The Kenya Revenue Authority (KRA) has won a KShs.2.5 billion Court case against sugar importer Darasa Investments Limited.
KRA will therefore execute its mandate of collecting the accrued import duty on the 40,000 metric tonnes of sugar imported by Darasa Investment Limited.
Darasa Investments Limited (the importer), had earlier moved to the High Court seeking Judicial Review orders barring KRA from demanding taxes over the consignment allegedly imported during the duty free window.
KRA appealed to the Court of Appeal, whose judgment was delivered on Wednesday 11th April, 2018, arguing that:
- The importation of the sugar did not fit within the Gazette Notice No. 9802 of 4th October, 2017 (as read with Gazette Notice 4536 of 12th May, 2017), which stated exempted sugar was loaded into a vessel destined to a port in Kenya from 12th May to 31st August, 2017. No credible evidence was presented by the importer to show that Vessel MV ANANGEL SUN was ever destined to a port in Kenya.
- The importer presented several documents, which clearly indicated that the source of the sugar was Dubai and it could not therefore have been shipped from Brazil on 15th July, 2017. Documents submitted by the importer to the Commissioner of Customs and Border Control for clearance had inconsistencies on the date of loading, the date and the place of inspection, the certificate of origin and change of ownership.
- The documents showed that the sugar was loaded into M.V. IRON LADY at the port of Jabel Ali (Dubai), United Arab Emirates, around 19th October, 2017, which was outside the gazetted duty free period of 11th May 2017 to 31st August 2017.
- The goods were not inspected at the port of loading, Santos, Brazil by an appointed inspection agent of Kenya Bureau of Standards. Instead, the inspection was done in Dubai, UAE.
- Despite the existence of alternative dispute resolution mechanism of a Tax Appeals Tribunal as per the East African Community Customs Management Act, 2004, the defendant opted to sue KRA in a court of law.
The judgment, delivered by Judges of Appeal Alnashir Visram, Wanjiru Karanja and Martha Koome at Mombasa Court of Appeal, set aside the High Court judgment, delivered on 22nd February 2018, allowing the sugar into the country duty-free.
The Court of Appeal judgement held, among others, that: there was an alternative remedy as per Section 229 of EACCMA, 2004; KRA heard the importer as required under the Fair Administrative Action Act, 2015; no legitimate expectations could arise in the matter; the importer did not provide evidence of discrimination; and the importer was given an opportunity to make clarifications on the inconsistencies in the documentation of the sugar imports by KRA but did not give satisfactory clarifications.