Acceler Global Logistics Ltd v Commissioner, Investigation & Enforcement (Tax Appeal E1053 of 2025) [2026] KETAT 139 (KLR) (3 July 2026) (Judgment)

Acceler Global Logistics Ltd v Commissioner, Investigation & Enforcement (Tax Appeal E1053 of 2025) [2026] KETAT 139 (KLR) (3 July 2026) (Judgment) Neutral citation: [2026] KETAT 139 (KLR) Republic of Kenya In the Tax Appeal Tribunal Tax Appeal E1053 of 2025 RM Mutuma, Chair, JM Malla, G Ogaga & T Vikiru, Members July 3, 2026 Between Acceler Global Logistics Limited Appellant and Commissioner, Investigation & Enforcement Respondent Judgment Background 1.The Appellant is an international freight and logistics service company that deals with freight and logistics services, customs brokerage, warehousing, cargo transportation, distribution and supply chain management services in Kenya and in the East and Central African regions. 2.The Respondent is a principal officer appointed under Section 13 of the Kenya Revenue Authority Act, CAP 469 of Kenya’s Laws. Under Section 5 (1) of the Act, the Kenya Revenue Authority is an agency of the Government for the collection and receipt of all tax revenue. Further, under Section 5(2) of the Act with respect to the performance of its functions under subsection (1), the Authority is mandated to administer and enforce all provisions of the written laws as set out in Part 1 and 2 of the First Schedule to the Act for the purposes of assessing, collecting and accounting for all revenues in accordance with those laws. 3.The Respondent conducted investigation on the Appellant for the periods January 2024 to March 2025 whereupon it established that the Appellant’s imported items were declared under HS Codes 8471.70.00, 8471.80.00 and 8471.90.00 instead of HS Code 8523.51.00 leading to tax loss of Kshs. 2,136,186. 4.The Respondent issued the Appellant with a notice of assessment on 9th May 2025. 5.The Appellant objected to the tax demand vide a letter dated 22nd May 2025, the Respondent proceeded to fully reject the Appellant's objection and confirm principal taxes of Kshs. 5,457,008 vide its Review decision dated 10th July 2025. 6.Dissatisfied with the Commissioner's Review decision, the Appellant on 24th September 2025, proceeded to file the present appeal. The Appeal 7.The Appeal is premised on the following grounds as stated in the Memorandum of Appeal dated and filed on 24th September 2025: - a.The Commissioner erred in fact and law in their interpretation of the General Interpretative Rules by failure to take into account relevant consideration, being the binding provisions of the General Rules for the Interpretation of the Harmonized System in their classification of the imported goods under consideration.b.The Commissioner erred in fact and law by failure to consider the Notice of Objection dated 25th June 2025 and the additional information contained therein.c.The Commissioner erred in law and fact by failure to take into account relevant facts, being the form and use of the imported equipment and merely considered the wording of the imported goods in their classification decision thereby arriving at an ultra vires classification decision. The Appellant’s Case 8.The Appellant’s case is premised on the following documents before the Tribunal:a.Its Statement of Facts dated and filed on 24th September 2025.b.Its Written Submissions dated and filed on 4th May 2026. 9.The Appellant averred that the Respondent stated that it undertook a Post Clearance Investigation on declaration of imported solid-state drives, memory cards and flash drives, where it established that some of the items were declared under HS Codes 8471.70.00, 8471.90.00 which attracts an import duty rate of 0% instead of classifying them under the correct HS Code which is 8523.51.0 which has an import duty rate of 10% resulting in a tax loss of Kshs. 5,457,008. 10.The Appellant stated that it lodged an Application for Review referenced JMM/C&BC/2025/05/22 dated 22nd May 2025 for review of the decision in line with the provisions of Section 229 (1) of EACCMA 2004 contending that the basis for the Respondent’s reclassification of Solid State Drivers was not consistent with the function and intended use of the drivers. 11.That in response, the Respondent through its letter referenced KRA/I&E/NRR/GEN/82/205, dated 28th May 2025 stated that the grounds of appeal provided by the Appellant were unsatisfactory and upheld its earlier decision. 12.The Appellant averred that the dispute is anchored upon the correct appreciation of the nature of the item's specifications including their characteristics, functions and intended use hence their resultant classification vis a vis the applicable interpretative rules and international classification practice. 13.The Appellant posited that the starting point in any tariff classification is the legal framework applicable to the interpretation of the Harmonized System. That Kenya, as a member of the East African Community, applies the East African Community Common External Tariff (EAC-CET), which is founded upon the Harmonized Commodity Description and Coding System (HS Code) developed and maintained by the World Customs Organization (WCO). The interpretation of the HS code is governed by the General Rules of the Interpretation of the Harmonized System (the "GIRs"), which are given legal force in East Africa through the East African Community Customs Management Act (EACCMA). 14.The Appellant averred that GIRs constitute the exclusive and mandatory framework for tariff classification of goods in the nomenclature. The Rules are applied in strict sequential order meaning that a subsequent rule may only be invoked where the preceding Rule fails to determine the classification. 15.The Appellant asserted that it is undisputed that classification under GIR 1 takes primacy as was stated in Kenya Breweries Ltd Commissioner of Customs & Border Control (TAT 282 of 2020) where this Honourable Tribunal stated that GIR 1 is the foremost rule of classification and for legal purposes, classification is determined by the terms of the heading, section or chapter notes where relevant. However, it must not be lost that as provided under GIR 1,“The titles of Sections, Chapters and sub-chapters are provided for ease of reference only; for legal purposes, classification shall be determined according to the terms of the headings and any relative Section or Chapter Notes, and provided such headings or Notes do not otherwise require, according to the following provisions.” 16.That in the case of Associated Battery Manufacturers Limited v Commissioner of Customs Services (2020] eKLR, the Court held that, the Respondent was enjoined by a statutory duty to impose duty according to the tariff classification provided by law under the Customs and Excise Act and under the Harmonized Commodity Description and Coding System provided by the World Custom Organization explanatory notes in which Kenya is a signatory. 17.The Appellant averred that the Commissioner erred in fact and law in interpretation of the General Interpretative Rules and failing to consider the form and use of the equipment in the determination of the appropriate classification. That the Canadian Court in Puratos Canada Inc. v Canada (Customs and Revenue), 2004 Can L11 57069 (CA CITT) held as follows on proper classification of the HS Tariff Codes:“The above legislation requires the Tribunal to follow several steps before arriving at the proper classification of goods on an appeal: first, to examine the schedule to see if the goods fit prima facie within the language of a tariff heading; second, to see if there is anything in the chapter or section notes that precludes the goods from classification in the heading; and third, to examine the Classification Opinions and the Explanatory Notes to confirm classification of the goods in the heading." 18.That further, in Kenya Breweries Limited v. Commissioner of Customs (Supra), the Court observed as follows:“The Tribunal having considered arguments by both parties and various materials placed before it, is of the view that the General Interpretative Rule I (GIR 1) is the foremost rule of classification. For legal purposes classification is determined by the terms of the headings, section or Chapter Notes where relevant, and if necessary and allowable, the other GIRS." 19.The Appellant submitted that the Commissioner, and by extension the Tribunal, are bound by the provisions of the General Interpretative Rules when making a tax decision on customs and excise duties. 20.The Appellant asserted that the Respondent erred on relying on the title of the section and sub-sections as legally determinative of the HS Code for the Solid State Drives since the title of the sections, chapters and sub-chapters are for ease of reference only and are of no probative value for legal purposes. 21.That the Respondent was under a duty to take into consideration General Rule 3 on the Interpretation of the HS Codes in evaluating the issue once it determined that there were more than one classification headings that the goods under consideration could satisfy. That under General Rule 3: -“When by application of Rule 2 (b) or for any other reason, goods are, prima facie, classifiable under two or more headings, classification shall be effected as follows:The heading which provides the most specific description shall be preferred to headings providing a more general description. However, when two or more headings each refer to part only of the materials or substances contained in mixed or composite goods or to part only of the items in a set put up for retail sale, those headings are to be regarded as equally specific in relation to those goods, even if one of them gives a more complete or precise description of the goods.Mixtures, composite goods consisting of different materials or made up of different components, and goods put up in sets for retail sale, which cannot be classified by reference to 3 (a), shall be classified as if they consisted of the material or component which gives them their essential character, insofar as this criterion is applicable.When goods cannot be classified by reference to 3 (a) or 3 (b), they shall be classified under the heading which occurs last in numerical order among those which equally merit consideration." 22.The Appellant submitted that for the particular products under consideration, the General Interpretive Rule 6(C) expressly provides for the treatment of the items when they are presented separately or singularly in the following terms:-“6.(A).For purposes of heading 8471, the expression "automatic data processing machines" means machines capable ofi.Storing the processing program or programs and at least the data immediately necessary for the execution of the program;ii.Being freely programmed in accordance with the requirements of the user;iii.Performing arithmetical computations specified by the user; andiv.Executing, without human intervention, a processing program which requires them to modify their execution, by logical decision during the processing run.(B).Automatic data processing machines may be in the form of systems consisting of a variable number of separate units.(C)Subject to paragraphs (D) and (E) belaw, a unit is to be regarded as being part of an automatic data processing system if it meets all of the following conditions:i)It is of a kind solely or principally used in an automatic data processing system;(ii)It is connectable to the central processing unit either directly or through one or more other units; and(iii)It is able to accept or deliver data in a form (codes or signals) which can be used by the system.Separately presented units of an automatic data processing machine are to be classified in heading 8471.However, keyboards, X-Y coordinate input devices and disk storage units which satisfied the conditions of paragraphs (C) (ii) and (C) (iii) above, are in all cases to be classified as units of heading 8471." 23.The Appellant argued that the Respondent erred in law and in fact by failing to take into account relevant considerations as set out under the General Interpretative Rules prior to arriving at a determination of the appropriate classification of the items. 24.The Appellant contended that had the Respondent taken into account the relevant considerations, the appropriate starting point would have entailed a review of the product specifications, characteristics, function and intended use which position would have ascertained that the Solid State Drives under consideration were: -a.electronic apparatus integrated with a storage component;b.semiconductor based electronic storage device, built on solid state architecture with flash memory to store non-volatile data and Dynamic Random Access Memory;c.It has either a Serial Attached SCSI or a Serial Advances Technology Attachment interface with permits integration in an automatic data processing machine and is used as an internal data storage device.d.SAS and SATA interfaces are technologies which ADP uses to transfer data from the motherboard to storage and vice versa and both technologies perform the same task but each is built with different hardware. 25.That in light of the foregoing specifications, it is evident that the equipment in question is a Solid State Drive principally intended to connect directly to the central processing unit of an ADP machine and to facilitate the transfer, storage, and retrieval of data within the same system. Unlike external storage media, which are designed to receive or transmit data from separate and independent devices, the Solid State Drive derives and delivers data internally within the ADP machine, thereby reinforcing its classification as an integral unit of such a system. 26.The Appellant asserted that a review of the terms of the heading will reveal that ADP machines and units are classified under heading 84.71 which states as follows:“Automatic data processing machines and units thereof; magnetic or optical readers, machines for transcribing data and data media in coded form and machines for processing such data, not elsewhere specified or included" 27.The Appellant stated that Note 6C of Chapter 84 has provided guidelines on how units regarded to be part of ADP machines should be treated in terms of classification. It states as follows:“CSubject to paragraphs (D) and € below, a unit is to be regarded as being part of an ADP system if it meets all of the following conditions:a.It is a kind solely or principally used in an ADP systemb.It is connected to the central processing unit either directly or through one or more unitsc.It is able to accept or deliver data in a form (codes or signals) which can be used by the systemSeparately presented units of an automatic data processing machine are to be classified in heading 84.71 28.That further, there is no note of exclusion excluding the internal data storage devices from classification under Heading 84.71. Note 6(D) to chapter 84 has provided a list of items to be excluded when presented separately, this does not include internal data storage devices as one of them. For clarity, the note states as follows:“(D)Heading 84.71 does not cover the following when presented separately, even if they meet all of the conditions set forth in Note 6 (c) above:i.Printers, copying machines, facsimile machines, whether or not combined;ii.Apparatus for the transmission or reception of voice, images or other data, including apparatus for communication in a wired or wireless network (such as a local or wide area network).iii.Loudspeakers and microphones;iv.Television cameras, digital cameras and video camera recorders;v.Monitors and projectors, not incorporating television reception apparatus.From the function, characteristics and intended use of Solid State Drivers, classification would automatically be placed under Heading 84.71. 29.The Appellant submitted that the Internal Storage Devices are not classifiable under Heading 8523.51.00 as alleged by the Respondent for the following reasons:a.The WCO explanatory notes to heading 85.23 reveals that the heading refers to devices used for recording data from an external source. The note states as follows: "Solid-state, non-volatile data storage devices for recording data from an external source (See Note 6 (a) to this chapter). These devices (also known as "flash memory cards" or "flash electronic storage cards") are used for recording data from an external source, or providing data to, devices such as navigation and global positioning systems, data collection terminals, portable scanners, medical monitoring appliances, audio recording apparatus, personal communicators, mobile phones, digital cameras and automatic data processing machines. Generally, the data are stored onto, and read from, the device once it has been connected to that particular appliance, but can also be uploaded onto or downloaded from an automatic data processing machine."'b.The explanatory note to heading 84.23 states that the heading covers different types of media, whether or not recorded for the recording of sound or other phenomena and that such media are generally inserted into or removed from recording or reading apparatus and may be transferred from one recording or reading apparatus to another.c.An external source refers to any entity outside of the given system and in the Appellant's case, the ADP machine.d.The Primary function of heading 85.23 is to allow users to easily transfer and store data between two different machines or devices, a classification that does not fit the function and intended use of Internal Storage Devices as the Devices are intended to be used inside an ADP machine permanently as well as obtain data from the same machine. 30.The Appellant submitted that, should any dispute arise as to the interpretation of the relevant tariff provisions, this Tribunal is bound to be guided in the first instance by the General interpretative Rules and the applicable section and chapter notes of the Harmonized System. 31.The Appellant posited that should the Tribunal find that there exist two plausible interpretations of the tariff the Tribunal must adopt the interpretation that accords with General Interpretation Rule 3(a) and in favor with the principle of interpretation of any ambiguity in favor of the taxpayer, keeping with the long-established principle of strict construction of taxing statutes. 32.That it is well settled, that if two interpretations are possible, then invariably, the Court would adopt that interpretation which is in favour of the taxpayer and against the tax authority. Lords Simonds in Scott v Rusell [1948] 2 ALL EA 1, stated that:“If the language of a Revenue Act is obscure, the taxpayer is entitled to demand that his liability to a higher charge should be made out with reasonable clearness before he is adversely affected" 33.That Similarly, the Court of Appeal in Mount Kenya Bottlers Ltd & 3 others v Attorney General & 3 others [2019] eKLR stated that:“The norm is that a taxing legislation must be construed with pe1fect strictness whether or not such construction is against the state or against the person sought to be taxed. If, however, there is any real ambiguity in a taxing act, such ambiguity may be resolved in favour of the tax payer, or, as it sometimes said: contra fiscum" 34.The Appellant submitted that both international and Kenyan jurisprudence affirm the doctrine of contra fiscum, that genuine doubt in classification must be resolved against the revenue authority 35.The Appellant averred that the commissioner erred in fact and law by failing to consider the Notice of Objection dated 25th June 2025. That the Respondent indicated that it requested the Applicant to provide samples or technical data sheets/brochures of the items to enable it analyze and expedite the issuance of a tariff ruling. That in the absence of the device samples and data sheets the Respondent confirmed its earlier decision. 36.The Appellant contended that the Respondent failed to engage with the substantive descriptive and functional evidence already provided, that even in the absence of physical samples, the Respondent was obliged to evaluate the detailed explanation of the goods' nature, characteristics, and intended use in line with the General Interpretative Rules and Explanatory Notes. Failure to do so was a dereliction of duty. 37.The Appellant argued that by insisting solely on the production of samples and dismissing the objection for non-provision thereof, the Respondent elevated form over substance and effectively predetermined the outcome. The Appellant submitted that classification disputes must be determined on the basis of substance, namely the objective characteristics and intended use of the goods, and not by reference to extraneous procedural hurdles. That in this instance, the Respondent ignored relevant considerations and instead relied on a single irrelevant factor. 38.The Appellant averred that this Tribunal has on several occasions emphasized the need for the Commissioner to consider the functionality and actual use of goods in classification matters, that the Tribunal in the case of Bidco Africa Limited v Commissioner of Customs & Boarder Control [Appeal No. 124 of 2021], while citing the case of Kenya Breweries Limited v Commissioner of Customs & Border Control (2020) eKLR, held as follows at paragraph 36:“This Tribunal does not agree that the Apple Concentrate constitutes a beverage. The respondent should have considered the purpose of use of the product before arriving at its decision. It is not in dispute that Apple Concentrate is used by the Appellant as a raw material in the manufacture of cider ... " 39.The Appellant submitted that an internal SSD is architecturally and functionally distinct from the class of devices described by the Respondent in its assessment. That the Respondent, in its review response, described the goods as "associated with a wide range of appliances such as navigation and global positioning systems, data collection terminals, portable scanners, medical monitoring equipment, audio recording apparatus, personal communicators, mobile phones, digital cameras, and automatic data processing machines." The Respondent further described the goods as being "composed of one or more flash memory chips mounted on a printed circuit board, contained within a single housing, and fitted with a connecting socket to a host appliance," citing USB flash drives as a common example. That this description is a description of removable USB flash memory devices or external portable storage media and not internal SSDs. 40.The Appellant postulated that Internal SSDs are characterised by the following technical attributes:a.They are manufactured in standard form factors, 2.5-inch, M.2 or PCie NVMe, designed specifically to be installed internally within the chassis of an ADP machine;b.They interface with the host ADP machine through dedicated internal bus interfaces, including the Serial Attached SCSI (SAS), Serial Advanced Technology Attachment (SAIA), NVMe/PCie, or M.2, interfaces that are absent from and incompatible with the range of appliances described by the Respondent.c.The Serial Attached SCSI (SAS) or Serial Advanced Technology Attachment (SAIA) are the two technologies which ADP uses to transfer data from the motherboard to storage, and vice versa albeit with different hardware.d.They have no autonomous functionality whatsoever and cannot operate independently outside an ADP machine. They are not multi-purpose storage media capable of interfacing with mobile phones, cameras or GPS devices. They require the operating system of an ADP machine to function, including initialization, partitioning, and file system management.e.They are classified in commerce, in technical literature, in manufacturer specifications and in international trade consistently as units of computing systems, not as standalone non-volatile media for general consumer use. 41.The Appellant submitted that the Respondent's apparent conflation of internal SSDs with USB flash drives, portable memory cards, and other removable storage media, appears to have fundamentally skewed the basis of its understanding hence assessment. 42.The Appellant submitted that the Harmonized Commodity Description and Coding System draws a clear conceptual boundary between units of ADP machines being components designed and used as integral parts of a computer system, including storage units, processors, and input/ output units classified under 84.71; and removable and portable storage media, being devices capable of operating across multiple types of host appliances such as computers, cameras, mobile phones, televisions and car entertainment systems, which are not dedicated to ADP machines and fall more appropriately within 85.23. 43.That Internal SSDs fall unequivocally within the first category. They are physically installed within the chassis of the ADP machine. They interface via internal bus interfaces (SATA, NVMe, M.2 PCie) that are proprietary to computing systems and absent from the consumer appliances referenced by the Respondent. They cannot be removed and used with a mobile phone, a camera, a GPS device, or a television. They are, in every material respect, units of an ADP machine, and their classification should reflect this reality. 44.That on the other hand, USB flash drives, SD cards, microSD cards, and compact flash cards, the types of devices described in the Respondent's review response, possess precisely the opposite characteristics. To begin with, they are small, portable, removable, and designed for interoperability across a wide range of host appliances. The classification of such devices under 8523 may well be appropriate. However, that classification cannot be extended to internal SSDs without impermissibly ignoring the material technical differences between the two categories of goods. 45.The Appellant submitted that the Respondent's apparent conflation of internal SSDs with USB flash drives and portable memory cards, is with respect, a fundamental factual error which vitiates the basis upon which the entire assessment rests. The assessment fails to appreciate the technical reality of the goods and proceeds upon an incorrect understanding of what was actually imported. That any classification built upon such as flawed factual foundation cannot stand. 46.The Appellant further submitted that under Section 51(11) of the Tax Procedures Act, the Commissioner is obligated to consider an objection and make an objection decision in writing, stating the reasons for the decision. That the Respondent's reply of 10th July 2025 fell short of this statutory duty, as it merely affirmed its earlier position without engaging with the substantive grounds raised by the Appellant or providing reasoned justification. Appellants’ Prayers 47.The Appellant Prayed as follows:a.This Appeal be allowed.b.The Respondents assessment dated 20th May 2025, be and is hereby set aside;c.The Respondent's decision dated 10th July 2025 be set aside in its entirety;d.In the alternative to prayer (iii) above, the Respondent is Ordered to undertake a fresh computation of the appropriate VAT taxes, penalties and interest in strict conformity with the provisions of the East Africa Community Customs Management Act, the HS Codes and the General Rules for the Interpretation of the Harmonized System;e.Costs of the incidental appeal be awarded to the Appellant;f.The Tribunal do issue any Order that it deems just and expedient. The Respondent Case 48.The Respondent’s case is premised on the following documents before the Tribunal:a.Its Statement of Facts dated 29th October 2025 and filed on 30th October 2025 together with the documents attached thereto,b.Its Written Submissions dated and filed on 4th May 2026. 49.The Respondent averred that it conducted investigation against the Appellant for the periods January 2024 to March 2025. The investigation revealed non-compliance with customs laws regarding tariff classification. The Respondent established that the Appellant’s imported items were declared under HS Codes 8471.70.00, 8471.80.00, 8471.90.00 which attracts import duty rate of 0% instead of classifying them under the correct HS Code 8523.51.00 which has import duty rate of 10% thereby leading to tax loss. 50.The Respondent stated that it issued the Appellant with an assessment of Kshs. 5,457,008 being import duty and VAT due. The Appellant objected to the reclassification of its imports under HS Code 8523.51.00. The Respondent reverted that its grounds of objection were found to be unsatisfactory hence the tariff reclassification was maintained and the resultant assessments confirmed. 51.The Respondent averred the Appellant contended that its clients had disagreed with the demand on the basis of item classification and tariff classification. 52.The Respondent stated that HS Code 84 71 covers storage devices that are solely and principally used with an automatic data processing machine (ADP) whether for internal installation in an ADP machines or for external use with such machines which refers to magnetic or optical drives for discs and tapes. 53.That HS Code 8523 and specifically HS Code 8523.51.00 on the other hand refers to solid state non-volatile data storage devices for recording data from an external source. The devices also known as flash memory cards or flash electronic storage cards are used for recording data from an external source or providing data to devices such as navigation or global positioning systems, audio recording apparatus, personal communicators, mobile phones, digital cameras etc. 54.That the items declared in the entries that formed the basis of the demand were described as solid state drives (SSDs) which at first glance, can be classified in both HS Code 8471 and 8523. That however, in application of General Rules of Interpretation (GRI) 3(a), when by application of rule 2(b) or for any other reason, goods are prima facie classifiable under two or more headings, classification effected by the heading which provides the most specific description shall be preferred to headings providing a more general description. The declared SSDs are expressly stated and classifiable under HS Code 8523.51.00 which provides for solid-state non-volatile storage devices and other. 55.The Respondent averred that it had investigated 28 clearing agents on the Solid State Drives (SSD) and written to the Valuation & Tariff division requesting for their interpretation and guidance on the issue. That vide an email dated 28th May 2025, the Valuation & Tariff office requested to be provided with samples and or technical data sheets/brochures of the items to enable them analyze and expedite the issuance of tariff ruling. 56.That the Respondent vide an email dated 3rd July 2025, requested the Appellant to provide samples to enable review. That by the time of issuance of the decision, the Appellant had not responded to the request. 57.The Respondent stated that responses from other clearing agents who had been investigated alongside the Appellant for misclassifying the tariff was that the items related to several clients and were consumables which had already been utilized given the period lapsed from the import date. They concluded that while they were to enquire from the clients, it was very difficult to get the item samples. 58.The Respondent averred that in absence of the requested device samples and cognizant of the objection review timelines of 30 days, it proceeded to fully reject the Appellant's objection and confirm principal taxes of Kshs. 5,457,008 vide its review decision dated 10th July 2025. 59.The Respondent contended that the burden was on the Appellant to prove that the interpretation used by the Respondent was wrong. That the Respondent used its best knowledge and information available to it to arrive at its position. 60.The Respondent averred that a review of the documentation provided at objection stage found them to be insufficient on account that there were no supporting documents to warrant the Respondent to make an alternative finding. That the Appellant having been further requested to provide samples of the imported items to enable the Tariff and valuation department make a finding failed to provide the same. 61.The Respondent contended that the Appellant having failed to provide samples for the imported goods, there was no way to determine the form and use of the said items hence leading to the confirmation of the assessment. 62.The Respondent stated that it was guided by Section 23 of the Tax Procedures Act, 2015 which imposes the responsibility on the Appellant to maintain and provide all material documents required by the Respondent in order to ascertain what taxes were due and payable by the Appellant who ought to have been paying taxes for the years under review 63.The Respondent averred that it is empowered by Section 24(2) of the Tax Procedures Act to assess a taxpayer's liability using any information available to it.“The Commissioner shall not be bound by a tax return or information provided by, or on behalf of, a taxpayer and the Commissioner may assess a taxpayer's tax liability using any information available to the Commissioner.” 64.The Respondent asserted that the determination of the tax liability depends on submission of necessary records by the Appellant. The Respondent further averred that it is allowed to make additional assessments based on the available information to the best of his judgment pursuant to Section 31 of the Tax Procedures Act. 65.That Section 54A (1) of the Income Tax Act, requires that any person carrying on a business shall keep records of all receipts and expenses, goods purchased and sold and accounts, books, deeds, contracts and vouchers which in the opinion of the Commissioner, are adequate for the purpose of computing tax. 66.The Respondent submitted that the general rule in taxing statutes as provided in section 56(1) of the Tax Procedures Act, 2015 is that the taxpayer must prove that an assessment is wrong and the rationale of this rule was elaborated in Kenya Revenue Authority v Man Diesel & Turbo Se, Kenya [2021] eKLR at paragraphs 31 and 32 where it states;“... the import of the above provisions is that the party with the obligation of persuasion (what Wigmore termed the risk of non-persuasion) is said to bear the burden of proof. The jl.ipside of the foregoing is the effect of non-persuasion on a party with the burden of proof which is that the particular issue at stake in the litigation will be decided against him/her. Generally, the taxpayer has the burden of proof in any tax controversy. The taxpayer must demonstrate that the commissioner's assessment is incorrect. The taxpayer has a significantly higher burden. The taxpayer must prove the assessment is incorrect.The shifting of the burden of proof in tax disputes flows from the presumption of correctness which attaches to the Commissioner's assessment or determinations of deficiency. The commissioner's determination of tax deficiencies are presumptively correct. Although the presumption created by the above provisions is not evidence in itself, the presumption remains until the taxpayer produces competent and relevant evidence to support his position. If the taxpayer comes forward with such evidence, the presumption varnishes and the case must be decided upon the evidence presented, with the burden of proof on the taxpayer” 67.The Respondent also relied on Section 30 of the Tax Appeals Tribunal Act which places the burden of proving an assessment excessive on the Appellant. Respondent’s Prayers 68.The Respondent prays that this Honourable Tribunal: -a.Upholds and affirms the Respondent's Decision dated 10th July 2025.b.Dismisses the appeal with costs to the Respondent Issues for Determination 69.The Tribunal having examined the parties’ pleadings, puts forth the following issues for determination:a.Whether the Respondent was justified in reclassifying the Appellant’s goods under HS Code 8523.51.00.b.Whether the Respondent was justified in demanding Kshs. 5,457,008.00 in short-levied taxes. Analysis and Findings 70.The Tribunal analysed the issues as hereunder: a. Whether the Respondent was Justified in Reclassifying The Appellant’s Goods Under HS Code 8523.51.00. 71.The gravamen of the dispute herein is the Respondent’s reclassification of the Appellant’s imported items under HS Code which is 8523.51.0 as opposed to the Appellant’s declared HS Codes 8471.70.00 and 8471.90.00, the reclassification followed a Post Clearance audit (PCA) conducted by the Respondent. The codes declared by the Appellant attract an import duty rate of 0% while the Respondent’s preferred code attracts import duty rate of 10% hence the reclassification resulted in a tax assessment of Kshs. 5,457,008.00. 72.The Appellant contended that the basis for the Respondent’s reclassification of its imports - Solid State Drivers (SSDs) was not consistent with the function and intended use of the drivers. In its objection to the reclassification, the Appellant outlined that its imports, solid state drivers are classified under HS 8471.70 since they get data from the motherboard while being fixed on the ADP while HS Code 8523.51 covers solid-state non-volatile storage that World Customs Union explanatory notes to heading 85.23 reveals that the heading refers to these devices as those recording data from an external source. 73.While the Respondent submitted that the items described as solid state drives (SSDs) at first glance, could be classified in both HS Code 8471 and 8523. It stated that HS Code 84 71 covers storage devices that are solely and principally used with an automatic data processing machine (ADP) whether for internal installation in an ADP machines or for external use with such machines which refers to magnetic or optical drives for discs and tapes. That HS Code 8523 and specifically HS Code 8523.51.00 on the other hand refers to solid state non-volatile data storage devices for recording data from an external source. That these devices also known as flash memory cards or flash electronic storage cards are used for recording data from an external source or providing data to devices such as navigation or global positioning systems, audio recording apparatus, personal communicators, mobile phones, digital cameras etc. 74.From the foregoing rival submissions by the parties, the Tribunal noted that both parties were in agreement that solid state drivers (SSDs) were classifiable under 84 71 whereas solid state non-volatile data storage devices were classifiable under 8523, what remained in contention is what the real attributes and functionality of the Appellant’s items were. The Respondent described the imports as solid state non-volatile storage devices while the Appellant maintained that they were solid state drivers. 75.The Appellant maintained that the dispute is anchored upon the correct appreciation of the nature of the item's specifications including their characteristics, functions and intended use hence their resultant classification vis a vis the applicable interpretative rules and international classification practice. The Appellant submitted that the declared items were to be used in an automatic data processing with capability of processing programs and not for recording of sounds or other phenomena of mere storage hence were correctly classified under HS Code 8471.70.00, 8471.80.00, 8471.90.00. 76.The Respondent submitted that the Appellant as well as other 28 clearing agents who had been investigated alongside it were all unable to provide samples, they explained that the items were consumables that had already been utilized given the period lapse from the import date. The Respondent therefore concluded that in the absence of the samples and given the strict review timelines of 30days it proceeded to fully reject the Appellant’s Objection and confirm the principal taxes. 77.Noting that the impugned reclassification was as a result of a post clearance audit, the Tribunal appreciates that the disputants did not have the benefit of the physical items at the time the dispute arose which was after the goods had been delivered to the Appellant’s clients and subsequently sold. 78.The Tribunal analysed the rival interpretations of the GIRs, by the parties and noted it was apparent that the items in contention were classifiable in more than one classification headings. The Respondent expressly acknowledged this position. In determining the classification of goods of such a nature, GIR Rule 3 provides that: -“When by application of Rule 2 (b) or for any other reason, goods are, prima facie, classifiable under two or more headings, classification shall be effected as follows:The heading which provides the most specific description shall be preferred to headings providing a more general description. However, when two or more headings each refer to part only of the materials or substances contained in mixed or composite goods or to part only of the items in a set put up for retail sale, those headings are to be regarded as equally specific in relation to those goods, even if one of them gives a more complete or precise description of the goods.Mixtures, composite goods consisting of different materials or made up of different components, and goods put up in sets for retail sale, which cannot be classified by reference to 3 (a), shall be classified as if they consisted of the material or component which gives them their essential character, insofar as this criterion is applicable.When goods cannot be classified by reference to 3 (a) or 3 (b), they shall be classified under the heading which occurs last in numerical order among those which equally merit consideration." 79.In application of General Rules of Interpretation (GRI) 3(a), when by application of rule 2(b) or for any other reason, goods are prima facie classifiable under two or more headings, classification effected by the heading which provides the most specific description shall be preferred to headings providing a more general description. 80.Upon analyzing the functional description of the goods by the parties, the Tribunal observes that indeed Heading 84.71 as read together with Note 6(C), provides a precise and functionally aligned description of the subject goods as units of ADP machines as opposed to Heading 85.23 which is residuary and generic, capturing a wide array of storage media not specifically provided for elsewhere. This position is further supported by WCO explanatory notes to heading 85.23 which reveal that the heading refers to devices used for recording data from an external source. Note 6(a) to Chapter 85 states as follows: "Solid-state, non-volatile data storage devices for recording data from an external source. These devices are used for recording data from an external source” 81.The Tribunal is persuaded that in the absence of samples for evaluation/analysis the functional description remained the basis upon which to determine this dispute. Guided explanation of the functionality by the Appellant and the WCO explanatory notes on chapter 85.23 the Tribunal finds that the heading that gives the Appellant’s imported items the most specific description is heading 84.17 and not 85.23. Therefore, that the Respondent was not justified in reclassifying the Appellant’s imported items under HS Code 8523.51. b. Whether the Respondent was Justified in Demanding Kshs. 5,457,008.00 in Short-levied Taxes. 82.The Tribunal having found that the Respondent erred in reclassifying the Appellant’s imported products in HS Code 8523.51, it follows that the Respondent was not justified demanding short-levied taxes from the Appellant. Final Decision 83.In view of the foregoing analysis, the Tribunal finds that the Appeal is merited and accordingly makes the following Orders:a.The Appeal be and is hereby allowed;b.The Respondent’s Review Decision dated 10th July 2025 be and is hereby set aside.c.Each Party to bear its own costs. 84.It is so ordered. DATED AND DELIVERED AT NAIROBI THIS 3RD DAY OF JULY 2026.……………………………ROBERT M. MUTUMACHAIRMAN……………………………… ……JIMMY M. MALLA.MEMBER………………………………GLORIA A. OGAGAMEMBER………………………………DR. TIMOTHY B. VIKIRUMEMBER