Landmark Ruling: Court Halts Nigeria Customs Service’s Excise Duty Collection on Non-Alcoholic Beverages Introduction In a landmark ruling with significant implications for Nigeria’s beverage industry, Justice Obiora Egwuatu of the High Court in Abuja has ordered the Nigeria Customs Service (NCS) to immediately stop the collection of excise duty on non-alcoholic, carbonated, and sweetened beverages. This decision, provides temporary relief to the Nigeria Employers’ Consultative Association (NECA) and its members, including Nigeria Bottling Company Limited (NBC) and Seven-Up Bottling Company Limited (SBC), pending compliance with Section 13 of the Customs, Excise Tariff, etc. (Consolidation) Act, Cap C49 LFN. This ruling is a major victory for the Organised Private Sector of Nigeria (OPSN), which has opposed the excise duty introduced by the Finance Act 2021—a tax measure that imposed a ₦10 per litre levy on non-alcoholic beverages from 2022. The Manufacturers Association of Nigeria (MAN) and NECA had strongly resisted this policy, arguing that it increased production costs and could lead to job losses, inflation, and business closures. Key Highlights of the Judgment Customs Service Lacks Authority to Enforce Excise Duty on Non-Alcoholic Beverages The court ruled that the Nigeria Customs Service (NCS) has no statutory power to administer, assess, or enforce excise duties on non-alcoholic beverages without explicit authorization under an enabling law. This means the NCS cannot unilaterally impose and collect excise duties on these products unless a specific legal framework is established. Interpretation of ‘Non-Alcoholic, Carbonated, and Sweetened Beverages’ Justice Egwuatu clarified that the phrase “non-alcoholic, carbonated, and sweetened” should be read conjunctively, not disjunctively. This means that for a beverage to be subject to excise duty, it must meet all three conditions simultaneously—it must be non-alcoholic, carbonated, and sweetened. This interpretation significantly narrows the scope of products that can be taxed under the contested excise regime. Finance Minister’s Fiscal Policy Measures Declared Invalid The court nullified the 2022 Fiscal Policy Measures and Tariff Amendments issued by the Minister of Finance on March 1, 2022, ruling that the amendments were beyond the Minister’s powers. This ruling underscores the importance of following due legislative processes in tax administration. Nigeria Customs Service Barred from Unlawful Demands on Businesses The ruling also addressed complaints regarding transport and feeding allowances demanded by NCS officials from businesses. The court held that such demands were illegal, reaffirming that government agencies must operate within the limits of the law. Immediate Suspension of Excise Duty Collection The court ordered the NCS to cease the collection of excise duty on the specified beverages until full compliance with the applicable legal provisions is achieved. This effectively means that beverage manufacturers no longer need to pay the excise duty unless the government rectifies the legal issues highlighted in the ruling. Award of Costs The plaintiffs, NECA, NBC, and SBC, were awarded ₦200,000 in costs, reinforcing the principle that failure to follow legal procedures renders government actions null and void. Implications of the Judgment 1. Relief for Manufacturers and Consumers The ruling is a huge win for the Nigerian manufacturing sector, especially companies in the food and beverage industry. With the removal of the excise tax burden, manufacturers can stabilize their production costs, prevent price hikes, and avoid potential layoffs. This decision may also provide temporary relief to consumers, who were expected to bear the cost of the tax through higher retail prices. 2. Legal and Policy Precedent This case sets a critical legal precedent for tax administration in Nigeria. It highlights the importance of compliance with statutory processes in tax imposition and collection. Going forward, government agencies must ensure that all tax policies are backed by proper legislation to avoid legal challenges. 3. Possible Government Response While this ruling halts the immediate collection of excise duties on non-alcoholic beverages, the Nigerian government may seek alternative ways to reintroduce the tax legally. This could involve: Amending the Finance Act to align with legal requirements. Reviewing the Customs and Excise Tariff Act to properly define taxable beverages. Appealing the ruling to a higher court. 4. Future of Excise Duty in Nigeria This decision may lead to a broader review of Nigeria’s excise duty framework, particularly in industries facing regulatory and tax-related challenges. The ruling could encourage greater consultation with stakeholders before implementing tax policies that impact businesses and consumers. Conclusion: A Milestone Judgment for Nigerian Businesses Justice Egwuatu’s decision underscores the fundamental principle that taxation must be grounded in clear legal authority. This ruling provides a significant victory for the private sector, reinforcing the need for predictable and legally sound tax policies. However, the broader debate on tax policy, revenue generation, and economic growth continues. Will the government find a way to legally reintroduce the tax? How will this ruling affect future tax policies? These are questions that will shape Nigeria’s fiscal landscape in the coming months. For now, manufacturers and business owners can breathe a sigh of relief—but they must remain vigilant, as the next steps from policymakers could reshape the tax framework once again. Olatunji Abdulrazaq CNA, ACTI, ACIArb(UK) Founder/CEO, Taxmobile.Online