Computed Value Method: This method builds up the value using the costs of production, profit, and general expenses for the imported goods. It requires extensive cooperation from the overseas manufacturer.
Fall-back Method: If none of the preceding methods can be applied, customs may use reasonable means consistent with the principles of the WTO agreement to determine the value. This method provides flexibility but must not be based on arbitrary or fictitious values.
A valuation query is fundamentally a challenge to the use of Method 1. The customs officer is signaling that they have reason to doubt the declared transaction value, and they require the importer or agent to prove its validity.
Common triggers for a customs valuation query in Nigeria
A valuation query is most often triggered by a significant deviation between the declared value and the customs reference database, or by inconsistencies within the declaration documents themselves. While many factors can contribute, a few common red flags account for the majority of queries.
Value deviation from reference price: The declared value is significantly lower than the value for identical or similar goods stored in the customs database. The NCS maintains a historical price database, accessed through platforms like the B'Odogwu portal, which serves as a risk assessment benchmark. A declaration with a value that falls below an expected threshold for a given 10-digit HS code will likely be flagged for review.
Documentary inconsistencies: Information across the key trade documents does not align. This includes discrepancies between the commercial invoice, the electronic Form M, the Pre-Arrival Assessment Report (PAAR), the bill of lading or airway bill, and the Single Goods Declaration (SGD). Mismatched quantities, descriptions, weights, or values create doubt about the integrity of the entire declaration.
Incomplete or suspect invoices: The submitted commercial invoice is a critical piece of evidence. A query is likely if it lacks essential details like a unique invoice number, date, seller and buyer information, a complete description of the goods, unit prices, total price, and the agreed delivery term (Incoterms). Using a pro-forma invoice instead of a final commercial invoice is another major trigger, as it does not represent a finalised sale.
Related-party transactions: When the buyer and seller are related (for example, a parent company and its subsidiary), customs may investigate whether that relationship influenced the price. The transaction value is still acceptable if the importer can demonstrate that the price closely approximates a test value, such as the price in sales to unrelated buyers of identical or similar goods.
Unusual freight or insurance costs: On a Cost, Insurance, and Freight (CIF) basis, the customs value includes the cost of the goods, international freight, and insurance. If an agent declares an unusually low or zero freight or insurance cost, customs will likely question it. In the absence of an insurance certificate, the NCS is empowered to apply a default rate of 1.5% of the Free on Board (FOB) value for insurance.
HS code and value correlation: The declared Harmonised System (HS) code for the goods implies a certain nature, quality, and, consequently, a plausible value range. If an agent declares a low value typically associated with a basic commodity but uses an HS code for a high-specification, finished product, the mismatch will trigger scrutiny.
The role of the PAAR and reference pricing
The Pre-Arrival Assessment Report provides an initial opinion on value and classification, but the final determination rests with the customs officer at the port, who may issue a query if the declared value conflicts with their reference data. The PAAR is an essential risk management tool generated by the NCS PAAR Ruling Centre. It provides an advisory assessment of the HS code and customs value based on the documents submitted with the Form M.
However, it is critical to understand that the PAAR is not a final, binding ruling on value. It is an assessment. The customs officer at the cargo release point, whether at the seaport or airport, has the authority and responsibility to conduct a final examination of the documents and, if necessary, the goods. If this officer believes the value declared on the SGD, even if it matches the PAAR, is incorrect, they can and will issue a query. This often happens when the officer's terminal-level data or the B'Odogwu system indicates a different benchmark price.
The reference price database is a powerful risk assessment tool, but it is not the law. The WTO Valuation Agreement is the law. An importer has the right to have their goods assessed based on the transaction value, provided they can prove it. A query is simply the official request for that proof.
How to prepare a defensible valuation declaration
Preparing a defensible valuation requires assembling a complete and consistent set of commercial documents that unequivocally support the transaction value method. A proactive approach focuses on building a case so strong that a query becomes unlikely.
Secure a final commercial invoice. The invoice must be the final version, not a pro-forma. It must contain all necessary details to stand alone as a complete record of the transaction.
Align all documents meticulously. Before preparing the SGD, cross-reference every detail on the invoice, Form M, PAAR, packing list, and bill of lading. The description of goods, quantity, weight, and value must be identical across all documents.
Provide definitive proof of payment. This is the most powerful evidence to support a transaction value. A SWIFT message confirmation, a letter of credit, or authenticated bank statements that show the transfer of funds for the declared value are difficult for customs to refute.
Document any discounts or special pricing. If the price is legitimately low due to a bulk purchase, a seasonal discount, or because the goods are near end-of-life, provide evidence. This can include email correspondence with the supplier, official price lists, or contractual agreements that explain the special pricing.
Declare all dutiable additions correctly. The customs value is not always just the invoice price. Under WTO Valuation Article 8, certain costs must be added if they are not already included. Failure to declare these is a common error.
The following table outlines common cost components and their dutiability.
Responding to a valuation query
Responding effectively to a valuation query involves promptly providing a structured set of documents and a clear explanation that validates the declared transaction value. A query should be treated as a formal request for information, not an accusation.
Analyse the query. First, understand the specific basis for the query. Is customs questioning the entire value, the classification, the freight component, or another specific element? The nature of the query dictates the required evidence.
Assemble the evidence pack. Gather all supporting documents as discussed previously. This includes the final commercial invoice, proof of payment, bill of lading, packing list, insurance certificate, and any correspondence that justifies the price.
Prepare a written response. Draft a clear, professional letter that addresses the query directly. Explain why the declared transaction value is correct according to WTO principles and reference the specific evidence you are providing in your document pack.
Engage professionally. Maintain a professional and cooperative dialogue with the customs officer. The goal is to provide the information they need to close the query and release the cargo.
Thorough preparation is the best defence against compliance issues. For more analysis on Nigerian trade compliance, explore our additional insights .
Consequences of unresolved queries and under-declaration
Unresolved valuation queries can lead to an uplift in the customs value, payment of additional duties, and potentially severe penalties for under-declaration. When an importer or agent cannot provide sufficient evidence to defend the declared transaction value, the NCS will reject it. They will then proceed to the next method in the valuation hierarchy, almost always resulting in a higher customs value, known as a value uplift.
This uplift triggers a demand notice for the shortfall in payment. This includes not only the additional customs duty but also the corresponding 7.5% VAT and other applicable levies, such as the 0.5% ECOWAS Trade Liberalization Scheme (ETLS) charge. Furthermore, CEMA provides for significant penalties for making false or inaccurate declarations. These can range from a percentage of the duty shortfall to, in serious cases, the outright seizure of the goods. A history of such issues can also lead to an importer being flagged as high-risk, guaranteeing heightened scrutiny on all future shipments.
FAQ
What is the difference between a PAAR uplift and a valuation query?
A PAAR uplift is an increase in the assessed value by the NCS PAAR Ruling Centre before the declaration is lodged. It happens during the pre-arrival assessment phase. A valuation query occurs after the declaration has been lodged, when an officer at the port or terminal challenges the value declared on the Single Goods Declaration (SGD).
Is using the customs reference price mandatory?
No, the primary basis for valuation under both Nigerian law and the WTO agreement is the transaction value. The customs reference price is a risk assessment tool used by the NCS to flag declarations that may be undervalued. If your declared value is lower than the reference price, you are not automatically wrong, but you must be prepared to provide strong evidence to prove your transaction value is correct.
Can I be penalised if my supplier gave me a fake invoice?
Yes, the importer of record is ultimately responsible for the accuracy of the information submitted to customs. CEMA holds the declarant accountable for the declaration's contents. This makes conducting due diligence on suppliers and their documentation a critical part of import management, as the legal liability rests with the importer.
How does my choice of Incoterms affect valuation?
Incoterms are fundamental to valuation because they define what costs are included in the price on the commercial invoice. For example, if you buy on Free on Board (FOB) terms, the invoice price only covers the goods up to the point they are loaded on the vessel. To arrive at the full CIF (Cost, Insurance, and Freight) value required for duty assessment in Nigeria, you must separately declare and add the cost of international freight and insurance.