[2023] KETAT 238 (KLR)

Abyssinia Iron and Steel Limited v Commissioner of Customs & Border Control (Appeal 457 of 2022) [2023] KETAT 238 (KLR) (Commercial and Tax) (31 March 2023) (Ruling)

Neutral citation: [2023] KETAT 238 (KLR)

Republic of Kenya

In the Tax Appeal Tribunal

Commercial and Tax

Appeal 457 of 2022

E.N Wafula, Chair, Cynthia B. Mayaka, A.K Kiprotich & Robert M. Mutuma, Members

March 31, 2023

Between

Abyssinia Iron and Steel Limited

Appellant

and

Commissioner of Customs & Border Control

Respondent

Ruling

BACKGROUND 1. The Appellant vide a Notice of Motion application dated May 30, 2022 and filed on May 31, 2022 sought for the following Orders:-a.The Honourable Tribunal be pleased to grant leave to the Appellant to file a Supplementary Statement of Facts.b.The Supplementary Statement of Facts filed together with this application be and is hereby deemed as duly filed and served.c.The Respondent be at liberty to file a response if it so wishes.d.The cost of this application be in the cause.

2. The application which is supported by an Affidavit sworn by Sharon Olbara, an Advocate for the Appellant, on May 30, 2022 is premised on the following grounds:-a.That the Appellant filed its Memorandum of Appeal and Statement of Facts on April 19, 2022. b.That the Appellant received new evidence of authentication letters from its suppliers on May 8 and 19, 2022 after filing its Memorandum of Appeal and Statement of Facts.c.That the Respondent is yet to serve the Appellant with its Statement of Facts and will therefore have an opportunity to respond to the evidence produced.d.That there will be no prejudice to the Respondent if the Supplementary Statement of Facts is admitted as the Respondent will have an opportunity to respond.e.That the Tax Appeals Tribunal (Procedure) Rules, 2015 allows the Appellant to amend its pleadings at any time before the closure of the case.f.That it is in the interest of justice that the Appellant be granted leave to file its supplementary Statement of Facts and the filed Supplementary Statement of Facts be deemed to be duly filed.

3. The Respondent in reply to the application filed a Replying Affidavit sworn by Seline Wanja, an officer of the Respondent, on July 28, 2022 and filed on the same date and in which the Respondent raised the following grounds in opposition to the application: -a.That the Respondent following a post clearance audit wrote to the Appellant on August 23, 2021 demanding for taxes in the sum of Kshs 253,803,726. 00 arising from what was deemed as mis-classification of goods imported by the Appellant during the period of 2016 to 2018. b.That the Appellant on September 17, 2021 maintained that during the period of importation under inquiry 2016-2018 did not import any materials with high boron content exceeding 0. 0008% thus the Hs Code 7225. 30. 00 attracting duty of 10%did not apply for the imports during the same period.c.That vide a letter dated October 8, 2021 the Respondent confirmed that indeed there were importations with high boron content exceeding 0. 0008% composition, based on the analysis of the entry declarations. That the Respondent requested for mill test certificates.d.That vide a letter dated November 8, 2021 the Appellant indicated that the requested documents were achieved 2-3 years back and it was to take time to retrieve the same.e.That the Appellant vide a letter dated November 11, 2021 confirmed the submission of 8 certificates of testing and indicated was to submit the rest as soon as they are retrieved.f.That the Respondent issued its review decision on November 22, 2021 confirming the taxes demanded.g.That the Respondent cannot link the mill test certificates from EZ Dekheila with the documents relating to the consignment.h.That the mill test certificates addressed to Duferco appears like a sales agent to EZ Dekheila and that it is hard to establish if the mill test is to Abyssinia or another client of the sales agent. That given the above the certification and admittance of mill test certificate from EZ Dekheila should be rejected.i.That the authentication letters from Arcelormittal relate to the consignment from Macsteel International, that it would make sense if the authentication letter was from the manufacturer Macsteel rather than Arcelormittal who seems to be the sales agent.j.That the Appellant does not present authentication letter for importers from China suggesting that they are choosing to present what they deem to favour their position. That the Commissioner is for the opinion that this is a deliberate effort to mislead the Tribunal in a particular direction.k.That the additional evidence is intended to remove a lacuna and fill the evidential gaps in the Appellant’s case which will amount to great prejudice to the Respondent as their authenticity is not known and that they were not brought to the attention of the Respondent at the review stage.l.That the Appellant is on a fishing expedition, looking for anything and everything it can grasp to salvage its case.

Analysis and Findings 4. The Tribunal on July 29, 2022 directed that the application was to be canvassed by way of written submissions. The both parties in due compliance with the directions filed their separate written submissions that were adopted by the Tribunal on August 26, 2023. The Tribunal has benefitted immensely from the separate elaborate written submissions as filed by the parties and which submissions made extensive reference to relevant and instructive judicial pronouncements.

5. The Respondent has substantively opposed the Appellant’s filing of a Supplementary Statement of Facts that introduces additional documents on the basis of the fact that the authentication of the documents sought to be produced has not been appropriately undertaken and that the Appellant did not provide the documents inspite of the request from the Respondent, for consideration during the review process.

6. The Appellant while admitting having failed to make the documents sought to be introduced available to the Respondent prior to the filing of the Appeal urges that inspite of using its best endeavours it was not able to obtain the documents in time. The Appellant had at the instance of the request for same documents by the Respondent indicated its difficult to retrieve the documents that had been achieved for a period exceeding two (2) years. The documents not supplied were following the Appellant’s intimation to be supplied upon retrieval and the additional documents sought to be filed are said to have been obtained subsequent to the filing of the Appeal and prior to the Respondent’s filing of its Statement of Facts in the Appeal.

7. The Appellant indicates that the additional documents sought to be introduced were the documents produced to the Respondent at the instance of the declaration and processing of the imports. The Appellant indicated its incapacity to produce the documents during the audit and review processes, that were undertaken about 3 to 5 years subsequent to the importation of the goods, to have been occasioned by the achieving of the documents for a period of 2 to 3 years prior to the post clearance audit leading to the tax dispute.

8. The Appellant has in essence demonstrated that inspite of its having exercised due diligence in securing the documents requested by the Respondent for the purposes of undertaking a review of its objection it was not possible to produce the documents and that infact the documents were only available subsequent to its filing of the Appeal.

9. The Tribunal has had several opportunities in considering such similar applications. The Tribunal is prompted in the circumstances to reiterate its finding in the Ruling delivered in TAT No 411 of 2018 Registered Trustees of the Agricultural Society of Kenya Vs. Commissioner of Domestic Taxes when it stated as follows:-“The Tribunal is of the considered view the Tribunal ought to be concerned more with administering justice in a more substantive manner with the calculated intention of determining the disputes on its full merits and accordingly cites with approval the finging in Essanji & Another vs. Solanki [1968] EA 218 to the effect that:-“The administration of justice should normally require that the substance of all disputes should be investigated and decided on their merits and that error and lapses should not necessarily debar a litigant from the pursuit of his right”

10. The cornerstone of the administration of justice and the exercise of judicial authority is aptly immortalized under Article 159 of the Constitution of Kenya, 2010 that dictates that justice shall be administered without undue regard to procedural technicalities.

11. With the Appeal still pending for substantive hearing and determination thereof there is no conceivable prejudice to be suffered by the Respondent with the Appellant being allowed to file a Supplementary Statement of Facts introducing the additional documents. The Respondent remains at liberty and has an opportunity to seek to adduce any incidental additional evidence in the Appeal and it shall be available to the Respondent during the hearing of the Appeal to appropriately and substantively interrogate the relevancy and admissibility of the further documents.

Disposition 12. The upshot of the foregoing is that the Tribunal finds the application to be merited and accordingly makes the following Orders:-i.The Appellant be and is hereby granted leave to file the Supplementary Statement of Facts with the proposed additional documents.ii.The Appellant to file and serve the Supplementary Statement of Facts with the additional documents within Seven (7) days of the date of delivery of this Ruling.iiiThe Respondent is at liberty to file any Supplementary Statement of Facts and/or any additional documents within Fourteen (14) days of the date of being served with the Supplementary Statement of Facts by the Appellant.iv.The matter shall be mentioned on 28th day of April, 2023 for further directions on any pending interlocutory applicationsv.No orders as to costs.

DATED AND DELIVERED AT NAIROBI THIS 31ST DAY OF MARCH 2023. ERIC N. WAFULACHAIRMANCYNTHIA MAYAKA ABRAHAM K. KIPROTICHMEMBER MEMBERROBERT MUGAMBIMEMBER