https://new.kenyalaw.org/akn/ke/judgment/ketat/2026/151

Kings Mabati Company Ltd v Commissioner of Customs and Border Control (Tax Appeal E994 of 2025) [2026] KETAT 151 (KLR) (3 July 2026) (Judgment) Neutral citation: [2026] KETAT 151 (KLR) Republic of Kenya In the Tax Appeal Tribunal Tax Appeal E994 of 2025 RM Mutuma, Chair, JM Malla, T Vikiru & G Ogaga, Members July 3, 2026 Between Kings Mabati Company Limited Appellant and Commissioner of Customs and Border Control Respondent Judgment Background 1.The Appellant is a company duly incorporated in Kenya and engaged in the manufacture and trading of roofing sheets and related steel products. 2.The Respondent is a principal officer appointed under Section 13 of the Kenya Revenue Authority Act, CAP 469 of Kenya’s Laws. Under Section 5 (1) of the Act, the Kenya Revenue Authority is an agency of the Government for the collection and receipt of all tax revenue. Further, under Section 5(2) of the Act with respect to the performance of its functions under subsection (1), the Authority is mandated to administer and enforce all provisions of the written laws as set out in Part 1 and 2 of the First Schedule to the Act for the purposes of assessing, collecting and accounting for all revenues in accordance with those laws. 3.The Respondent sought to establish the accuracy of the values declared for the Appellant's galvanized steel coils. Consequently, the Respondent carried out a comparative analysis of the Appellant's importations against those of other identical consignments from China. 4.It revealed that the Appellant's declared FOB value was lower when compared to the FOB value of identical goods originating from the same country of origin (China) which was 1100/MT in the year 2022 and 1200/MT for the year 2023. The analysis revealed certain discrepancies, leading to the issuance of an assessment for short-levied duties dated 16th June 2025 in the sum of Kshs 3,770,150. 5.From the pleadings, the Appellant applied for extension of time to file a response to the assessment vide a letter dated 30th July 2025. The Respondent then granted the Appellant leave to object out of time. The Respondent issued a Review decision dated 25th August 2025 confirming the assessment on the basis that the Appellant did not object to the assessment even though it was granted leave to object out of time. 6.Dissatisfied with the Review decision, the Appellant filed a Notice of Appeal dated 2nd September 2025 and filed on the even date. The Appeal 7.The Appellant lodged memorandum of appeal dated 16th December 2025 and filed on 17th December 2025 raising the following grounds of appeal:a.That the Respondent erred in law and in fact by determining the value of the Appellant's imported goods based on a comparison with goods that were not truly identical in specification, quality, or terms of sale.b.That the Respondent failed to consider the Appellant's specific commercial circumstances and contractual agreements which legitimately resulted in the purchase price.c.That the assessment is based on an arbitrary and unsubstantiated benchmark price that does not accurately reflect the volatile market rates for steel on the dates of the appellant's importations.d.That the Respondent's decision is excessive, punitive, and not supported by the evidence as required under the East Africa Community Customs Management Act, 2004 (EACCMA).e.That it is in the interests of justice to grant the reliefs sought herein. The Appellant’s Case 8.In support of the appeal, the Appellant filed statement of facts on 17th December 2025. 9.The Appellant stated that during the audit period between 2022 and 2025, the Appellant imported several consignments of Galvanized and Cold Rolled Steel Coils from China, which were duly declared to the Respondent through Form C17BS, supported by commercial invoices, shipping documents and proof of bank payments. A summary of the respective import entries, declaration numbers, and FOB values. 10.The Respondent, in exercise of its powers under Sections 235 and 236 of the EACCMA, conducted a Post Clearance Audit to verify the accuracy of the customs values declared by the Appellant for the said consignments. Following the audit, the Respondent, through a Notice of Demand dated 16th June 2025, claimed that the Appellant had under-valued its imports and proceeded to uplift the declared Free on Board (FOB) values to USD 1,100 per MT for 2022 and USD 1,200 per MT for 2023, culminating in a purported short levy of Kenya Shillings Three Million Seven Hundred and Seventy Thousand One Hundred and Fifty (KES 3,770,150). 11.According to the Appellant, the Respondent stated that the commercial invoices provided lacked supplier bank information and that the relationship between the seller and the beneficiary could not be verified which allegedly prevented reliance on the transaction value method. The Appellant, being aggrieved by the said demand, lodged an appeal in accordance with Section 229 of the EACCMA, contesting the Respondent's findings. 12.The Appellant disputed this finding in its entirety and averred that the Respondent misapplied both Section 122 of EACCMA and the Fourth Schedule. 13.The Appellant contended that under Section 122(1) of EACCMA, the customs value of imported goods shall be the transaction value, defined as be price actually paid or payable for the goods when sold for sport to a Partner State. According to the Appellant, Paragraph 2(1) of the Fourth Schedule establishes this as the primary method of valuation, and only where the transaction value cannot be determined should recourse be made to subsequent methods under Paragraphs 3 to 8. 14.It argued that the Respondent erred in invoking Paragraphs 3 to 8 without first establishing that the Appellant's declared value could not be determined under Paragraph 2. It noted that the sequential hierarchy of valuation methods is conditional, not automatic. The Appellant was of the view that each method can only be applied once the preceding one has been invalidated with evidence. 15.According to the Appellant, the Respondent's conclusion that the transaction value was unusable merely because the invoices lacked supplier bank information or verifiable relationship is legally unsound. It stated that Section 122 and Paragraph 2(2) of the EACCMA require the Commissioner to determine whether "there are restrictions, conditions, or influences on price," not whether certain administrative details are missing from an invoice. 16.It contended that it provided verifiable documentation including supplier invoices, Form C17BS, and bank payment proof showing remittance to independent suppliers, all of which demonstrate that the prices declared were the actual prices paid or payable. 17.The Appellant averred that the Respondent failed to identify any evidence of related-party influence, hidden consideration, or falsified invoices. Consequently, the rejection of the transaction value is contrary to the statutory test in Paragraph 2(2) of the Fourth Schedule. 18.It reiterated that past determinations by the Respondent have affirmed that where an importer furnishes verifiable documentation demonstrating actual payment, shipment, and consistency of invoices, the declared transaction value should be upheld unless there is evidence proving otherwise. It argued that its documents satisfy this standard. 19.According to the Appellant, the Respondent's reliance on alleged invoice omissions is a procedural, not substantive, defect that cannot justify moving from Method One to Method Two. It added that by disregarding valid transaction documents, the Respondent contravened both Section 122(2) and the WTO Agreement on Customs Valuation (Article 1), which Kenya domesticated through EACCMA. 20.The Appellant asserted that the Respondent's assertion that Paragraphs 2 to 8 of the Fourth Schedule were applied sequentially is erroneous, as the conditions precedent under Paragraph 2 were never met. 21.It stated that Paragraph 3(1) authorizes use of identical goods only "when the customs value of imported goods cannot be determined under Paragraph 2. It pointed out that since the transaction value was determinable backed by invoices, C17BS, and bank payments the shift to Method two was premature and unlawful. 22.The Appellant stated that whereas Paragraph 3(2) further provides that identical goods must be the same in all respects including physical characteristic, quality, and reputation, the Respondent did not disclose any evidence demonstrating that the comparator consignments used in valuation were identical to the Appellant's imports. 23.It argued that the uplifted benchmark values of USD 1,100/MT (2022) and USD 1,200/MT (2023) were arbitrary and unsupported by any commercial data or verified import entries. It maintained that the Respondent's internal comparative analysis failed to consider crucial commercial differences such as coating thickness, gauge (0.22mm-0.31mm), quantity ordered, and freight terms, all of which materially influence FOB price. 24.In Appellant’s view, the use of generalized market averages violates Paragraph 8 of the Fourth Schedule, which requires valuation to reflect the price of the goods at the time of export to the Partner State or legal basis. The Appellant maintained that the Respondent erred in law and in fact by applying Method Two without factual basis. 25.The Appellant contended that the Respondent's uplift to USD 1,200 per MT disregards global market dynamics and results in a valuation inconsistent with prevailing trade conditions. It also pointed out that the Respondent's reliance on inflated comparatives is inconsistent with Section 122(3) of EACCMA, which requires customs value to be based on the actual transaction price at the time of export. 26.The Appellant also stated that from the supporting invoices and C17BS that the declared values represented the genuine commercial prices paid to the suppliers, consistent with prevailing market trends. 27.It stated that Section 229(1) of EACCMA entitles any person aggrieved by a decision of the Commissioner to seek a review, and the Commissioner is obligated to consider all evidence presented. 28.The Appellant contended that the Respondent did not furnish the Appellant with the comparative data relied upon in uplifting the values, nor did it provide an opportunity to verify or challenge the same prior to issuing the demand. 29.It stated that the Respondent's conduct breached Article 47(1) of the Constitution of Kenya, 2010, and Section 235(2) of EACCMA, which require fair administrative action and full disclosure of the basis for any post-clearance adjustment. 30.The Appellant asserted that it's declarations were made in accordance with Section 122 of EACCMA and the Fourth Schedule, and the duties assessed thereon were fully paid based on genuine transaction values. 31.It reiterated that the Respondent's valuation uplift is unsupported by evidence, contrary to law, inconsistent with prevailing market rates, and in breach of established principles. 32.The Appellant did not file written submissions. Appellant’s Prayers 33.The Appellant prayed as follows:i.The Respondent's assessment of Kshs 3,770,150 be set aside;ii.The Tribunal be pleased to affirm that the Appellant's declared transaction values represent the price actually paid, as contemplated under Section 122 of EACCMA; andiii.Order that each party shall bear its own costs of this appeal The Respondent’s Case 34.The Respondent lodged statement of facts dated 8th December 2025 and filed on 10th December 2025. The Respondent also filed witness statement of Christina Madiavale dated 28th April 2026 which was admitted as evidence in chief on 5th May 2026. 35.The Respondent stated that dispute related to alleged under-valuation of imports. It stated that during the analysis, the Respondent compared the Appellant's imports against those of other identical consignments from China. The Respondent then issued a demand for tax on the undervalued imports. 36.The Respondent averred that all actions were taken in accordance with the provisions of the EACCMA and related regulations. 37.It contended that the Appellant was granted an opportunity to respond to the demand for short levied duties in line with due process. 38.The Respondent maintained that the tax assessment issued was properly founded in fact and law, and that the review decision was fair, reasonable, and made in accordance with statutory provisions. 39.The witness stated that the Respondent sought to establish the accuracy of the values declared for the Appellant's galvanised steel coils. It then carried out a comparative analysis of the Appellant's importations of PPGI galvanized steel coils against those of other identical consignments from China for the period from 2022 to 2023. The analysis revealed that the Appellant's declared FOB value was lower when compared to the FOB value of identical goods originating from the same country of origin (China) which was 1100/MT in the year 2022 and 1200/MT for the year 2023. 40.That consequently, a notice of demand ref KRA/CBC/RMD/PCA/368/2025 (NOD) dated 16th June 2025 amounting to Kshs 3,770,150 was issued. 41.The witness further stated that the Appellant requested for 14 days' extension of time to lodge an objection under Section 229 of the EACCMA dated 30th July 2025. The Respondent approved the request vide email dated 6th August 2025 allowing for 14 days to lodge a valid objection. 42.The witness stated that the Appellant did not lodge an objection and a Review decision was issued on 25th August 2025 informing the Appellant that the assessed taxes remained due and payable. That dissatisfied with the Review decision, the Appellant filed this appeal. 43.The witness maintained that the Appellant was treated fairly and was granted adequate time to make any clarifications before the Respondent took any decisive action. The witness reiterated that the Respondent applied the procedural fairness by abiding by the Law. 44.The Respondent also filed written submissions dated 26th May 2026 wherein it submitted that it acted within its mandate by demanding duties of Kshs. 3,770,150. 45.It also submitted that the Appellant did not file its letter dated 30th July 2025 nor did it file any other document to indicate that it indeed lodged any application for review as required under Section 229 of EACCMA. The Respondent submitted that the Appellant’s failure to lodge an application for review means that the grounds of appeal in this Appeal before the Tribunal where not placed before the Respondent for determination at the review stage. Issues for Determination 46.Having carefully evaluated parties’ pleadings the Tribunal identified the following issues for determination: -a.Whether the appeal is competent; andb.Whether the Respondent erred in deviating from transactional value method in favour of transaction value of identical goods method. Analysis and Findings a. Whether the Appeal is Competent 47.The Respondent’s case was that it issued an assessment for short-levied duties dated 16th June 2025 in the sum of Kshs 3,770,150. The Respondent in the review decision dated 25th August 2025 stated that pursuant to Section 229(3) of the EACCMA, the Appellant vide a letter dated 30th July 2025 sought leave from the Respondent to extend time to lodge an objection against the assessment. Consequently, the Respondent vide email of 18th August 2025 granted the Appellant 14 days to compile and submit an objection to the assessment for Respondent’s review. The Respondent in the review decision pointed out that there was no objection to the assessment therefore, the Respondent confirmed the assessment. The Respondent reiterated the same position in the statement of facts, witness statement and written submissions. 48.In the case of Mukisa Biscuits Manufacturing Co. Ltd v West End Distributor Ltd [1969] E.A 696, Law JA discussed matters of preliminary objections as follows:“a preliminary objection consists of a point of law which has been pleaded or which arises by clear implication out of pleadings and which if argued as a preliminary point may dispose of the suit. Examples are an objection to the jurisdiction of the court or a plea of limitation or a submission that the parties are bound by the contract giving rise to the suit to refer the dispute to arbitration….a preliminary objection is in the nature of what used to be a demurrer. It raises a pure point of law which is argued on the assumption that all the facts pleaded by the other side are correct. It cannot be raised if any fact has to be ascertained or if what is sought is the exercise of judicial discretion.” 49.The question then is whether the Appellant objected to the assessment, if not, whether the Tribunal has jurisdiction to entertain the appeal. 50.Section 229 (1) and (3) of the EACCMA provides as follows: 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(3)Where the Commissioner is satisfied that owing to absence from the Partner State, or sickness or other reasonable cause, the person affected by the decision or omission of the Commissioner was unable to lodge an application within the time specified in subsection (1), and there has been no unreasonable delay by the person in lodging the application, the Commissioner may accept the application lodged after the time specified in subsection (1). 51.The Tribunal notes that the letter dated 30th July 2025 and the email dated 6th August 2025 was not on record. Further, the Appellant in its statement of facts did not attempt to point out the date it lodged an objection against the assessment despite the Respondent in the objection clearly stating that the Appellant did not lodge an objection even after being granted leave to object out of time. 52.Before addressing any other issue, the starting point for Appellant’s case should have been to address the issue whether it filed an objection against the assessment. that should have been the first priority. It did not. Further, it did not file any document to demonstrate that it objected against the assessments. 53.The Tribunal notes that the assessment was issued on 16th June 2025 and that the Appellant subsequently filed an application dated 30th July 2025 seeking leave to lodge an objection out of time. This demonstrates that the Appellant acknowledged that no valid objection had been filed within the statutory period and intended to pursue a late objection. However, the evidence on record does not show that the Appellant thereafter lodged the intended objection. The Tribunal further notes that the Respondent consistently raised this issue in its Review Decision, Statement of Facts, Witness Statement, and Written Submissions, yet the Appellant neither disputed nor rebutted the assertion. 54.In Republic v Kenya Revenue Authority Commissioner of Custom Services Ex-Parte Europa Healthcare Limited [2014] KEHC 5271 (KLR) the High Court stated that:“Section 229(1) of the EACCMA clearly mandates a person aggrieved with the decision of the Commissioner or any other person on a matter relating to the customs to lodge an application for review in writing within thirty days of the decision or omission.’’ 55.Failure to object to assessment as provided under section 229 of EACCMA renders the appeal invalid. In Ripple Pharmaceuticals Limited v Commissioner, Customs and Border Control [2025] KEHC 806 (KLR) the High Court held as follows:“In view of the above, this Court finds that the appellant did not comply with the provisions of Section 229 of the EACCMA 2004. I therefore agree with the Tribunal’s finding at paragraph 59 of its decision that no application for review was made by the appellant as per Section 229 of the EACCMA, thus the Appeal filed before the Tribunal was invalid.’’ 56.The Tribunal finds that although the Respondent granted the Appellant leave to lodge an objection out of time, the Appellant failed to demonstrate that it subsequently filed a valid objection against the assessment. In the absence of evidence of a properly lodged objection and a corresponding Review decision, there is no appealable decision before the Tribunal. Since the Tribunal's jurisdiction is appellate in nature, the Appeal lacks a proper legal foundation. 57.In the absence of a valid objection setting out the grounds now being advanced, the tribunal finds that the Respondent was never called upon to interrogate or determine those issues in the first instance. To undertake such an inquiry at this stage would be to convert the Tribunal into a court of first instance, contrary to the appellate framework established under the Tax Procedures Act. The Tribunal therefore declines the invitation to determine matters that were not properly ventilated before the Commissioner. 58.Consequently, the Tribunal finds and holds that the Appeal is incompetent. 59.Having established the foregoing, analysis of the remaining issue is rendered moot. Determination 60.The upshot to the foregoing is that the Tribunal finds and holds that the Appeal is incompetent and makes the following ordersa.The appeal be and is hereby struck out; andb.Each party to bear its own cost. 61.It is so ordered. DATED AND DELIVERED AT NAIROBI THIS 3RD DAY OF JULY 2026.……………………………ROBERT M. MUTUMACHAIRMAN……………………………… ……JIMMY M. MALLAMEMBER……………………………DR. TIMOTHY B. VIKIRUMEMBER……………………………GLORIA A. OGAGAMEMBER