[2024] KETAT 738 (KLR)

Exome Life Sciences Kenya Limited v Control (Tax Appeal E608 of 2023) [2024] KETAT 738 (KLR) (24 May 2024) (Judgment)

Neutral citation: [2024] KETAT 738 (KLR)

Republic of Kenya

In the Tax Appeal Tribunal

Tax Appeal E608 of 2023

RM Mutuma, Chair, EN Njeru, M Makau, B Gitari & AM Diriye, Members

May 24, 2024

Between

Exome Life Sciences Kenya Limited

Appellant

and

And Border Control

Respondent

Judgment

Background 1. The Appellant is a limited liability company duly incorporated under the Companies Act of the laws of Kenya, and in the business of manufacturing and importation of products for application on agriculture.

2. The Respondent is a principal officer appointed under and in accordance with Section 13 of the Kenya Revenue Authority Act and the Kenya Revenue Authority mandated with the responsibility of assessment, collection and accounting for all tax revenue as an agent of the Government of Kenya, and is also mandated with the administration and enforcement of the statutes set out under the schedule to the said Act.

3. The Appellant imported fertilizers branded; “Supersoil,”“ K-Bio”, “Tetrapower”, “Harvester”, “M-Power”, “Calratna”, “Gainup”, “Secure”, “Miniboost” and “Tels-BV”, under several different entries and having declared them as fertilizers classified the same under HS Code 3101. 00 .00 of the EAC/CET, under which fertilizers are not chargeable for VAT.

4. The Respondent disagreed with the Appellant on the classification and reclassified the products as “miscellaneous chemical products” under Chapter 38 of the EAC/CET under HS Code 3824. 99. 90 and charged VAT of Kshs. 5,177,517. 00 thereon.

5. Dissatisfied with the Respondent’s reclassification, the Appellant filed its Notice of Appeal with the Tribunal on 8th September 2023

The Appeal 6. The Appellant filed its Memorandum of Appeal dated 21st September 2023 and filed on 26th September 2023, and set out the following grounds of appeal;i.That the Appellant’s products are fertilizers and their correct classification is under Chapter 31 of the EAC/CET under HS Code 3101. 00. 00. ii.That the classification of the products by the Respondent as “Miscellaneous Chemical Products” under Chapter 38 of the EAC/CET under HS Code 3824. 99. 90 is incorrect and wrongful.iii.That the Chapter Notes relied upon by the Respondent to exclude the products from classification under Chapter 31 of the EAC/CET are inapplicable and inappropriate.iv.That the Heading of Chapter 38 of the EAC/CET and Heading 38. 28 under which the Respondent has purported to classify the products is wholly inapplicable to the products.v.That Value Added Tax is not chargeable on the products.vi.That the Products have been duly certified for use in Kenya as a fertilizer by the Kenya Plant Health Inspectorate Services (KEPHIS) of the Ministry of Agriculture.vii.That in Tax Appeals Tribunal No. 222 of 2022, this Tribunal dealt with the classification of one of the products branded “Supersoil” and held that its correct classification is as a fertilizer under Chapter 31 of the EAC/CET under HS Code 3101. 00. 00, and that the Respondent has deliberately ignored, disregarded and failed to obey the Judgment of this Tribunal in that regard dated 13th January 2023.

The Appellant’s Case 7. The Appellant’s case is set out in its;a.Statement of Facts dated 21st September 2023 and filed on 26th September 2023 together with the documents attached thereto;b.Written Submissions dated 21st November 2023 and filed on 22nd November 2023;c.Supplementary list of documents dated 21st November 2023 and filed on 22nd November 2023;d.Further written submissions dated and filed on 6th February 2024; and,e.Further Supplementary written submissions dated and filed on 4th March 2024.

8. The Appellant stated that it imported fertilizers branded “Supersoil, K-Bio, Tetrapower, Harvester, M-power, Caltrana, Gainup, Secure, Miniboost and Tels-BV”, under several entries, and declared the same as fertilizers classified under HS Code/Tariff No. 3101. 00. 00 of the EAC/CET.

9. The Appellant stated that the products being fertilizer were not chargeable for Value Added Tax.

10. The Appellant further stated that the Respondent disagreed with its classification and instead classified the same as “miscellaneous Chemical Products”, under Chapter 38 of the EAC/CET under HS Code 3824. 99. 90 and thereafter imposed VAT and penalties totaling Kshs. 5,177,517. 00 thereon.

11. It further averred that due to the reclassification, VAT and penalties were imposed upon the product, which the Appellant proceeded to pay under protest to avoid accrual of demurrage and other charges.

12. It also averred that in respect to the reclassified goods, the Appellant was obliged to furnish the Respondent with a bank guarantee to secure the alleged VAT liability claimed by the Respondent.

13. The Appellant also stated that as a result of the Respondent’s wrongful classification of the products and insistence on payment of VAT, the Appellant incurred demurrage charges totaling Kshs. 853,997. 00.

14. The Appellant also averred that this Tribunal had already dealt with the classification of “Supersoil” as a fertilizer in TAT No. 222 of 2022, in which the Tribunal classified the same as a fertilizer under Chapter 31 of EAC/CET under HS Code 3101. 00. 00. It contended that the Respondent is blatantly going against the judgment of the Tribunal and classifying the same as “Miscellaneous Chemical Product”, yet the Tribunal had made a finding that the same is a fertilizer.

15. The Appellant also averred that the Respondent’s classification of its products as “miscellaneous chemical products” under Chapter 38 of EAC/CET HS Code 3824. 99. 00 and subsequent imposition of VAT and penalties thereon is erroneous and wrongful for the following reasons;a.The products are fertilizers and its correct classification is under Chapter 31 of EAC/CET under HS Code 3101. 00. 00. b.The classification of the products by the Respondent as “Miscellaneous Chemical Products” under Chapter 38 of EAC/CET under HS Code 3824. 99. 90 is incorrect and wrongful.c.The Chapter Notes relied upon by the Respondent to exclude the products from classification under Chapter 31 of the EAC/CET are inapplicable to the product.d.That the Value Added Tax is chargeable on the imported products classified as fertilizer.e.The products have been duly certified as fertilizers by KEPHIS of the Ministry of Health, who issued a Biological Importation Permit to facilitate the same.f.That the products are imported specifically for use in agriculture as fertilizer.g.In TAT No 222 of 2022, this Tribunal dealt with the classification of one of the products, “Supersoil” and held that its correct classification is a fertilizer under Chapter 31 of EAC/CET under HS Code 3101. 00. 00, and the Respondent has deliberately ignored, disregarded and failed to obey the Judgment of this Tribunal in that regard dated 13th January 2023.

16. In its submissions, the Appellant posited that it classified the imported products under HS Code 3101. 00. 00 which applies to:“Animal or vegetable fertilizers, whether or not mixed together or chemically treated; fertilizers produced by the mixing or chemical treatment of animal or vegetable products.”

17. The Appellant further submitted that there was no dispute that the products it imported were for agricultural use as fertilizers and bio-stimulants for growth enhancement and improvement of quality of produce.

18. It further submitted that all its products subject of this Appeal qualify as fertilizers and the certificates of analysis in respect of the products show the composition of the said products, which prove that the chemical composition forms a very small (minimal) part of the composition of the products which are all composed of a majority of “non -chemical” components. It therefore submitted that as per the ratio of the Tribunal in TAT 222 of 2022, the products are more aptly classifiable under Chapter 31.

19. It was a further submission of the Appellant that as per the Cambridge English Dictionary, the term fertilizer is defined as;“A natural or chemical substance that is spread over land or given to plants to make plants grow well”,While Collins English Dictionary defines fertilizer as;“Any substance, such as manure or a mixture of nitrates, added to soil or water increase its productivity.”

20. The Appellant submitted that going by the foregoing definitions, the declared intended usage of the products, as well as the certifications and approvals from KEPHIS, there can be really no doubt that the products are indeed fertilizers.

21. The Appellant also submitted that the products were not intended for use as chemical as per the Respondent’s classification but they are indeed fertilizers approved for commercial usage by KEPHIS, who after extensive trials at multiple locations in Kenya found the products suitable for use as fertilizer and beneficial for use on vegetables and legumes, and therefore the Appellant was justified in classifying the same under tariff HS Code 3101. 00. 00.

22. The Appellant cited the case of Lachlan Kenya Ltd vs. Commissioner of Customs & Border Control TAT 160 of 2019, in which the Tribunal while dealing with a similar dispute relating to a product which the importer had classified as a fertilizer under Chapter 31 of EAC/CET and which the Respondent had reclassified as a chemical under Chapter 38 of the EAC/CET, found that it was guided by the General Rules of Interpretation of the Harmonized Code, and held that the product in question was correctly classified as a fertilizer and not chemical, and proceeded to uphold the importer’s declared classification and allowed the Appeal stating;“the Appellant submitted that the Nitrozinc fertilizer should be classified under Chapter 31 of the EAC/CET and being a fertilizer, it is exempt from VAT. The Respondent in rebuttal argued that the Nitrozinc fertilizer is a chemical product under tariff number 38. 24 of the EAC/CET and VAT should apply. The Tribunal holds that the Respondent erred in classifying Nitrozinc under HS Code 3824. 99. 90 and the product was classifiable under chapter 31 as a fertilizer and specifically Heading 3102. Therefore, the appeal has merit and succeeds.”

23. That the Tribunal’s decision was upheld in the High Court on appeal by the Respondent in Commissioner of Customs & Border Control vs. Lachlan Kenya Ltd ITA E054 of 2021 KEHC 12109 (KLR).

24. The Appellant also cited the case of Republic vs. Kenya Revenue Authority Exparte Bata Shoe Company (K) Ltd, and East African Seed Company Ltd vs. Commissioner of Domestic Taxes TAT 116 of 2016, and submitted that the Respondent erred in classifying all the products as “miscellaneous chemical products” under Chapter 38 of EAC/CET HS Code 3824. 99. 90, whereas the correct classification is under Chapter 31 of EAC/CET HS code 3101. 00. 00.

25. The Appellant also submitted that VAT is not chargeable on the products based on the classification that the products are fertilizers, as Chapter 31 deems the products as fertilizer, which is exempt from VAT and therefore the Appellant has no VAT tax obligation over the product.

26. It was further submitted that the Appellant paid VAT under protest and the Respondent is aware as the Appellant wrote to the Respondent on 5th September 2023, despite knowing that the product is classified as a fertilizer under HS Code 3101. 00. 00, and the Respondent erred in levying VAT liability of Kshs. 5,177,517. 00 and Demurrage of Kshs. 853,997. 00.

27. On the issue of costs, the Appellant submitted that it has been constrained by the actions of the Respondent. It submitted that the actions of the Respondent have been deliberate and offensive towards the Appellant, and the Respondent has blatantly ignored the Judgment made by this Honourable Tribunal, and has acted capriciously and with utter impunity in regard to the same. The Appellant therefore submitted that it would be unfair and unjust for the Appellant to bear a portion of the costs herein, and that the Respondent ought to bear the costs of this suit.

28. The Appellant in its Further Submissions discredited the Chapter Notes relied on by the Respondent and cited in the impugned thirteen letters dated 19th July 2023, 31st July 2023, and 16th August 2023 (General Notes to Chapter 31), which notes were not provided, and further stated that rather than using appropriate code of the EAC/CET, the Respondent has relied on authorities that are not relevant for this case and the Respondent’s position on the same are misconceived and not tenable.

29. The Appellant also filed Further Supplementary Submissions in response to the Respondent’s Further written submissions, and stated that subject of this Appeal, the Respondent made a number of decisions purporting to reclassify the Appellant’s imported products as “chemicals” under Chapter 38 of EAC/CET. It stated that these decisions were clearly and undoubtedly decisions made by the Commissioner on matters arising from the provisions of a tax law, and these decisions are clearly and directly appealable to this Honourable Tribunal under Section 12 of the Tax Appeals Tribunal Act.

30. It further submitted that the decisions of the Respondent which are the subject of the current Appeal are clearly not tax decisions as defined under the TPA, nor are they decisions made in the course of making a tax decision. Accordingly, the decisions against which this Appeal has been filed are clearly appealable decisions to which Section 52 (1) of the TPA applies and against which the Appellant has a clear and express right to file an Appeal to this Tribunal under the said section.

31. The Appellant cited the case of Fair Logistics Agency Ltd vs. Kenya Revenue Authority (2020) eKLR, where it was stated;“… where the construction of a statute confers a jurisdiction on a court, Tribunal, person, body or authority, the jurisdiction must be exercised in accordance with the constitution of the statute conferring it …”.

32. It was therefore submitted by the Appellant that it lodged this Appeal against the Respondent for wrongly reclassifying its products which in turn attracted the imposition of VAT upon it, which was incorrect. The wrong reclassification of the products is an appealable decision made by the Commissioner arising from the provisions of the law. Therefore, the Appellant’s Appeal is not moot as submitted by the Respondent, as the same has merit and was filed under the mandate and provisions of under the Tax Appeals Tribunal Act and the Tax Procedures Act.

33. The Appellant in view of the foregoing prayed that the Tribunal allows the Appeal herein with costs, revokes and sets aside the Respondent’s reclassification decisions contained in its various letters dated 19th July 2023, 31st July 2023, and 16th August 2023 classifying the Appellant’s products as “miscellaneous chemical products” under HS Code 3824. 99. 90, and hold that the classification of the Appellant’s subject imported products is a fertilizer classifiable under HS Code 3101. 00. 00, that the products are not chargeable to VAT, that the Respondent refunds the total amount of Kshs. 5,177,517. 00 in respect of VAT and penalties wrongfully imposed upon and paid by the Appellant in protest, refunds the Appellant the sum of Kshs. 853,997. 00 in respect of demurrage charges wrongfully imposed and paid, and effect the cancellation of the bank guarantees issued by I&M Bank in favour of the Respondent to secure the release of the said goods.

The Appellant’s Prayers 34. By reason of the grounds aforesaid the Appellant prayed to this Tribunal that;a.The Respondent’s decisions classifying its products as “miscellaneous chemical products” under Chapter 38 of the EAC/CET under HS Code 3824. 99. 90 be set aside; and,b.The Appeal herein be allowed.

The Respondent’s Case 35. The Respondent’s case is set out on its;a.Statement of Facts dated and filed on 19th October 2023 together with the documents attached thereto;b.Written submissions dated 5th December 2023 and filed on 19th December 2023; and,c.Further Written Submissions dated and filed on 19th February 2024.

36. The Respondent stated that the Appellant imported products specified as micronutrient preparations under several entries and declared them as classified under EAC/CET Code 3101. 00. 00.

37. It stated that the Appellant’s consignment was partially verified, quantities and values were found to be satisfactory however the products were identified for possible misdeclaration of Tariff Code.

38. It further stated that the Appellant disputed the release point’s classification and the products were sampled for review of tariff classification for entries 23EMKIM400286227 & 23CTSIM4000223809, respectively.

39. The Respondent stated that based on the product descriptions, the products where described to be micro-nutrient preparations that help to improve soil quality whilst improving crop yield.

40. The Respondent also stated that it issued Tariff Rulings dated 19th July 2023, 31st July 2023, and 16th August 2023, and the products were classified under EAC/CET HS Code 3824. 99. 90, as the declared EAC/CET HS Code 3101. 00. 00 was at variance with the tariff classification guidance.

41. It stated that dissatisfied with the findings of the Respondent, the Appellant filed the Appeal herein seeking to set aside the findings of the Commissioner as well as refund for payment of VAT and demurrage charges imposed.

42. The Respondent posited that the General Rules for Interpretation GIR 1, provides that classification shall be determined according to the terms of the headings and any relative Section or Chapter Notes;“The titles of Sections 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”.

43. It also stated that GIR 6 provides,“For legal purposes, the classification of goods in the subheadings of a heading shall be determined according to the terms of those subheadings and any related sub-heading notes and , mutatis mutandis , to the above rules , on the understanding that only subheadings at the same level are comparable . For the purposes of this Rule the relative Section and Chapter Notes also apply , unless the context otherwise requires.”

44. It posited that based on the goods description and intended use as well as the Legal Notes to CET the micronutrient preparations products are classifiable as miscellaneous chemical products of Heading 38. 24.

45. The Respondent further stated that the classification of goods under HS Code is determined by the characteristic’s composition and components of the product and not what the product is called or what it is alleged to do. Further GIR 1 on interpretation of tariff classification is clear.

46. It stated that the general notes to Chapter 31 provides that the Chapter does not cover products which improve rather than fertilizes the soil. The Chapter also excludes micronutrient preparations which are applied to seeds, to foliage or to soil to assist in seed germination and plant growth. They may contain small amounts of the fertilizer elements nitrogen, phosphorous and potassium, but not as essential constituents.

47. The Respondent also stated that Heading 38. 24 covers the classification of prepared binders for foundry moulds; chemical products and preparations of chemical or allied industries (including those consisting of mixtures of natural products) not elsewhere specified or included.

48. It stated that the Products imported by the Appellant fell under the categories of bio-stimulant, plant growth promoters/enhancers and soil decontaminants, all products which are not covered by the HS Code 3101. 00. 00 as contended by the Appellant.

49. The Respondent further stated that Section 56 (1) of the Tax Procedures Act provides that the burden falls upon a taxpayer to prove that a tax decision is incorrect, and also stated that this provision is reiterated in Section 30 of the Tax Appeals Tribunal Act. Thus, the burden always ultimately rests on the taxpayer to prove that the Commissioner’s decision is wrong.

50. The Respondent cited the case of Commissioner of Investigations and Enforcement vs. Sangyug Enterprises (K) Ltd ITA E056 of 2020 KEHC 59 (KLR).

51. The Respondent submitted that the Appellant’s products are bio-stimulants and that in order to determine the precise nature of the products imported by the Appellant, and, as a result, the correct HS Code for the products, it is necessary to distinguish them from fertilizers.

52. It further submitted that HS Code 3824. 99. 00 falls under Chapter 38 of the Harmonized System, which is related to miscellaneous chemical products. Specifically, it is in the subheading 3824 which covers“prepared binders for foundry moulds or cores; chemical products and preparations of the chemical or allied industries (including those consisting of mixtures of natural products) not elsewhere specified or included.”

53. The Respondent submitted that the Appellant’s products fell under this tariff classification since the products have already been established as not being fertilizers but instead as bio-stimulants.

54. The Respondent in its Further Submissions stated that the relevant notes to EAC/CET Chapter 31 reads as follows:“This chapter does not cover:a.Animal blood heading 05. 11;b.Separate chemically defined compounds (other than those answering to the descriptions in Note 2 a, 3a, 4a or 5 below; or (c) cultured potassium chloride crystals (other than optical elements) weighing not less than 2. 5 g each, of heading 38. 24; optical elements of potassium chloride (heading 90. 01)”.

55. It submitted that, of importance to note is part (b) above, Note 2 a, 3 a, 4 a, & 5 provide criteria or characteristics that certain chemically defined compounds must meet to be considered under this Chapter. The implication of this is that only chemically defined compounds meeting the specific criteria outlined in Notes 2 a, 3 a, 4 a, or 5 are considered within the scope of this chapter, and the others are excluded.

56. It further submitted that the general notes of Chapter 31 thus do not cover products that improve the soil rather than directly fertilize it. That if a product’s primary purpose is to enhance soil quality, rather than providing essential nutrients to plants, it falls outside the scope of this Chapter.

57. The Respondent also submitted that the classification of products within Chapter 31 depends on their primary purpose. If the primary function is direct fertilization, they fall under the Chapter; if it is soil improvement or non-essential plant functions, they are not covered.

58. The Respondent also submitted that from the schedule of the products imported by the Appellant which show the composition of the products, based on the indicated product descriptions, the products are micronutrient preparations that help improve the soil quality whilst improving crop yield, and while these preparations may contain small amounts of essential fertilizing elements, they are not considered essential constituents for plant nutrition.

59. The Respondent also submitted that though the Appellant has called into question the research paper attached by the Respondent that seeks to differentiate between bio-stimulants and fertilizers, this research paper provides detailed descriptions of products, including their characteristics, composition and specifications, which information is crucial in establishing the true identity and nature of the goods.

60. It also submitted that if the goods are essentially the same, the same principles used to classify them in the USA should be applicable in Kenya. It stated that the characteristics of the goods in the US tariff ruling were similar to the characteristics of the Appellant’s goods in that they were soil enhancers whose purpose was to stimulate growth and development of the plants.

61. It was also a submission of the Respondent that there is reliance by the Appellant on the KEPHIS certifications and approvals. It stated that KEPHIS is a Government body whose responsibility is to assure the quality of agricultural inputs and produce to prevent adverse impacts on the economy, the environment and human health. That KEPHIS does not have the mandate of tariff classification of products, which mandate is the preserve of the Respondent.

62. The Respondent also submitted that Section 229 of EACCMA provides for the procedure that an applicant should follow where they do not agree with the decision of the Commissioner;“(1)A person directly affected by the decision or omission of the Commissioner or any other officer on matters relating to Customs shall within thirty days of the date of the decision or omission lodge an application for review of that decision or omission”.

63. It submitted that in the instant case eight (8) tariff rulings were issued by the Respondent on 19th July 2023, 31st July 2023, and on 16th August 2023, and it was incumbent upon the Appellant to seek a review of the tariff rulings by the Commissioner within 30 days.

64. The Respondent submitted that the Appellant cannot therefore seek redress against the tariff ruling when it did not follow the due process. The Respondent cited the case of Republic vs. Kenya Revenue Authority & Commissioner of Customs Services exparte Europa Healthcare Ltd [2014] eKLR, where the application of Section 229 (1) is settled.

65. The Respondent also cited the provisions of Section 230 of the EACCMA, which provides that a person dissatisfied with the decision of the Commissioner under Section 229 (1) of EACCMA is to file an appeal with the Tribunal within 45 days upon being served with the decision.

66. The Respondent also cited the case of Equity Group Holdings Ltd vs. Commissioner of Domestic Taxes [2021] eKLR, and Nicholas Kiptoo Arap Korir Salat vs. IEBC & 6 others [2013] eKLR,where the High Court emphasized the strict application of statutory timelines.

67. The Respondent in light of the foregoing submitted that the Appeal before the Tribunal is moot by reason of the Appellant having failed to follow the provisions of Section 229 (1) of EACCMA.

68. The Respondent further submitted that for the legal burden of proof to be discharged should be by way of evidence, and nothing provided by the Appellant could lead to a change of tariff classification by the Respondent.

Respondent’s Prayers 69. By reason of the foregoing the Respondent prayed that;a.The Appellant’s Appeal be struck out with costs.

ISSUES FOR DETERMINATION 70. The Tribunal having carefully considered the pleadings filed by the parties and the submissions made, is of the considered view that the Appeal distils into two issues which commend for determination;i.Whether the Appellant’s Appeal is properly before the Tribunal.ii.Whether the Respondent correctly classified the Appellant’s products under Tariff EAC/CET HS Code 3824. 99. 90 instead of Tariff EAC/CET HS Code 3101. 00. 00.

Analysis And Determination 71. The Tribunal having identified the issues for determination, proceeds to analyze the same as follows;i.Whether the Appellant’s Appeal is properly before the Tribunal.

72. The background to the dispute subject of this Appeal is the Respondent’s reclassification of the Appellant’s imported products specified as fertilizer and declared under tariff HS Code 3101. 00. 00, to products specified as miscellaneous chemical products under Tariff Code 3824. 99. 90.

73. The Respondents issued eight tariff rulings on the 19th July 2023, 31st July 2023, and 16th July 2023 reclassifying the said products and the Appellant filed the Appeal herein to challenge the said reclassification.

74. The Respondent has contended that the Appellant did not follow the laid down procedure set out under Section 229 of EACCMA upon disagreement with the Commissioner.

75. The Respondent submitted that Section 229 of EACCMA provides for the procedure that an applicant ought to follow where they do not agree with the decision of the Commissioner, and therefore it was incumbent upon the Appellant to seek a review of the Commissioner’s tariff rulings within 30 days of issuance thereof, before seeking a redress at the Tribunal. The Appellant instead filed an Appeal without following and exhausting the due process set out under Section 229 of EACCMA.

76. The Appellant has submitted that the Respondent made a number of decisions purporting to reclassify the Appellant’s imported products as “chemicals” under Chapter 38 of EACET, and these decisions were clearly and undoubtedly decisions made by the Commissioner on matters arising from the provisions of a tax law. It therefore submitted that these decisions are clearly and directly appealable to the Tribunal under Section 12 of the TAT Act, and moreover parties have a right to appeal an appealable decision to the Tribunal by dint of Section 52 (1) of the TAT Act.

77. The Appellant further submitted that the provisions of EACCMA, which the Respondent has sought to apply, are not exclusive and do not create any exclusive remedy for the Appellant. It further submitted that Section 229 of EACCMA does not provide the only avenue or remedy for any party aggrieved by the decision of the Commissioner. Other remedies are provided under the TPA and TAT Act, and the Appellant is free to excise any of the remedies availed by the law. It also submitted that in any event, the decisions made under EACCMA are appealable without review by dint of Section 12 of the TAT Act.

78. The Appellant cited the case of Fair Logistics Agency Ltd vs. Kenya Revenue Authority [2020] eKLR, where it was stated;“where a statute establishes a specific procedure for handling a particular issue, that procedure needs to be strictly followed and exhausted before a party comes to court and that the court should let such other alternative dispute resolution mechanisms operate freely without undue intrusion. It is called the doctrine of exhaustion of alternative remedies or administrative remedies…The essence of that doctrine dictates that, where the constitution or a statute confers a jurisdiction on a court, tribunal, person, body or authority, the jurisdiction must be exercised in accordance with the constitution or the statute conferring it.”

79. The relevant provision of the EACCMA reads ;“229 (1) A person directly affected by the decision or omission of the Commissioner or any other officer on matters relating to Customs shall within thirty days of the date of the decision or omission lodge an application for review of that decision or omission”.

80. Section 230 (1) of the EACCMA then provides;“A person dissatisfied with the decision of the Commissioner under Section 229 may appeal to the Tax Appeals Tribunal established in accordance with section 231. ”

81. Such an Appeal shall be lodged within forty-five days after being served with the decision, and a copy of the appeal served on the Commissioner.

82. The concise meaning of the foregoing provisions is that an Appeal to the TAT emanating from decisions or omissions of the Commissioner on matters relating to Customs should be founded on a decision of the Commissioner upon application and review as provided under Section 229 of EACCMA. Neither the TPA nor the TAT Act provide alternative remedies, and therefore the remedy set out under Section 229 of EACCMA, ought to be exhausted before a party can lodge its Appeal under Section 230 of EACCMA.

83. The Appellant in the instant case lodged its Appeal with the Tribunal based on the tariff reclassification rulings, which in the Tribunal’s considered view are not appealable decisions contemplated under Section 230 of EACCMA.

84. The Appellant ought to have in the first instance sought a review of the tariff classification rulings by the Commissioner under Section 229 of EACCMA and in the event of dissatisfaction with the ensuing review decision, lodge an Appeal under Section 230 of EACCMA to the Tribunal.

85. In the foregoing circumstances, the Tribunal is satisfied that the Appellant did not exhaust the internal remedies provided for under Section 229 of EACCMA, thus lodged its Appeal to the Tribunal prematurely.

86. In light of the foregoing, the Tribunal finds and holds that the Appellant’s Appeal having been lodged without exhausting the provisions of Section 229 of EACCMA, is defective and not properly before the Tribunal.ii.Whether the Respondent correctly classified the Appellant’s products under HS Code 3824. 99. 90 instead of HS Code 3101,00. 00.

87. The Tribunal having made a finding that the Appellant’s Appeal is defective and not properly before the Tribunal, will not proceed to consider the other issue commending for determination as the same has been rendered moot.

88. The upshot of the foregoing is that the Appeal is incompetent and ought to be struck out.

Final Decision 89. The Appeal being incompetent and unsustainable in law , the Tribunal proceeds to make the following Orders;a.The Appeal be and is hereby struck out.b.Each party to bear its own costs.

90. It is so ordered.

DATED AND DELIVERED AT NAIROBI THIS 24TH DAY OF MAY, 2024. ROBERT M. MUTUMA - CHAIRPERSONELISHAH N. NJERU - MEMBERMUTISO MAKAU - MEMBERBERNADETTE M. GITARI - MEMBERMOHAMED A. DIRIYE - MEMBER