[2024] KETAT 615 (KLR)

Juma v Commissioner of Customs & Border Control (Appeal E372 of 2023) [2024] KETAT 615 (KLR) (5 April 2024) (Judgment)

Neutral citation: [2024] KETAT 615 (KLR)

Republic of Kenya

In the Tax Appeal Tribunal

Appeal E372 of 2023

Grace Mukuha, Chair, Jephthah Njagi, E Komolo, W Ongeti & G Ogaga, Members

April 5, 2024

Between

Ronald Odhiambo Juma

Appellant

and

Commissioner of Customs & Border Control

Respondent

Judgment

Background 1. The Appellant is an individual taxpayer who resides and works in Mombasa.

2. The Respondent is a principal officer appointed under and in accordance with Section 13 of the Kenya Revenue Authority Act, and KRA is charged with the responsibility of among others, assessment, collection, accounting and the general administration of tax revenue on behalf of the Government of Kenya.

3. The Appellant received donated goods from the United Kingdom in form of 34 pallets as declared in the bill of lading.

4. The Respondent targeted the Appellant’s consignment under entry number 23MBAIM401978485 for low values.

5. On 19th April 2023 an email was sent to the Appellant's clearing agent requesting documentary proof to support declared values as per Section 122(4) of EACCMA.

6. The Appellant wrote back indicating that the "...the goods are not for sale and there was no funds transfer involved " and therefore the Appellant could not support the declared values.

7. The Respondent did the verification and findings were submitted to its Valuation & Tariff Division for guidance.

8. The Valuation & Tariff (V&T) Division reverted asking for a more detailed verification account to which the Appellant declined to offload the consignment for 100% verification citing fragile nature of the goods. The Appellant instead, applied for a destination verification on the 25th April 2023 and the request was declined on 5th May 2023.

9. A 100% joint verification was done on 10th May 2023, with the Verification Officer (VO), Valuation & Tariff, Enforcement and Clearing Agent and findings were forwarded to V&T Division for value guidance.

10. The Respondent on the 23rd May 2023 gave value uplift which was applied and advised the Appellant to cancel his entry in order to declare the undeclared items and get approvals of the same.

11. Vide a letter dated 24th May 2023, the Appellant indicated that it was not satisfied with the value uplift but requested to pay for the same under protest.

12. The Appellant cancelled entry 23MBAIM401978485 and replaced it with entries 23MBAIM403077599 and 23MBAIM403045349 and also paid the additional taxes under protest.

13. Aggrieved by the demurrage charges and the value uplift, the Appellant lodged this Appeal on 10th July 2023.

The Appeal 14. The Appeal is premised on the Memorandum of Appeal dated 30th June 2023 and filed on 7th July 2023 raising the following grounds:-a.That the Respondent erred in law and in fact by violating Part 1 (interpretation), paragraph (2)(a) of the Fourth Schedule of the EACCMA, 2004 by uplifting duty through comparing with goods from United Arab Emirates instead of United Kingdom where the goods came from.b.That the Respondent erred in law and in fact by refusing to allow for destination verification pursuant to Section 53 of the EACCMA Regulations 2004 an aspect that would have avoided incurring unwarranted shipping detention charges, Awanad CFS storage charges and custom warehouse rent.c.That the Respondent erred in both law and fact by insinuating that the Appellant violated Section 203(a) of the EACCMA, 2004 without telling the Appellant which document were false.d.That the Respondent erred in both law and fact by claiming that documents such as the invoice, presented to them were not sufficient documents to support declaration values yet the shipper had specifically indicated in the documents that the goods he had shipped to the Appellant were donated items and therefore could not have paid for the goods to warrant him to have a bank pay-in-slip.e.That the Respondent unlawfully separated complete items such as sockets, switches USBs from ceiling fans, sport­ lights, and digital led Astra Lighting that were complete items and claimed that they were undeclared.f.That the Respondent erred in both law and fact by insinuating at paragraph 3 of its letter dated 31st May, 2023 that since Valuation & Tariff failed to rely on the transaction values that made the basis of declaration incorrect and therefore a contravention of Section 203 of EACCMA, 2004. g.That the Respondent erred in both law and fact by stating in its letter dated 31st May 2023 that requesting the Appellant to mitigate an offence under the provisions of Section 210 of EACCMA, an offence the Appellant never committed.h.That the Respondent erred in both the law and fact by relying on the provisions of 4th Schedule Part 1 Paragraph 4 of the EACCMA 2004 an aspect that allowed it to issue arbitrary and erroneous figures to uplift the goods.i.That the Respondent erred in law and in fact by refusing destination verification therefore subjection the Appellant to third verification which resulted in the following storage charges;i.Maersk shipping line detention Kshs. 982,520. 00. ii.CFS charges Kshs. 732,424. 00. iii.Awanad warehouse rent Kshs. 110,365. 00. Total Kshs. 2,448,276. 00. j.That the Respondent erred in law and in fact by giving an uplift value but failing to provide the basis for the same contrary to Section 122(1) of EACCMA 2004. k.That the Respondent erred in both law and fact by stating in its letter dated 31st May 2023 requesting the Appellant to mitigate an offence under the provisions of Section 210 of EACCMA, an offence the Appellant never committed.l.That the Respondent erred in law and in fact by causing the Appellant to incur extra storage charges of Kshs. 2,448,276. 00 which would have been avoided had destination verification been done.m.That the Respondent erred in law and in fact by failing to adhere to Article 47(l) of the Constitution of Kenya, 2010, on fair administrative action.

Appellant’s Case 15. The Appellant’s case was premised on the following documents:-a.The Appellant’s Statement of Facts dated 30th June 2023 and filed on 10th July 2023 and the documents attached thereto.b.The Appellant’s written submissions dated and filed on 22nd January 2024 together with the authorities attached thereto.

16. The Appellant averred that he received a donation from United Kingdom mainly 32 pallets of tiles of various sizes, 1 pallet of bath tab and accessories and 1 pallet of door locks, lights and accessories all totaling to 34 pallets as declared in the Bill of Lading.

17. That the Appellant knowing that the goods were a donation did not know that the same would attract duty and/or have a duty implication.

18. That the Appellant’s clearing agents first lodged the import declaration form (IDF) as it is procedurally required.

19. That subsequently the entry was lodged with the Respondent on 14th April, 2023.

20. That the Appellant paid duty of Kshs. 957,651. 00 as per the documents sent to him by the donor from the United Kingdom which was almost one (1) month after the arrival of the vessel carrying the goods and it was because the Appellant was still looking for money for payment of duty.

21. That upon lodging of the entry, the first verification was carried out on 17th April 2023.

22. That the NTC (National targeting center) which is a Department within the Respondent flagged the container and requested for an extensive verification report and collection of extra revenue which necessitated for the second verification to be done on 18th April, 2023.

23. That this prompted the Appellant through his clearing agent to seek for destination verification due to the nature of the goods, the same being fragile and to avoid shipping detention, CFS storage and custom warehouse rent. That the same was requested through a letter dated 25th April 2023 pursuant to Section 53 of EACMMA 2004.

24. That the said letter was not responded to and the Appellant was forced to write to the Regional Coordinator Southern Region vide a letter dated 28th April, 2023.

25. That vide the Respondent’s email dated 9th May, 2023 the Respondent notified the clearing agents that, the container was to be subjected to 100% verification, and on the same day they placed the container for 100% verification but no officer from the Respondent's office was available.

26. That on 10th May, 2023 V&T, Enforcement Department and verification officer availed themselves and the verification was done successfully and the verification report was written after six (6) days.

27. That upon the said verification, 95% of the consignment was found to be tiles of various sizes in square meters and whatever was declared and paid for was 986 square meters and what was found upon verification was 996 square meters.

28. That further, upon verification 60 by 120 centimeters of tiles were found in the container undeclared and 90 by 45 centimeters of tiles were declared but were not found in the container but were paid for, according to the importer the light and switches were accessories of the sports lights that were declared.

29. That on 17th May, 2023 the valuation in Mombasa referred the document to Nairobi and from 17th May, 2023 to 25th May, 2023 there was communication between the clearing agent and the Respondent.

30. That the Respondent notified the Clearing agent that the uplift amount was going to be Kshs. 509,480. 00. That after being notified of the aforesaid uplift duty amount, the agents wrote to the Chief Manager CFS Operations vide a letter dated 24th May 2023 requesting for an explanation for the uplift to avoid accumulation of storage charges, custom warehouse rent and shipping demurrage but the same was not responded to.

31. That despite writing the aforesaid letter requesting for the basis of uplift, the Respondent did not respond but instead gave the Appellant a worksheet just showing the uplift amount of Kshs. 509, 480. 00 without any basis for the same.

32. That the Respondent refused to generate a payment slip to allow and/or enable the Appellant pay the aforesaid uplift amount of Kshs. 509,480. 00.

33. That being dissatisfied with the uplift the agents lodged an objection on the said uplift pursuant to Section 229 of the EACCMA 2004 and to avoid accumulation of further storage charges, the Appellant requested and/or applied to be allowed to pay the said uplift of Kshs 509,480. 00 under protest pursuant to Section 123 of the EACCMA 2004.

34. That pursuant to condition 4 of the customs agents license issued to the Agent by the Commissioner of KRA, they are liable for any duty payable and in this case therefore, the Respondent had no reason for refusing to release the aforesaid container to the agent as any duty payable can and would be recoverable later rather than burdening the appellant with further storage charges by refusing to release the container.

35. That it is worth noting that custom gazette area is not a storage place and/or warehouse for importers’ goods and the shipping line normally gives importers 9 free days and after they charge USD 75 per day, custom warehouse gives importers 21 days free of charge and thereafter storage charge of USD 0. 3 per cubic measurement while KPA/CFS gives importers 4 free of charge days thereafter they start charging USD 90 per day.

36. That the Appellant paid Kshs. 56,284. 00 being part of the custom warehouse rent.

37. That the Appellant subsequently paid the following storage charges:-i.Maersk shipping line detention Kshs. 982,520. 00. ii.CFS charges Kshs. 732,424. 00. iii.Awanad warehouse rent Kshs. 110,365. 00. Total Kshs. 2,448,276. 00.

38. That from the Respondent’s letter dated 23rd May,2023 the following can be deduced;a.That the entry was referred to valuation and tariff and tariff Southern region for valuation guidance on 13th April 2023. b.That it is clear from the time the document was lodged that this was a donation and there was definitely no proof of payment.c.That the donor of the goods gave an estimated value which guided the Appellant while lodging the entry.d.It is not clear why it took the defendant almost one (1) month to raise the issue of proof of payment when it knew from the beginning and by the documents lodged that this was a donation.

39. That the aforesaid email by the Appellant is simply an attempt to save face and run away from its inefficiency and negligence in the way the Respondent handled the Appellant’s container.

40. That because of the Respondent’s inefficiency, the Appellant was condemned to pay storage charges which would have been avoided had the Respondent acted with speed and efficiency.

41. The Appellant submitted that the following should be the issues for determination in this matter.a.Whether the Respondent's decision not to use the transaction value method was procedural and justifiedb.Whether the transaction document could not sufficiently support the transaction values of nine (9) items the Respondent selected uplifted their FOB values and claimed that there FOB values were low compared to similar goods.c.Whether the Respondent was justified in intending to surcharge the Appellant under Section 203 of EACCMA, 2004. d.Whether the Appellant incurred unnecessary extra costs due to delays caused by the Respondent.

42. The Appellant submitted that Section 122(1) of EACCMA 2004 stipulates that:-“where imported goods are liable to import duty ad valorem, then the value of such goods shall be determined in accordance with the Fourth Schedule and import duty shall be paid on that value.”

43. That Paragraph 2 of Part 1 of the Fourth Schedule specifies that the customs value of imported goods shall be the transaction value which is the price actually paid or payable for the goods when sold for export to the partner's state.

44. That paragraph 2 provides that the customs value shall be the transaction value provided the following conditions are met:-a.That there are generally no restrictions on the disposition or use of the goods by the buyer.b.That the sale price or price is not subject to conditions or considerations for which a value cannot be determined.c.That no part of the proceeds of any subsequent resale, disposal or use of the goods by the buyer will accrue directly or indirectly to the seller and the buyer.d.That the buyer and seller are not related, or where the buyer and seller are related that the transaction value is acceptable for customs purposes under the provisions of sub paragraph (2). The paragraph also spells out the adjustment to be made to the value and these are found in Paragraph 9.

45. That price is defined in the in the interpretative notes (Part 11 of the Fourth Schedule) as "the price actually paid or payable is the total payment made or to be made by the buyer to or for the benefit of the seller for the imported goods" and includes all payments made as a condition of sale of the imported goods by the buyer to the seller or by the buyer to a third party to satisfy an obligation of the seller.

46. That Part 1 of the Fourth Schedule of EACCMA 2004 lists the various methods of valuation as explained in Paragraph 35 above whereas the interpretative notes (Part II) of the Schedules) stipulates that the methods are to be applied sequentially and the primary method of customs valuation is the transaction value method.

47. The Appellant submitted that the Respondent did not consider the explanation, documentation and evidence provided by the Appellant in relation to its consignment.

48. That the Respondent erred in law by departing from the transaction value method in valuing the Appellant's goods without according the Appellant an opportunity to justify his declared values.

49. The Appellant submitted that the Respondent decision was contrary to the Fourth Schedule and Article 17 of WTO customs valuation agreement and also violated the Appellant’s rights to a fair administrative action as provided for by the Constitution and the Fair Administrative Action Act No.4 of 2015,

50. That in the case of Testimony Motors limited -vs -The Commissioner of Customs (Uganda Revenue Authority 2012, HC Civil suit 2012, it was held“That Section 122(1) is couched in mandatory terms, It provides that the value of such goods shall be determined in accordance with the Fourth Schedule and import duty shall be paid on that value. It does not give any discretionary powers on the Commissioner to rely on alternative methods without following the procedure or directive laid out in the Fourth Schedule .in other words, it is the price paid for the goods by the buyer or importer which forms the basis for assessing the customs duty payable on the goods"

51. The Appellant submitted that according to the Fourth Schedule the Customs Value is the transaction value which is the primary method of customs valuation. The document presented for valuation of Appellant's goods included the FCA (Free Carrier) a shipping documents which showed the CIF Customs value as the cost of the goods.

52. The Appellant submitted that on receipt of the arbitrary uplift of extra duty, the Appellant wrote to the Respondent vide Section 122(3) requesting to be informed the basis of the uplift vide a letter dated 23rd May 2023.

53. That the Valuation & Tariff Unit vide a letter Ref; MFS/VTUP/23/5/23 dated 23rd May 2023 informed the Appellant the following: -“That the transaction documents attached could not sufficiently support declared values since there was no proof of payment. That the value declared for some items were found to be low compared against similar previously accepted unit values for similar goods from the same country of origin.”

54. That to the astonishment of the Appellant the Respondent attached five import entries to support its claim. That the stated import entries did not support the Respondent's claim of similar goods from the same Country of origin. That while the Appellant’s donations came from United Kingdom, the entries attached by the Respondent as evidence came from different Countries but not the Country of origin.

55. The entries are stipulated as follows:-a.Although entry No. 22NBOIM4014187706 was presented as attached to the inspection report as sample of similar goods, the entry was not attached and therefore the Appellant could not interrogate the entry.b.The sample No. 22EMKIM401675013 dated 29/12/22 attached to the inspection report cleared goods imported from Italy. It consists of several types of wash basin and none of them is the size of the items that Appellant imported.c.At column 15a of import entry No. 22SCDIM400058780 dated 18/11/2022 indicate that the country of origin as Dubai in the United Arab Emirates. The goods consisted household goodsd.At Column 15a of the import entry No. 22EMKIM400840892 dated 22/06/2022. These Goods were imported from United Arab Emirates.e.At column 15a of import entry No.23MBAIM402006591 dated 13/04/2023 these goods imported from China.

56. That from the above information, the Respondent offended Article 2 of the World Trade Organization (WTO) valuation Agreement which actually bars the Respondent from comparing imported goods from other countries other than the country of origin and provide that:-“The transaction value of similar goods is calculated in the same manner as identical goods if the goods are:a.The same in all respects including physical characteristics, quality, and reputation.b.Produced in the same country as the goods valued.c.Produced by the producer of the goods being valuedd.The goods are sold to the same cou11try of importation as the goods being valuede.The goods must also be exported arou11d the same time as the goods being valued.”

57. That on 23rd May 2023 having struggled and failed to convince the Respondent to act responsibly within the stipulated law the Appellant wrote a letter Ref; No. MFS/VTUP/23/5/23 lamenting the delays and failure to approve the Appellant’s transaction values.

58. The Respondent replied to the Appellant's letter vide a letter it referenced as MFS/VTUP/23/5/23 dated 23rd May, 2023 objecting to review the uplifted values and claim to apply the provision of 4th Schedule Part 1 Paragraph 4 of the EACCMA, 2004 and forwarded its decision which recommended an adjustment in alleged applicable impugned FOB value.

59. That the Appellant vide a letter ref: MFS/VTUP/23A/5/23 dated 24th May, 2023 requested the Respondent to allow it to pay the adjusted impugned uplifted amount of Kshs. 509,480. 52 under protest in line with Section 122(3) of the EACCMA, 2004 in order to forestall the ballooning storage charges, in terms of Customs warehouse rent, CFS charges and container detention charges.

60. That vide a letter Ref; C&BC/AWDCFS/GEN/5/2023 dated 29th May, 2023 the Respondent replied the Appellant's letter dated 24th May 2023 which declined to allow the Appellant to pay the uplifted amount under protest, as it stated that it had preferred an offence against the Appellant on allegation of having committed an offence under the provision of Section 203 (a) of the EACCMA, 2004 alleging that the Appellant had made an incorrect declaration.

61. That the Appellant vide a letter of Ref; MFS/VTUP/23B/5/23 dated 30th May 2023 protested to the invoking of Section 203(a) based on the fact that the Respondent had totally failed to evidently demonstrate the issue of incorrect declaration, to justify the compounding of an offence, apart from its application of arbitrary and fictitious figures as per the undated verification report.

62. That the Respondent vide its letter Ref: CBC/AWDCFS/GEN/5/1/2023 dated 31st May 2023 in reply to the Appellant's letter dated 30th May 2023 further declined to allow the Appellant to pay the Kshs. 509,480. 00 under protest alleging that it preferred offence and directed the Appellant to mitigate the factors upon settlement under the provision of Section 21 of the EACCMA 2004.

63. The Appellant submitted that the persistent decline by the Respondent to disallow the Respondent to pay the impugned uplifted duty under protest was meant to chain the Appellant to Section 219(e) which provide that:-“the order shall be final and shall not be subject to appeal and may be enforced in the same manner as a decree or order of the High Court."

64. That the Respondent aimed to make it difficult for the Appellant to appeal against its unlawful and unreasonable decision.

65. That vide a letter Ref: MFSNTUP/23C/6/23 dated 6th June 2023 the Appellant declined in principle to admit the alleged feigned self­ incriminating offence under Section 219(2) which provide that:-“The Commissioner shall not exercise his or her powers under subsection (1) unless the person admits in a prescribed form that he or she has committed the offence and requests the Commissioner to deal with such offence under this section,"

66. That the Appellant has all reasons and facts to believe that it never committed any offence to justify the invoking of Section 219(1) and the Respondent preferred an imaginary offence against it.

67. That the Appellant vide a letter Ref: MFSNTUP/23C/5/23 dated 6th June, 2023 requested the Respondent to put the compounding of an offence in abeyance pending determination of the matter in the Tax appeals Tribunal under Section 230 of the EACCMA, 2004.

68. That the Appellant sought to have the Tribunal to declare that the Appellant committed no offence as alleged by the Respondent as the Respondent did not provide any reasonable fact to prove the alleged incorrect declaration for the following reasons;a.That the 60 X120cm assorted tiles were in the container but were not in the entry though the square metres were captured in what had been declared.b.That the 90 X45 cm assorted tiles were declared and duty was paid for and upon verification the tiles were not in the container meaning they were replaced by the 60X120. c.That when one refers to paragraph 4 of the submissions of the Appellant, one will find 4(b) are the items while 4(c) are the accessories to the items in 4(b), the accessories in 4(c) are automatically declared when the items in 4(b) were declared as they are like conjoined twins and it was therefore an error and un-procedural for the Respondent to consider and find that the accessories were undeclared lot.

69. In response to the Respondent's Statement of Facts that the matter is premature for failure to adhere to the provisions of Section 229 of EACCMA, 2004 the Appellant submitted that the Commissioner wanted to charge him with an offence pursuant to Section 219(1) of EACCMA, 2004 and that Appellant declined the offence under Section 219(2) of EACCMA, 2004. In such circumstances, the Appellant could not go back again to the Commissioner for review as the Commissioner had already made up his mind that the Appellant had committed an offence.

70. The Appellant further submitted that this matter was even referred to the ADR and the Respondent was not ready for the ADR process although the Appellant had travelled to Nairobi from Mombasa in order to engage in the ADR Process.

Appellant’s Prayers. 71. The Appellant made the following prayers to the Tribunal: -a.That the impugned decision be annulled.b.The Respondent’s uplift assessment be amended to NIL and vacated.

Respondent’s Case 72. The Respondent’s case was premised on the following documents:-a.The Respondent’s Statement of Facts dated 3rd August 2023 and filed on 4th August 2023 together with the documents attached thereto.b.The Respondent’s Written Submissions dated and filed on 9th February 2024.

73. The Respondent averred that this Appeal is premature and hence bad in law for failure to comply with the provisions of Sections 229 and 230 of the East African Community Customs Management Act. That the Respondent therefore prayed that the same be dismissed with costs to the Respondent.

74. That the aforesaid notwithstanding, the Respondent averred that its decision with regards to valuation of the Appellant's consignment was proper, as the documents presented by the Appellant did not support the correct value of the imported consignment.

75. The Respondent averred that it was guided by the law on valuation of goods as provided in Section 122(1) read with the Fourth Schedule to the EACCMA, 2004.

76. That Section 122(1) of East African Community Customs Management Act (EACCMA) stipulates that customs valuation for imported goods liable to ad valorem duty shall be determined in accordance with the Fourth Schedule and import duty shall be paid on that value.

77. That Part 1 of the Fourth Schedule of EACCMA lists the various methods of valuation whereas the Interpretative Notes (Part II of the Schedule), stipulate that the methods of valuation are to be applied in a sequential order and the primary method of customs valuation is the transaction value method.

78. That Paragraph 2 of Part 1 of the Fourth Schedule specifies that the customs value of imported goods shall be the transaction value, which is the price actually paid or payable for the goods when sold for export to the Partner State.

79. That when the Appellant was asked to provide invoices so as to establish the price actually paid or payable, the Appellant stated that the goods in question were a donation and as such there was no invoice to verify and establish the actual price paid or payable for the goods.

80. That being the case, the primary method of valuation being transaction value method became inapplicable in the instant case and the Respondent had to consider other methods in order to determine the customs value of the goods in question.

81. That according to the Fourth Schedule to the EACCMA, 2004 the next method in line is the price the transactional value of identical goods.

82. Identical goods is defined in Part 1 of the Fourth Schedule to mean:-“Identical goods" means goods which are same in all respects, including physical characteristics, quality and reputation. Minor differences in appearance shall not preclude goods otherwise conforming to the definition from being regarded as identical;

83. The Respondent averred that it was not able to find goods that were identical to the Appellant's goods in dispute.

84. There being no identical goods the next method to be applied was the transaction value of similar goods.

85. The Respondent therefore used the transactional value of similar previously accepted units to determine the customs value of the goods in dispute.

86. The Appellant was officially notified of the uplift through a letter dated 23rd May 2023.

87. That vide a letter dated 24th May 2023 the Appellant indicated that it was not satisfied with uplifted values but requested to pay the same under protest.

88. That the Appellant never lodged an application for review of the Commissioner's decision as provided for under Section 229 of the EACCMA, 2004.

89. That the Appellant having not sought for a review of the Respondent's decision, the Respondent averred that the instant appeal is premature and the same should be struck out with costs to the Respondent.

90. That the invalidity of the Appeal not withstanding, the Respondent submitted that it followed the law as provided for under Section 122 as read together with the Fourth Schedule of EACCMA, 2004 in uplifting the customs duty payable and as such therefore its decision should be upheld.

91. The Respondent averred that regarding demurrage costs incurred the Respondent relied on the decision of the Tribunal in TAT No. 33 of 2018: Autoexpress Limited versus the Commissioner of Customs & Border Control where the Tribunal held that issues relating to demurrage falls outside its jurisdiction.

92. That demurrage fees were incurred by the Appellant while the Respondent was in the process of determining the correct customs value of the goods in question and as such the Respondent cannot be held liable.

93. The Respondent submitted that the following should be the issues of determination in this Appeal:-a.Whether the Appeal was prematurely filed.b.Whether the Tax Appeals Tribunal has jurisdiction to determine the matter.c.Whether the Tribunal has jurisdiction to determine a dispute on demurrage charges.d.Whether the Respondent's decision not to use the transaction value method and uplift duty on the Appellant's goods was lawful.

94. The Respondent submitted that Section 229(1) EACCMA 2004, that provides that:-“A person directly affected by the decision or omission of the commissioner or any other officer on matters for review of relating to customs shall within thirty days of the date of the commissioner's decision or omission lodge an application for review of that decision or omission.”

95. The Respondent submitted that it made a decision to recommending adjustment in the applicable FOB value in the Appellant's consignment. That if the Appellant was aggrieved by the said decision as it would appear he was, then he ought to have sought for a review of the said decision in accordance with the provisions of Section 229(1) EACCMA 2004.

96. That had the Appellant sought a review decision, then the Respondent would have had an opportunity to issue a review decision as provided for under Section 229 (4) of EACCMA which provides as follows:-“The Commissioner shall, within a period not exceeding thirty days of the receipt of the application subsection (2) and any further information the commissioner may require from the person lodging the application, communicate his or her decision in writing to the person.”

97. That the failure by the Appellant to lodge an application for review is fundamental as it renders the instant appeal pre-mature hence offending the doctrine of exhaustion.

98. The Respondent relied on the case of Republic Vs. Secretary County Public Board & Another Ex Parte Hulbai Gedi Abdille, where it held that:-“it is now trite law that where a statute provides a remedy to a party, the Court must exercise restraint and first give an opportunity to the relevant bodies or state organs to deal with the dispute as provided in the relevant statute. This principle was well articulated by the Court of Appeal in speaker of National Assembly vs. Njenga Karume [2008] 1 KLR 425, where it held that:"In our view there is considerable merit... that where there is clear procedure for the redress of any particular grievance prescribed by the constitution or an Act of parliament, that procedure should be strictly followed."

99. The Respondent submitted that in the case of Kotile General Contractors Company Limited vs Commissioner of Domestic Taxes (202o)eKLR, it was stated that:-“that upon determination by this honourable tribunal on the issue of validity or invalidity of the objection lodged, the Applicant can then either proceed to await the Respondent's Objection Decision on the objection or seek an extension of time to lodge a Notice of Objection in accordance with Section 51(6) of the TPA, 2015 or choose to abandon the objection altogether and pay the taxes assessed. That the Applicant is clearly guilty of laches and is in violation of express provisions of the Tax procedures Act and Tax Appeals Tribunal ActIt was further stated that; "as provided by the above section, the taxpayer upon receiving notification from the Respondent that its Notice of Objection was deemed invalid had one recourse: to appeal to the Commissioner. Once the appeal to the Commissioner was considered and a decision reached, then the Applicant would have recourse to lodge an appeal before the Tribunal. Until such process is followed, the application at hand is premature and therefore fails."

100. The Respondent also submitted that in the Court of Appeal in the case of Kenya Revenue Authority &2 others v Darasa Investments Limited [2018] eKLR, held that:-“In light of the foregoing provisions, we respectfully disagree with the respondent's position that alternative remedies thereunder specifically relate to quantum or assessment of tax payable. The wording used thereunder is clear that any decision which is made by the Commissioner or any other offlce1· under the respective Acts is subject to review by the Commissioner under Section 229 of the EACC.MA and appeal to the Tax Appeals Tribunal.(34)It is trite that where the Constitution or statute confers jurisdiction upon a court, tribunal, person, body or any authority, that jurisdiction must be exercised in accordance with the Constitution or statute.”

101. In regard to whether the Tax Appeals Tribunal has jurisdiction to determine this Appeal, the Respondent submitted that Section 13 of the Tax Appeals Tribunal Act (TAT Act) provides as follows regarding the filing of appeals before the Tribunal:-“(1)A notice of appeal to the Tribunal shall-a.Be in writing or through electronic means.b.Be submitted to the Tribunal within 30 days upon receipt of the decision of the Commissioner.”

102. The Respondent submitted that the above provisions notwithstanding, the Appellant having been issued with the impugned decision on 23rd May 2023 was expected to have lodged a Notice of Appeal by the 21st June 2023. As at the 22nd June 2023, the Applicant had not filed a Notice of Appeal.

103. The Respondent submitted that the Appellant served the Respondent with an undated and unstamped Notice of Appeal. That based on the Tribunal registry the same had not been filed by the 22nd June 2023.

104. The Respondent submitted that Section 13(3) provides as follows:-“The Tribunal may, upon application in writing or through electronic means, extend the time for filing the notice of appeal and for submitting the documents referred to in subsection (2).”

105. That despite the Appellant being late to lodge a Notice of Appeal, the Appellant failed to make an application for extension of time to lodge a late appeal as provided for under Section 13(3) of TAT Act.

106. That the Appellant having filed the Notice of Appeal late and without leave, the Tribunal lacks jurisdiction to determine the same.

107. The Respondent relied on the case of TAT No. 1097 of 2023: Pylotech Electricals Limited versus Commissioner Domestic Taxes where the Tribunal held that:-“the failure to file a Notice of appeal on time and the failure to seek leave of the Tribunal to regularize it means that there was no jurisdiction granted to the Tribunal to consider the Appeal."

108. In regard to whether the Tribunal has jurisdiction to determine a dispute on demurrage charges, the Respondent relied on the decision of the Tribunal in TAT No. 33 of 2018: Autoexpress Limited versus the Commissioner of Customs & Border Control where the Tribunal held that issues relating to demurrage falls outside its jurisdiction.

109. The Respondent submitted that demurrage fees were incurred by the Appellant while the Respondent was in the process of determining the correct customs value of the goods in question and as such the Respondent cannot be held liable.

Respondent’s Prayers. 110. The Respondent prayed that this Appeal be dismissed with costs to the Respondent as the same is devoid of any merit.

ISSUES FOR DETERMINATION 111. The Tribunal has considered the facts of the matter and the submissions made by the parties and identified the following to be the single issue for determination in this matter:-Whether the Tax Appeals Tribunal has jurisdiction to determine the matter.

Analysis And Findings 112. Having identified the issues that falls for its determination, the Tribunal proceeds to analyze it as hereunder.

113. The genesis of this Appeal was the 100% verification of the Appellant’s goods imported from the United Kingdom as a donation to the Appellant.

114. On the 23rd May 2023, the Respondent gave a value uplift which was applied and advised the Appellant to cancel the customs entry in order to declare the undeclared items and get approvals of the same.

115. Vide a letter dated 24th May 2023, the Appellant indicated that he was not satisfied with the value uplift and requested to pay the uplift under protest.

116. The Appellant cancelled entry 23MBAIM401978485 and replaced it with entries 23MBAIM403077599 and 23MBAIM403045349 and also paid the additional taxes under protest.

117. Aggrieved by the demurrage charges and the value uplift, the Appellant lodged this Appeal on 10th July 2023.

118. The Respondent submitted that it made a decision to recommend adjustment in the applicable FOB value in the Appellant's consignment. That if the Appellant was aggrieved by the said decision as it would appear he was, then he ought to have sought review of the said decision in accordance with the provisions of Section 229 (1) EACCMA 2004.

119. That had the Appellant sought a review decision, then the Respondent would have had an opportunity to issue a review decision as provided for under Section 229 (4) of EACCMA.

120. That the failure by the Appellant to lodge an application for review is fundamental as it renders the instant Appeal pre-mature.

121. In response to the Respondent’s assertion that the Appeal is premature for failure to adhere to the provisions of Section 229 of EACCMA, 2004 the Appellant submitted that the Commissioner wanted to charge him with an offence pursuant to Section 219(1) of EACCMA, 2004 and that Appellant declined the offence under Section 219(2) of EACCMA, 2004. The Appellant submitted that in such circumstances, it could not go back again to the Respondent for review as the Respondent had already made up his mind that the Appellant had committed an offence.

122. The Appellant further submitted that this matter was even referred to the ADR and the Respondent was not ready for the ADR process although the Appellant had travelled to Nairobi from Mombasa in order to engage in the ADR process.

123. The Tribunal notes that Section 229(1) EACCMA 2004, that provides as follows:-“A person directly affected by the decision or omission of the commissioner or any other officer on matters for review of relating to customs shall within thirty days of the date of the commissioner's decision or omission lodge an application for review of that decision or omission.”

124. Once a taxpayer applies for a review, Section 229 (4) of EACCMA makes it mandatory for the Commissioner to make a review decision. The Section provides that:-“The Commissioner shall, within a period not exceeding thirty days of the receipt of the application subsection (2) and any further information the commissioner may require from the person lodging the application, communicate his or her decision in writing to the person.”

125. It is only after the Commissioner has made a review decision that a taxpayer can move to the Tribunal. Section 230 of EACCMA states as follows on Appeals to the Tax Appeals Tribunal:-“(1)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. 2.A person intending to lodge an appeal under this Section shall lodge the appeal within forty five days after being served with the decision, and shall serve a copy of the appeal on the Commissioner.”

126. It is clear from the above Section that a taxpayer can only lodge an appeal based on the review decision of the Commissioner. Without a review decision or upon lapse of the time provided for making the review decision, the Tribunal has no jurisdiction.

127. It is only after an application for review is made under Section 229(1) of EACCMA, that an appeal under Section 230 of EACCMA becomes available to a taxpayer after a review decision is made.

128. The Tribunal reiterates its decision in a similar mater in TAT 1930 2022 Ripple Mart Vs Commissioner of Customs & Border Control where at paragraph 85 the Tribunal decided that:-“the Appellant failed to follow due process as there was no review decision from which its appeal would have been anchored on”.

129. The Tribunal also reiterates its holding in TAT 776 of 2022 Ripple Pharmaceuticals Limited vs Commissioner of Customs & Border Control where at paragraph 59 it held that:-“It is therefore a fact that no application for review was made by the Appellant and the Appeal before the Tribunal having not satisfied the requirements under Section 2229(1) of EACCMA is improperly filed and therefore invalid.”

130. It is trite law that the legal procedures have to be followed when pursuing appeals and the Tribunal has also on many occasions determined that where specific procedures for redress have been set out the same have to be adhered to. This was the holding in the case of W.E.C. Lines Ltd vs. The Commissioner of Domestic Taxes: -“Where there is a clear procedure for redress of any particular grievance prescribed by the constitution or an Act of Parliament, that procedure should be strictly followed. Accordingly, the special procedure provided by any law must be strictly adhered to since there are good reasons for such special procedures. The relevant procedure here is the process of opposing an assessment by the Commissioner.”

131. After consideration of the documents submitted by the parties, the law and the case laws cited above, the Tribunal finds that the Appeal was filed prematurely and there is therefore no valid Appeal before the Tribunal, and the Tribunal lacks the jurisdiction to determine the matter.

Final Decision 132. The upshot of the foregoing is that the Appeal is incompetent and therefore fails. The Tribunal makes the following final Orders:a.The Appeal be and is hereby struck out.b.Each party to bear its own costs.

134. It is so ordered.

DATED AND DELIVERED AT NAIROBI THIS 5TH DAY OF APRIL, 2024. GRACE MUKUHA - CHAIRPERSONJEPHTHAH NJAGI DR. ERICK KOMOLO - MEMBER MEMBERDR. WALTER J. ONGETI GLORIA A. OGAGA - MEMBER MEMBER