https://new.kenyalaw.org/akn/ke/judgment/kehc/2026/8553

**REPUBLIC OF KENYA** **IN THE HIGH COURT OF KENYA AT NAIROBI** **MILIMANI COMMERCIAL & TAX DIVISION** **HCCOMM CTA NO. E016 OF 2025** **COMMISSIONER OF CUSTOMS &** **BORDER CONTROL …………………………………….…….APPELLANT** **VERSUS** **NO EXCUSE LTD ……………….…………………….…….RESPONDENT** *(Being an appeal arising from the whole judgment of the Tax Appeals Tribunal delivered on 31st January, 2025, in Tax Appeals Tribunal No. E070 of 2024)* **JUDGMENT** 1. This is an appeal arising from the decision of the Tax Appeals Tribunal delivered on 31st January 2025, in which the Tribunal allowed the Respondent’s appeal and set aside the Appellant’s review decision dated 11th December 2023. The dispute concerns the tariff classification of imported tyres and the resultant demand for short-levied taxes amounting to Kshs. 3,605,870/=. 2. The background to the dispute is not contested. Following a post-clearance audit conducted pursuant to Section 236 of the East African Community Customs Management Act, 2004 (EACCMA), the Appellant concluded that the Respondent had imported SUV, pickup and off-road tyres and had wrongly classified them under tariff code 4011.20.20 instead of tariff code 4011.10.00. Consequently, a demand for short-levied taxes was issued. Upon review, the Commissioner confirmed the assessment, prompting the Respondent to appeal to the Tax Appeals Tribunal. The Tribunal found in favour of the Respondent and held that the tyres were properly classifiable under HS Codes 4011.20.10 and 4011.20.20. 3. Aggrieved by that decision, the Appellant lodged the present appeal on the grounds set out in the Memorandum of Appeal dated 27th March 2025, raising the following grounds: 4. *That the Tax Appeal Tribunal erred in law in finding that the Respondent’s imported tyres were classifiable under HS code 4011.20.10 and 4011.20.20 because of their rim sizes without verifying whether they were tyres of a kind used on buses or lorries.* 5. *That the Tax Appeal Tribunal erred in law and in fact in failing to appreciate the distinction in tariff code classification under HS code heading 4011.10.00 and subheadings 4011.20.10 and 4011.20.20 as the kind of tyres whether motor cars (including station wagons and racing cars) or buses or lorries and not rim sizes.* 6. *That the Tax Appeal Tribunal wrongly misinterpreted the HS code subheadings 4011.20.10 and 4011.20.20 as only based on rim sizes of the tyres and not the kind of tyres.* 7. *That the Tax Appeal Tribunal erred in law by failing to appreciate that HS Code subheading 4011.20.10 and 4011.20.20 is clearly for buses and lorries tyres and cannot include tyres intended for passenger cars such as SUVs and light pickup (trucks).* 8. *That the Tax Appeal Tribunal erred in law and fact by dismissing the manufacturer’s catalogue stating that the categorization is broad and bound to mislead because it means that only vehicles under tariff code 4011.10.00 can be equipped with “all season”, “winter” or “summer” tyres.* 9. *That the Tax Appeals Tribunal erred in law and in fact by stating that adopting the Appellant’s reasoning that the manufacturer’s catalogue determines the type of tyre would be in contravention of GIR 6 which requires classification of goods to be determined according to terms of those of the subheadings.* 10. *That the Tax Appeal Tribunal erred in law by classifying the Respondent’s imported tyres under HS code 4011.20.10 and 4011.20.20 instead of 4011.10.00 yet the Respondent imported SUV, pickup and off-road tyres for (light trucks) classifiable under HS code 4011.10.00.* 11. *That the Tax Appeal Tribunal failed to appreciate that subheading 4011.10 includes both radial and non-radial tyres which are designed for use on motor vehicles classified under heading 87.03 of the EAC CET such as passenger cars, station wagons, four wheeled motor vehicles, specialized transport vehicles and racing cars. This has no limit on size of the tyre.* 12. *That the Tax Appeal Tribunal erred in law by shifting the burden of proof to the Appellant contrary to Section 30 of the Tax Appeals Tribunal Act, 2013.* 13. *That the Honourable Tribunal erred in law and fact in failing to consider the evidence and submissions tendered by the Appellant.* 14. *That the Honourable Tribunal misapplied the law and facts and by ignoring all material facts placed before it and based its Judgment on a biased approach without due regard to the balance of the scales of justice.* 15. The appeal was canvassed by way of written submissions. The Appellant filed submissions dated 23rd May 2025 and the Respondent filed submissions dated 27th August 2025. **Appellant’s submissions** 1. The Appellant submits that the Tax Appeals Tribunal erred in law and fact in allowing the Respondent’s appeal and setting aside the Commissioner’s review decision, which classified the Respondent’s imported tyres under HS Code 4011.10.00. It is argued that the Tribunal misinterpreted the East African Community Common External Tariff (EAC CET), the Harmonized System (HS) nomenclature and the General Interpretative Rules (GIRs) by treating tyre rim size as the decisive criterion for classification, instead of considering the nature, characteristics and intended use of the tyres. The Appellant maintains that the imported tyres were designed for use on SUVs, light trucks, pickups and other passenger vehicles and therefore properly fell under HS Code 4011.10.00, whereas HS Codes 4011.20.10 and 4011.20.20 are reserved for tyres of a kind used on buses and lorries. 2. The Appellant further submits that the Tribunal wrongly disregarded manufacturers’ catalogues, technical specifications and product descriptions which demonstrated the intended use of the tyres. According to the Appellant, such materials constitute objective evidence that is routinely relied upon in customs classification disputes and ought to have been accorded evidential weight. It is argued that the Tribunal misapplied General Interpretative Rule 6 and the relevant HS Explanatory Notes by elevating tyre dimensions above the functional and commercial characteristics of the tyres. 3. The Appellant also contends that the Tribunal improperly shifted the burden of proof to the Commissioner contrary to Section 30 of the Tax Appeals Tribunal Act. It is submitted that the Respondent, as the taxpayer, bore the burden of proving that the Commissioner’s classification and resultant tax demand were incorrect, but the Tribunal instead required the Commissioner to justify its decision. The Tribunal is further faulted for failing to properly evaluate the documentary evidence and submissions tendered by the Commissioner and for arriving at conclusions unsupported by the record. 4. In support of its case, the Appellant relies on **Republic v Commissioner General & Another ex parte Awal Ltd [2008] eKLR** and **Beta Healthcare International Ltd v Commissioner of Customs Services [2010] eKLR** for the proposition that tariff classification must be undertaken in accordance with the Harmonized System, the EAC CET and the World Customs Organization Explanatory Notes. 5. The Appellant also cites **Abok James Odera t/a A.J. Odera & Associates v John Patrick Machira t/a Machira & Co. Advocates [2013] eKLR** on the duty of a first appellate court to re-evaluate the entire record, **Kenya Revenue Authority v Man Diesel & Turbo SE, Kenya [2021] eKLR** on the burden of proof in tax disputes, and **Pharmaceutical Manufacturing (K) Co. Ltd & 3 Others v Commissioner General of Kenya Revenue Authority & 2 Others [2017] eKLR** on the Commissioner’s statutory authority to recover short-levied taxes. 6. The Appellant urges the Court to find that the Tribunal misdirected itself on both the facts and the law, to allow the appeal, set aside the judgment of the Tribunal, uphold the Commissioner’s review decision classifying the tyres under HS Code 4011.10.00, sustain the tax demand of Kshs. 3,605,870/= together with interest, and award costs of the appeal to the Appellant. **Respondent’s submissions** 1. The Respondent submits that the appeal is devoid of merit and that the Tax Appeals Tribunal correctly found that the imported tyres were properly classifiable under HS Codes 4011.20.10 and 4011.20.20, being tyres of a kind used on buses and lorries, rather than under HS Code 4011.10.00 as contended by the Commissioner. The Respondent argues that classification under the East African Community Common External Tariff (EAC/CET) must be guided by the General Interpretative Rules (GIRs), particularly GIR 1 and GIR 6, which require classification according to the terms of the tariff headings and subheadings. The Tribunal correctly considered the physical characteristics of the tyres, including rim size, load capacity and technical specifications, and found that the Commissioner failed to adduce evidence demonstrating that the tyres were designed for motor cars. 2. The Respondent further contends that the Commissioner bore the evidential burden of proving that the Respondent had misclassified the tyres and failed to discharge that burden. Although the Commissioner relied on manufacturers’ catalogues and general product descriptions, it did not produce evidence of any actual inspection, examination or technical analysis of the imported tyres. The Tribunal therefore correctly concluded that the Commissioner’s proposed reclassification was speculative and unsupported by evidence. 3. In support of the burden of proof principles, reliance is placed on **Sections 107, 109** and **112** of the **Evidence Act** and the decision in **Evans Otieno Nyakwana v Cleophas Bwana Ongaro [2015] KEHC 8440 (KLR)**, where the Court emphasized that the burden of proving a fact lies upon the party asserting it. 4. The Respondent submits that tax statutes must be construed strictly and that any ambiguity in tariff classification must be resolved in favour of the taxpayer. Reliance is placed on **Kenya Revenue Authority v Ndegwa [2025] KECA 510 (KLR)**, where the Court of Appeal reaffirmed the principle of strict interpretation of tax legislation and cited **Cape Brandy Syndicate v Inland Revenue Commissioners [1920] 1 KB 64** for the proposition that nothing is to be implied into a taxing statute and a taxpayer cannot be taxed except by clear words of the law. The Tribunal therefore correctly interpreted the tariff provisions strictly and found that the imported tyres fell within HS Codes 4011.20.10 and 4011.20.20. 5. The Respondent also argues that the Commissioner’s reliance on manufacturers’ catalogues was misplaced because catalogues contain broad product descriptions and cannot override the physical characteristics and technical specifications of the actual goods imported. The Tribunal properly found that the operative words “of a kind used on buses or lorries” refer to the nature and characteristics of the tyres rather than the particular vehicle on which they may ultimately be fitted. The Respondent therefore maintains that the Commissioner sought to reclassify the tyres contrary to both the manufacturers’ descriptions and the applicable tariff provisions. 6. The Respondent relies on **Commissioner of Income Tax v Westmont Power (K) Ltd, Income Tax Appeal No. 626 of 2002**, where the Court emphasized that taxation statutes must be interpreted with caution and any ambiguity resolved in favour of the taxpayer rather than the revenue authority. The Respondent submits that this principle supports the Tribunal’s decision. 7. The Respondent further contends that the Commissioner improperly sought to apply the 2022 EAC/CET retrospectively. In support of the principle against retrospective application of statutes, reliance is placed on **Kalpana H. Rawal v Judicial Service Commission & 4 Others [2015] eKLR**, where the Court held that legislation is presumed to operate prospectively unless a contrary intention is clearly expressed. 8. The Respondent also cites **Keroche Industries Limited v Kenya Revenue Authority & 5 Others [2007] eKLR**, in which the Court condemned the retrospective imposition of tax liabilities as unfair and punitive. It is argued that the Commissioner’s attempt to impose additional duties retrospectively offended these principles and violated the Respondent’s right to fair administrative action. 9. The Respondent submits that it discharged the burden imposed under **Section 56(1)** of the **Tax Procedures Act** and **Section 30** of the **Tax Appeals Tribunal Act** by demonstrating that the Commissioner’s assessment was erroneous. The Commissioner failed to rebut the evidence regarding the characteristics of the tyres and failed to provide any rational basis for reclassification under HS Code 4011.10.00. Consequently, the Tribunal correctly set aside the review decision and tax demand of Kshs. 3,605,870/=. The Respondent therefore urges the Court to dismiss the appeal with costs, uphold the Tribunal’s judgment delivered on 31st January 2025, maintain the classification under HS Code 4011.20.20, and declare the tax demand invalid. **Analysis and determination** 1. Pursuant to the provisions of Section 56(2) of the Tax Procedure Act, an Appeal to the High Court from the decision of the Tax Appeals Tribunal lies only on questions of law. The jurisdiction of this Court is therefore limited to examining whether the Tribunal correctly interpreted and applied the law to the facts before it. This Court is not at liberty to substitute its own findings of fact for those of the Tribunal merely because it may have arrived at a different conclusion. See **Commissioner of Domestic Taxes v Barclays Bank of Kenya Ltd [2020] eKLR**, where the Court emphasized that an appeal from the Tribunal is confined to questions of law. 2. I have considered the Memorandum of Appeal and Record of Appeal filed by the appellant, the statement of facts by the respondent and the written submissions filed by Learned Counsel for the parties. The issues that arise for determination are: 3. *Whether the Tribunal correctly interpreted the applicable tariff provisions and General Interpretative Rules in classifying the imported tyres.* 4. *Whether the Tribunal erred regarding the burden of proof.* 5. *Whether the appeal is merited.* 6. It is trite that tax laws are to be construed within their exact meaning and there are no in-betweens. In **Mount Kenya Bottlers Ltd & 3 Others v attorney General & 3 Others NRB CA No. 164 of 2103 (2019) eKLR** the Court of Appeal observed thus: ***“When it comes to interpretation of tax legislation, the statute must be looked at using slightly different lenses. With regard to tax legislation, the language imposing the tax must receive a strict construction. Judge Rowlett in his decision in Cape Brandy Syndicate v I.R. Commissioners [1921] 1KB (cited by the appellants), expressed the common law position in this area when he stated ‘…in a taxing Act one has to look at what is clearly said. There is no room for any intendment. There is no equity about a tax. There is no presumption as to a tax. Nothing is to be read in, nothing is to be implied. One can only look fairly at the language used…’.”*** 1. It is common ground that classification of goods in Kenya is governed by the East African Community Common External Tariff (EAC CET) which codified and adopted the World Custom Organization Harmonized Commodity Description and its principles of General Interpretation Rules (GIRs) classification of goods. (See **Republic v Commissioner General & Another Ex- Parte Awal Ltd [2008] eKLR** and **Beta Healthcare International Ltd v Commissioner of Customs Services [2010] eKLR**). 2. The gravamen of the Appellant’s case is that the imported tyres ought to have been classified under HS Code 4011.10.00 as tyres of a kind used on motor cars, including SUVs, pickups and light trucks, rather than under HS Codes 4011.20.10 and 4011.20.20 as found by the Tribunal. 3. The applicable framework is found in the General Rules for Interpretation of the Harmonized System. Rule 1 provides that classification shall be determined according to the terms of the headings and any relevant section or chapter notes. Rule 6 further requires classification at the subheading level to be determined according to the terms of the competing subheadings and any related notes. 4. The competing tariff provisions are straightforward. HS Code 4011.10.00 applies to tyres of a kind used on motor cars and attracts duty at the rate of 25%, while HS Codes 4011.20.10 and 4011.20.20 apply to tyres of a kind used on buses or lorries, distinguished by rim size. 5. A perusal of the Tribunal’s judgment shows that it considered the applicable GIRs, the import declaration forms and the specifications of the imported tyres. Upon examining the evidence, the Tribunal found that some of the imported tyres had rim sizes below 17 inches and were therefore classifiable under HS Code 4011.20.10, while others had rim sizes of 17 inches and above and were classifiable under HS Code 4011.20.20. 6. The Tribunal further found that the descriptions contained in HS Codes 4011.20.10 and 4011.20.20 more specifically corresponded with the characteristics of the imported tyres. Applying GIR 3(a), which favours the more specific description, the Tribunal concluded that the tyres were properly classifiable under those subheadings rather than under the broader heading advanced by the Commissioner. 7. Importantly, the Tribunal found that the Commissioner had not adduced sufficient evidence demonstrating that the imported tyres were of a kind used on motor cars within the meaning of HS Code 4011.10.00. The Commissioner primarily relied on manufacturers’ catalogues and generalized descriptions. 8. The Tribunal observed that no evidence was produced showing that the Commissioner had physically inspected, tested or technically examined the imported tyres so as to establish their actual characteristics and intended use. In those circumstances, the Tribunal was entitled to conclude that catalogue descriptions alone were insufficient to justify a reclassification of the goods. 9. I find no error in that reasoning. Classification under GIR 6 requires an examination of the terms of the competing subheadings and the characteristics of the goods under consideration. The Tribunal cannot be faulted for relying on the physical specifications and technical features of the tyres in determining the appropriate classification. 10. Consequently, I am satisfied that the Tribunal properly interpreted and applied the relevant tariff provisions and the General Interpretative Rules. There is therefore, no basis for interfering with its conclusion that the imported tyres were correctly classified under HS Codes 4011.20.10 and 4011.20.20. 11. On the issue of proof, the Appellant alleges the Tribunal shifted the burden of proof onto the Commissioner contrary to Section 30 of the Tax Appeals Tribunal Act, 2013. 12. **Section 109** of the **Evidence Act** provides that theburden of proof as to any particular fact lies on the person who wishes the court to believe in its existence, unless it is provided by any law that the proof of that fact shall lie on any particular person. 13. This court appreciates that in tax matters the burden of proof is placed upon the taxpayer by **Section 56(1)** of the **Tax Procedure Act** and **Section 30** of the **Tax Appeals Tribunal Act**, but that is limited to proof that a tax decision is incorrect or should have been made differently. That strict liability does not extend to matters which are meant to be done by the Appellant or the Tax Authority. It does not mean that the tax payer is supposed to prove every issue even those in the personal or special knowledge of the Tax Authority. 14. The burden borne by a taxpayer is therefore not absolute. (See **Kenya Revenue Authority v Man Diesel & Turbo SE, Kenya [2021] eKLR**). 15. The record demonstrates that the Tribunal appreciated that the Respondent bore the legal burden of proving that the Commissioner’s decision was erroneous. The Tribunal nevertheless found that the Commissioner had not adduced evidence of any physical examination, inspection report or technical analysis to support the proposed reclassification. 16. In my view, the Tribunal did not shift the legal burden of proof. Rather, it evaluated the evidence presented by both parties and concluded that the evidential foundation advanced by the Commissioner was insufficient to warrant a departure from the classification adopted by the Respondent. That was a finding properly within the Tribunal’s mandate. 17. Ultimately, I am satisfied that the Tribunal correctly directed itself on the applicable law, properly evaluated the evidence before it and arrived at conclusions that were supported by both the facts and the law. I find no misdirection in law capable of warranting interference by this Court. 18. For the reasons given, I find the appeal lacks merit and is hereby dismissed. 19. Consequently, I make the following final orders: 20. ***The appeal is dismissed in its entirety.*** 21. ***The judgment of the Tax Appeals Tribunal delivered on 31st January 2025 in Tax Appeal No. E070 of 2024 is hereby upheld.*** 22. ***The review decision dated 11th December 2023 and the tax demand of Kshs. 3,605,870/= are hereby set aside.*** 23. ***The classification of the Respondent’s imported tyres under HS Codes 4011.20.10 and 4011.20.20 is upheld.*** 24. ***Each party will bear its own costs.*** Orders accordingly **JUDGMENT** delivered virtually, dated and signed at **NAIROBI** This **11th** day of **June** 2026. **P.M. MULWA** **JUDGE** **In the presence of:** *Ms. Gitau* for Appellant *Ms. Gitonga h/b for Mr. Mogeni* for Respondent Court Assistant*: Lispa*