Court Orders Customs to Pay $150,000 for Unlawful Auction of Agro Engineers’ Equipment

The Federal High Court in Lagos has ordered the Nigeria Customs Service (NCS) to pay $150,000 in special damages to MV Agro Engineers Nigeria Limited and its Indian sister company, MV Agro Engineers Pvt Limited, after finding that Customs unlawfully auctioned part of their imported agricultural equipment.

Justice Daniel Osiagor, in his judgment also awarded the companies N500,000 in general damages, with 10 per cent post-judgment interest until the judgment sum is fully liquidated.

The court further declared that the auction of one of the companies’ containers violated their constitutional right to own property, holding that cargo subjected to a government security investigation could not lawfully be treated as overtime or abandoned cargo while the investigation remained unresolved.

Justice Osiagor held that the period during which cargo remained under government security investigation should not count towards determining whether it had become overtime cargo.

“A Government Security check places abeyance time of counting overstay of cargo,” the judge held.

The judgment arose from a suit, FHC/L/CS/2081/24, filed by MV Agro Engineers Nigeria Limited and MV Agro Engineers Pvt Limited under the Fundamental Rights (Enforcement Procedure) Rules, 2009.

The companies had accused Customs of unlawfully auctioning one of six containers containing specialised equipment imported for a Federal Government rice-processing project.

According to the applicants, the first applicant, a Nigerian agricultural engineering company, had secured a contract from the Federal Ministry of Agriculture and Rural Development for the design, engineering, manufacture and construction of integrated rice-processing plants across Nigeria.

They said the second applicant, an Indian company, served as its sister company and procurement agent.

The companies stated that they imported specialised rice-processing equipment valued at about $502,500 from India, with the shipment arriving through Apapa Port in 2020.

They said the equipment qualified for import-duty exemption because it was intended exclusively for the Federal Government project and that previous consignments imported under the same contract had enjoyed similar exemptions.

However, according to the applicants, Customs demanded an Import Duty Exemption Certificate, causing delays in clearing the shipment.

They said they eventually obtained the certificate from the Federal Ministry of Finance, Budget and National Planning, but Customs subsequently informed them that the shipment was subject to an investigation by the Office of the National Security Adviser (ONSA).

The applicants said the investigation lasted several years before ONSA eventually approved the release of the cargo and communicated its decision to them, Customs and the terminal operator.

Despite the approval, they alleged that Customs continued to withhold the shipment.

They said they later discovered through the terminal operator that one of the containers had been auctioned and removed from the terminal.

The companies alleged that they were not notified of the proposed auction, served with any notice declaring the goods abandoned or overtime cargo, or given an opportunity to challenge the proposed sale.

They therefore asked the court to declare the auction a violation of their constitutional right to property under Section 44 of the 1999 Constitution and Article 14 of the African Charter on Human and Peoples’ Rights.

Customs opposed the action and urged the court to dismiss it.

The service argued that the applicants had failed to establish that the container was compulsorily acquired and maintained that the cargo had become overtime and abandoned because it was not cleared within the stipulated period.

Customs also challenged the applicants’ claim for $307,000, arguing that the alleged value of the contents of the auctioned container had not been strictly proved.

In a preliminary objection, Customs further argued that the dispute concerned an alleged unlawful auction rather than compulsory acquisition and therefore did not fall under the Fundamental Rights (Enforcement Procedure) Rules.

Justice Osiagor dismissed the objection, holding that the applicants’ originating process disclosed an alleged violation of their constitutional right to own property.

Relying on the Supreme Court decision in Nigeria Delta Power Holding Company Limited v. Ulonna Michael (2024), the judge held that the auction of a person’s goods without consent could fall within the constitutional right to acquire and own property.

On the substantive dispute, the court found that it was established that Customs had auctioned the applicants’ container.

Justice Osiagor particularly faulted Customs for failing to produce the alleged court order which it claimed authorised the condemnation and auction of the container.

The judge noted that Customs had claimed that the container was “condemned by the order of this court and auctioned accordingly”, but no such order was exhibited.

The court also examined the documentary evidence and established a timeline that contradicted Customs’ claim that the cargo had simply been abandoned.

The Bill of Lading was dated January 9, 2020, while the import-duty exemption was issued on July 28, 2020.

The court further noted that ONSA wrote to Customs and the terminal operator on February 27, 2024, approving the release of the cargo.

However, Customs’ records showed that the container was allocated to an auction buyer on July 1, 2024, while APM Terminal records showed that it left the terminal on August 15, 2024.

Justice Osiagor held that the import-duty exemption and ONSA’s approval for release both predated Customs’ listing of the container for auction.

The judge consequently rejected Customs’ position that the container had become abandoned merely because it was not cleared within the prescribed period.

The court also held that an importer should not be penalised for delays arising from a government security investigation beyond the importer’s control.

Justice Osiagor said he had taken judicial notice of the growing cases in which importers were left with “humongous demurrage Bills” arising from prolonged government investigations into their cargoes.

He described the practice as an “anti-commercial attitude” that should be “deprecated in the strongest term.”

Having found merit in the applicants’ case, the court granted the two principal declarations sought.

However, Justice Osiagor declined to award the full $307,000 claimed as special damages, noting that only one of the six containers had been auctioned.

The judge therefore awarded $150,000 in special damages, alongside N500,000 general damages.

The judgment sum will attract 10 per cent interest annually from July 6, 2026, until fully liquidated.

Dissatisfied with the judgment, Customs has now filed a Notice of Appeal at the Court of Appeal, Lagos Judicial Division, challenging the decision on six grounds.

The service is asking the appellate court to set aside the judgment and dismiss the suit, arguing, among other things, that the auction of overtime cargo following an importer’s failure to clear it within the statutory period constituted enforcement of Customs law rather than compulsory acquisition of property under Section 44 of the Constitution.

Customs is also challenging the trial court’s findings on the timeline of the shipment and the effect of the ONSA investigation. In its appeal, the service maintains that the container had become overtime cargo before the security clearance was issued in February 2024 and argues that delays arising from an investigation by ONSA, which was not a party to the suit, could not legally be attributed to Customs.

The service is further contesting the $150,000 special damages, arguing that the applicants failed to strictly prove the actual value of the contents of the auctioned container. Customs is urging the Court of Appeal to allow the appeal, overturn the judgment and dismiss the applicants’ claims.