[2024] KETAT 147 (KLR)

Ombra Limited v Commissioner of Customs & Border Control (Tax Appeal 1485 of 2022) [2024] KETAT 147 (KLR) (Civ) (9 February 2024) (Judgment)

Neutral citation: [2024] KETAT 147 (KLR)

Republic of Kenya

In the Tax Appeal Tribunal

Civil

Tax Appeal 1485 of 2022

Grace Mukuha, Chair, G Ogaga, E Komolo, Jephthah Njagi & T Vikiru, Members

February 9, 2024

Between

Ombra Limited

Appellant

and

Commissioner Of Customs & Border Control

Respondent

Judgment

Background 1. The Appellant is a limited liability company duly incorporated in Kenya and is a registered taxpayer.

2. The Respondent is a principal officer appointed under Section 13 of the Kenya Revenue Authority Act, 1995. Under Section 5 (1) of the Act, the Kenya Revenue Authority (the Authority) is an agency of the Government for the collection and receipt of all revenue. Further, under Section 5(2) of the Act with respect to the performance of its function under subsection (1), the Authority is mandated to administer and enforce all provisions of the written laws as set out in Part 1 & 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 Appellant had in or about March 2022 contacted the Respondent seeking an opinion on the proper classification of composite man hole covers.

4. Upon receipt of the application, the Respondent reviewed the goods in issue and issued a tariff classification contained in a Tariff Ruling by the Customs & Border Control Department (CBC) Ref: KRA/CBC/BIAITHQ/132/04/2022 on 1st April 2022 to the Appellant and advised the Appellant that the applicable tariff was 3922. 90. 90 of the East African Community External Tariff 2017.

5. Subsequently, the Appellant made an application for review of the Respondent's Tariff Ruling.

6. Vide a letter dated 26th October 2022, the Respondent issued a tariff ruling stating that the correct and applicable tariff code is 3926. 90. 90.

7. The Appellant being dissatisfied with the Respondent’s review decision lodged this Appeal at the Tribunal on 8th December 2022.

The Appeal 8. The Appeal is premised on the following grounds as stated in the Appellant’s Memorandum of Appeal filed on 8th December 2022. i.That the Respondent erred in law and on fact in classifying the Composite manhole covers under EAC/CET Tariff line 3926. 90. 90, by application of GIRS 1 and 6 which cannot be used as the basis of classification.ii.That the Respondent erred in law and on fact by failing to find that the manhole covers are composite goods within the meaning of GIR 3 (b) and (c).iii.That the Respondent erred in law and on fact by failing to appreciate that although the manhole covers are goods or articles within the meaning of GIR 3 (b) and (c) the applicable GIR is GIR 4 given the import of the Exclusion Notes under Sub heading 70. 19. iv.That the Respondent erred in law and in fact by failing to find that as per Explanatory Notes VIII on GIR 3 (b) the factor which determines essential character will vary as between different kinds of goods. It may for example be determined by the nature of the material or component, its bulk, quantity, weight or value, or by the role of a constituent material in the use of the goods.v.That the Respondent erred in law and in fact by failing to appreciate that the Explanatory Notes I, II & III on GIR 4 provide that goods which cannot be classified in accordance with Rules 1 to 3, such goods shall be classified under the heading appropriate to the goods to which they are most akin.vi.That the Respondent erred in law and in fact by failing to appreciate that the Explanatory Notes III on GIR 4 provides that the test for kinship can, of course, depend on many factors, such as description, character, purpose and that the Respondent cannot exclude Tariff line 7325. 10. 00 simply because the composite manhole cover is not made of iron or steel.vii.That the Respondent erred in law and in fact in failing to find that the Tariff line 7325. 10. 00 was the most appropriate classification of the composite manhole covers pursuant to Explanatory Notes 73. 25 which includes drain covers which are similar or akin to the manhole covers which even the Respondent concedes are drain covers.viii.That the Respondent erred in law and in fact by only applying multiple usage test in unlawfully classifying the product under Tariff line 3926. 90. 90 but that Sub heading reveals no usage that would prompt classification under that Tariff line or Sub Heading.

Appellant’s Case 9. The Appellant’s case is premised on the following documents filed before the Tribunal: -i.Its Statement of Facts dated 1st November 2022 and filed on 8th December 2022. ii.Its Written Submissions dated 30th May 2023 and filed on 6th June 2023.

10. The Appellant submitted that the Respondent erred in fact and in law by applying multiple usage tests in unlawfully classifying manhole covers under Tariff line 3926. 90. 90.

11. The Appellant averred that the Respondent erred in holding that application of the general integration is done in sequential manner whereby you cannot apply GIRs 2 where GIRs 1 is applicable. That this informed the erroneous reasoning of the Respondent that in determining the Tariff Classification, the product as presented is looked at and analyzed thus leading to holding that manhole chamber cover is composed of glass fiber material and plastic material content.

12. The Appellant submitted that the Respondent failed to appreciate Explanatory notes III on GIR. 4 that the test for kinship can depend on many factors such as descriptions, character, purpose and that the Respondent cannot exclude tariff line 7325. 10. 00 simply because the composite manhole cover is not made of iron or steel.

13. The Appellant submitted that it was erroneous for the Respondent to conclude that the manhole covers don't fit under Chapter 73 by virtue of the terms of heading under 73. 25 not being in conformity with material product and thus classifying it under EAC/CET 3926. 90. 90 by application of GIR.s 1 and 6.

14. The Appellant submitted that although the manhole covers are goods or articles within the meaning of GIR 3(b) and (c) the Applicable GIR is GIR 4 given the import of the Exclusion notes under sub-heading.

15. That furthermore, as per Explanatory Notes VIII on GIR 3 (b) the factor which determines essential character will vary as between different kind of goods i.e. nature of material or component, bulk, quantity weight, role of constituent material in the use of goods.

16. The Appellant submitted that the Respondent’s classification of the manhole cover under Tariff line 3926. 90. 90 was not in accordance with the provisions of EACCMA, 2004 and the GIRs for classification of goods.

17. The Appellant relied on the case of Bidco Oil Refineries Ltd vs Commissioner of Domestic Taxes, TAT NO.150 of 2015, where it was held that:“having made the above finding that the Respondent's adjustment of the customs value as declared by the Appellant on the basis of the sum assured was not in conformity to the provisions of Section 122 and the Fourth Schedule to the ECCMA we hereby find that the statutory provisions governing customs valuation of imported goods was not properly applied by the Respondent and consequently the Respondent is not entitled to demand the extra revenue of Kshs.1,377,505,229. 00 from the Appellant"

18. The Appellant submitted that in addition, the Respondent failed to apply various methods of classification in a sequential manner leading to wrong classification of manhole covers under Tariff 3926. 90. 90. The Appellant further relied on the case of Bidco Oil Refineries (Supra) where the Tribunal held at Par. 99 that;“The Tribunal notes that the Respondent has attempted to distinguish this case from the two cases relied upon by both parties herein, among others, namely; Diamond, Industries Limited vs Commissioner of Custom Services and Kapa Oil Industries Limited vs Commissioner of Custom Services, being Tax Appeal Nos. T2 of 2013 and 17 of 2013, respectively. That having perused the said cases, The Appellant noted that the Commissioner therein failed to apply the valuation methods sequentially as envisaged in law resulting into the holding that the customs values were not procedurally uplifted. In the instant case, we will agree with the Appellant’s contention that the Respondent has failed to demonstrate to the Tribunal to its satisfaction as to which valuation method it applied in adjustment of the customs values in issue.”

19. The Appellant averred that the Respondent failed to correctly apply and/or misinterpreted the General Interpretation Rules for classifications and arrived at an erroneous classification.

20. The Appellant submitted that it proposes the Heading 73. 25 Other cast articles of iron or steel, specifically 7325. 10. 00 based on other goods which include drain covers which manhole covers is most akin to.

21. The Appellant averred that its proposition was guided by the following facts and exposition of the law;a.That According to the Explanatory Notes, Heading 73. 25 "covers all cast articles of iron or steel, not elsewhere specified or included".b.That the Heading includes, inspection traps, gratings, drain covers and similar castings for sewage, water, etc. systems; hydrant pillars and covers; drinking fountains; pillar-boxes, fire alarm pillars, bollards, etc.; gutters and gutter spouts; mine tubing; balls for use in grinding and crushing mills; metallurgical pots and crucibles not fitted with mechanical or thermal equipment; counterweights; imitation flowers, foliage, etc. (except articles of heading 83. 06); mercury bottles.c.That this Heading does not cover castings which are products falling in other headings of the Nomenclature (e.g., recognisable parts of machinery or mechanical appliances) or unfinished castings which require further working but have the essential character of such finished products.d.The Heading also excludes: (a) Articles of a kind described above obtained by processes other than casting (e.g., sintering) (Heading 73. 26), (b) Statues, vases, urns and crosses of the type used for decoration (Heading 83. 06).

22. The Appellant averred that the reason for this choice is that various conventions of the World Customs Organisation (WCO) mandate the classification of goods under the Harmonized System (HS) to a set of principles set out in the General Rules of Interpretation (GIR). That in recognition of this, the CET in its own introduction declares:“The text of the Nomenclature established under the International Convention on the Harmonized Commodity Description and Coding System, approved by the Customs Co-operation Council on June 1983, amended as at 1st January 2002. The Handbook includes the General Rules for the Interpretation of the Harmonized System, abbreviations and symbols, Section, Chapter and Subheading Notes, and the headings and subheadings.”

23. The Appellant noted that its selection appears under Chapter 73, Articles of iron or steel.

24. The Appellant submitted that there are various types of manholes based on their composition and purpose. That it was important to elaborate the various types of manholes and their composition as it would be helpful in analysis, since this traditional nature of the cover is responsible of the placement of the item under articles of iron and steel.

25. The Appellant stated that it was guided in its proposition by GIR Rules 1, 2, 3 and 4.

26. The Appellant posited that most products are classified according to Rule 1 of the GIR, which state; - “The titles of Sections, Chapters and sub-Chapters are provided for ease of reference only. For legal purposes, classification is usually determined according to the terms of the headings and any relative Section or Chapter Notes.”

27. That for practical purposes, this Rule 1 can be broken down into 2 parts:a.The words in the Section and Chapter titles are to be used as guidelines ONLYb.If the goods classified are covered by the words in a heading and the relevant Section and Chapter Notes do not exclude classification in that heading, the heading applies.

28. The Appellant proffered that where there is an ambiguity and two or more Headings appear to be applicable, then Rule 3 (and not Rule 2) should be applied. That this is because Rule 2(a) deals with the classification of unfinished, incomplete, unassembled or disassembled goods, which goods can be classified as the same goods in a finished state provided that they have the essential character of the complete or finished article. That as a matter of course, this rule will not apply if the text of the Heading or the relevant Legal Notes exclude the unfinished or unassembled product in question.

29. That Rule 2(b) states that a Heading referring to a given material or substance includes mixtures of that substance with others, including products composed either wholly or partly of that material or substance - a mixed product may seem to be classifiable under two or more Headings, which leads Rule 3 to be used to decide between alternative Headings.

30. The Appellant explained further that under Rule 3(a), where 2 or more Headings seem to apply, the one which provides the most specific description of the product in question should be used. That this means that the Heading which names the actual product should be used in preference to one which only names a category to which the product could belong, and the Heading that describes the whole product should be used in preference to one which describes only a part of it.

31. That however, where two Headings both only describe part of the product, this rule cannot be used to tell which one to use even if one seems more specific or detailed than the other.

32. The Appellant opined that for example, "Mint tea" is not stated specifically in the CET as a product, and although the product descriptions are mint and tea, it must be classified under the appropriate tea Heading because it provides the most specific product description and mint is only a flavour of the tea.

33. The Appellant averred that Rule 3(b) applies to mixtures, composite & goods and sets that cannot be classified by use of the previous Rules. That these should be classified as if they consisted of the material or component which gives them their essential character.

34. The Appellant submitted that an example of ‘a liquor gift set’ which includes the bottle of liquor and glasses that it must be classified under the appropriate liquor Heading. The essential character of the item is the liquor itself and not the glasses contained within the set.

35. The Appellant submitted that this approach leads it to the GIRs, specifically to Rule No. 3(b):b)Mixtures, composite goods consisting of different materials or made up of different components, and goods put up in sets for retail sale, which cannot be classified by reference to 3 (a), shall be classified as if they consisted of the material or component which gives them their essential character, insofar as this criterion is applicable.

36. The Appellant asserted that this is to be looked at also in relation to Rule No. 4, which demands as below:4. Goods which cannot be classified in accordance with the above Rules shall be classified under the heading appropriate to the goods to which they are most akin.

37. The Appellant averred that Rule 4 is used as a "last resort Rule" and is mostly used to classify new products. Thus, the Appellant's man hole covers being a new product in the market the Appellant prayed that the correct HS Tariff line is to other man hole covers it is most akin that being 7325. 10. 00.

The Appellant’s Prayers 38. Appellant prayed to the Tribunal that: -i.It be pleased to allow the Appellant's Appeal in its entirety,ii.The Tariff Ruling dated 26th October 2022 issued by the Respondent be set aside,iii.It be pleased to Order that the Applicable Tariff Code is 7325. 10. 00iv.It be pleased to Order the Respondent to pay the costs of this Appealv.It be pleased to issue any other Order favourable to the Appellant as it may find just and expedient to issue.

Respondent’s Case 39. The Respondent’s case is premised on the hereunder filed documents:-a.The Respondent’s Statement of Facts dated and filed on 6th January 2023. b.The Respondent’s Witness Statement of Moses Agufana dated 5th May 2023 and adopted in evidence by the Tribunal on 27th September 2023. c.The Respondent’s Written Submissions dated 26th October 2023 and filed on 1st November 2023.

40. The Respondent submitted that the Appellant made a request for review of tariff classification of Composite manhole covers through submission presented to the Respondent’s Departmental Technical Committee.

41. The Respondent stated that from the sample provided by the Appellant, the Tariff line 7325. 10. 00 warrants consideration on the principal of application of General Interpretation Rule 4, that states goods that cannot be classified in accordance with the above rule shall be classified under the heading appropriate to the goods to which they are most akin.

42. The Respondent submitted that a review of the tariff classification was undertaken based on the Appellant's new submissions where the Respondent, based on the analysis reached the conclusion that the goods imported by the Appellant being composite manhole cover is classifiable under EAC/CET Tariff No. 3926. 90. 90 by application of GIRs 1 & 6.

43. The Respondent submitted that it rescinded and revoked its initial decision where it classified the product under EAC/CET Tariff No. 3922. 90. 90 this being a decision that was based on the material information and submissions presented by the Appellant.

44. The Respondent stated that upon extensive review of the product in issue, the item is correctly classified under EAC/CET Tariff No. 3926. 90. 90 by application of GIRs 1 & 6.

45. The Respondent stated that in its submission, the Appellant agreed that the composite manhole cover that had been presented for classification was not classifiable under EAC/CET HS. Code 7019. 90. 90. That however, the Appellant disputed the classification of the composite manhole covers under EAC/CET HS. Code 3922. 90. 00

46. The Respondent asserted that the Tariff classification was done in line with the Common External Tariff, read together with the relevant Explanatory Notes. That the General Interpretation Rules (GIRs) form the general guideline principles in looking at the applicable tariff. That application of GIR is done in a sequential manner, whereby one cannot apply GIR2 whereas GIR 1is applicable.

47. The Respondent stated that in determination of the tariff classification, the product as presented was looked at and analyzed, it was determined that the composite manhole chamber cover is composed of glass fiber material and plastic material content. That the article has a rigid characteristic and lost its essential character of glass through the impregnation of plastic.

48. The Respondent submitted that classification of the composite manhole chambers covers under Tariff line 7325. 10. 00 is not applicable because the product is not made of iron or steel.

49. The Respondent opined that from the foregoing, the product under review did not warrant consideration under Chapter 73 by virtue that the terms of the Headings under 73. 25 are not in conformity with the material product in dispute and the notes under the Section, Chapter and subheading have no inclusion of the product therein.

50. The Respondent submitted that consideration of classifying the product under Chapter 39 was then taken in view of the exclusion notes under sub heading 70. 19 that excludes:“a)Semi-finished products and articles obtained by compressing glass fibres, or superimposed layers of glass fibres, impregnated with plastics, if having a hard, rigid character and hence having lost the character of articles of glass fibres.”

51. The Respondent opined that based on the product having multiple usage, sub-heading 39. 22 was limiting in its scope in that it only applied to similar sanitary ware. Yet the scope of the usage covered areas outside the sanitary ware application.

52. That further, the conditions to be met under Heading 39. 22 i.e. fittings designed to be fitted permanently, designed for sewerage were not met. That Sub Heading 39. 26 was found to be most suitable to classify composite manhole covers presented for tariff review.

53. That from the foregoing, the composite manhole covers was found to be properly classifiable under EAC/CET 3926. 90. 90 by application of GIRs 1 and GIR 2.

54. The Respondent submitted that in determining which Chapter to classify a good one has to look at the use, contents and chemical composition.

55. The Respondent submitted that goods are classified according to the Harmonised System. That the World Customs Organization sets out the classification rules, each Chapter and Section contains specific information regarding classification.

56. The Respondent submitted that the legal regime guiding the HS classification of goods in East Africa and specifically in Kenya, is the East Africa Community Common External Tariff as read together with the World Customs Organization Explanatory Notes.

57. The Respondent relied on the holding in Engineering Supplies 2001 Limited v Commissioner Domestic Taxes, Hewa Tele Limited v Commissioner Domestic Taxes and Keroche Breweries Limited v Commissioner of Domestic Taxes who quoted the CET and WCO Explanatory notes.

58. The Respondent stated that according to GIR.1, classification shall be determined according to the terms of the Headings and any relative Section or Chapter Notes. That the rules of classification clearly provide that the HS classifications should be read not to distort the true classification but to give it meaning.

59. In response to the Appellant’s in its 4th ground of Appeal, the Respondent posited that the essential character of a good is defined as the strong attribute which strongly makes and serves to distinguish what an item/article is. That the essential character can be can be determined by a review of the nature of the material or composition, its bulk, quality, weight or value.

60. The Respondent averred that the Appellant imported composite manhole chamber covers under import entry number 2021ICD293802 and all the items were declared under 2017 EAC/CET HS Code 7019. 90. 90. That a sample of the product was forwarded to the laboratory for analysis and a laboratory report ITC/SAMP/17719 of 14. 02. 2019 was filed.

61. That the product was found to be a rigid, grey rectangular slab with vents containing calcium, iron and silicon, with a loss on ignition of 44. 05%. That in addition, the product included grey material with visible fine threads of glass characteristic of fiberglass. Hence the item was specified to be composite manhole chamber cover, a glass fibre woven cloth embedded with modified resin (plastics).

62. The Respondent asserted that from the lab findings, the composite manhole cover was found to be a composition of plastic and glass fibre material whose essential character was found to be plastic as is defined in Chapter Note 1 to Chapter 39 which states that:-“Throughout the Nomenclature the expression "plastics" means those materials of headings 39. 01 to 39. 14 which are or have been capable, either at the moment of polymerisation or at some subsequent stage, of being formed under external influence (usually heat and pressure, if necessary with a solvent or plasticiser) by moulding, casting, extruding, rolling or other process into shapes which are retained on the removal of the external influence.”

63. The Respondent stated that considering the essential character of the imported composite manhole cover was plastic embedded with glass fibre, as such the proper Chapter for the classification of the item is Chapter 39 and not Chapter 73 by dint of Chapter Note 1 to chapter 39.

64. The Respondent opined that the glass fibre having been impregnated to the plastic, the product lost its essential character as a glass and pursuant to heading exclusion note (a) to Chapter 70 the product cannot be classified under Chapter 70.

65. That the exclusion note (a) to Chapter 70 provides that: -“(a)Semi-finished products and articles obtained by compressing glass fibres, or superimposed layers of glass fibres, impregnated with plastics, if having a hard, rigid character and hence having lost the character of articles of glass fibres (Chapter 39).”

66. The Respondent submitted that on the other hand Chapter 73 of the EAC/CET HS code covers articles of iron and steel. That as submitted herein above, the composite manhole cover is only made up of plastic and embedded glass fibres and therefore the item is not made of either iron or steel.

67. The Respondent submitted that it then classified the composite manhole covers under HS 3926 which covers other articles of plastics and articles of other materials of Heading 39. 01 to 39. 14. That specifically, the good was classified under EAC/CET HS code 39. 26. 90. 90. which was guided by GIR6.

68. The Respondent stated that Tariff classification is guided by the General Rules of Interpretation (GIRs) that are applied sequentially. Heading 39. 26 covers articles, not elsewhere specified or included, of plastics (as defined in Note 1 to Chapter) or of other materials of Headings 39. 01 to 39. 14.

69. That the composite manhole chamber covers are considered as other articles of plastics and articles of other materials of Headings 39. 01 to 39. 14 classifiable in EAC CET, 2022 tariff code 3926. 90. 90.

70. The Respondent submitted that the composite manhole covers in question having not been covered in any other place in Chapter 3926, the Respondent was proper in classifying the same under HS Code 3926. 90. 90.

71. Further, the Respondent submitted that the review decision issued on 26th October 2022 was issued by the Respondent upon considering the material before it, laboratory test on samples of the Appellant's imports as well as the Respondent's best judgement.

72. The Respondent submitted that its tariff ruling and review decisions were all hinged on the letter of the law and that it was upon the Appellant to provide evidence to support its assertions against the assessment at the objection stage, a fact which it admittedly did not consider.

73. The Respondent averred that under Sections 135, 235, 236 & 249 of the EACCMA, 2004, it is allowed to conduct a Post Clearance Audit to assess and demand for the short­ levied taxes within five years of importation.

74. The Respondent reiterated that the Appellant had failed to discharge its burden of proof in proving that the Respondent's tax decision was incorrect as per the provisions of Section 30 of the Tax Appeals Tribunal Act and Section 223(a) of EACCMA.

Respondent’s Prayers 75. The Respondent prayed that this Honourable Tribunal:-a.Upholds the Respondent’s review decision dated 26th October 2022. b.Dismisses this Appeal with costs to the Respondent.

Issue For Determination. 76. After perusing the pleadings and documentation produced before it, the Tribunal is of the view that the following is the main issue for determination: -

Whether the Respondent erred in classifying manhole covers under Tariff 3926. 90. 90 Analysis And Findings 77. Having identified the issue that calls for its determination, Tribunal proceeds to analyse it as hereunder.

78. The Tribunal considered the varied interpretations of the Harmonized Commodity Coding System and the GIRs as propounded by the parties in their rival submissions.

79. The Appellant posited that there are various types of manholes based on their composition and purpose hence it was important to elaborate the various types of manholes and their composition as it would be helpful in analysis. That this traditional nature of the man hole cover is responsible of the placement of the item under articles of iron and steel.

80. The Appellant proffered that where there is an ambiguity and two or more Headings appear to be applicable, then Rule 3 (and not Rule 2) should be applied. That this is because Rule 2(a) deals with the classification of unfinished, incomplete, unassembled or disassembled goods, which goods can be classified as the same goods in a finished state provided that they have the essential character of the complete or finished article.

81. The Respondent on its part stated that in determination of the tariff classification, the product as presented was looked at and analyzed. That a sample of the product was forwarded to the laboratory for analysis and a laboratory report ITC/SAMP/17719 of 14. 02. 2019 was filed.

82. The Tribunal noted that during the hearing, the Respondent’s witness stated that the sample presented before the Tribunal was not the exact sample collected from the Appellant’s consignment and that the actual sample had been disposed of samples. This revelation casts doubt on the laboratory results which may have well been from a different sample other than the Appellant’s specific consignment in question.

83. The Appellant submitted that the Respondent failed to appreciate Explanatory Notes III on GIR. 4 that the test for kinship can depend on many factors such as descriptions, character, purpose and that the Respondent cannot exclude tariff line 7325. 10. 00 simply because the composite manhole cover is not made of iron or steel.

84. The Appellant relied on Rules 3(b) and 4 to propose that Heading 73. 25 that covers Other cast articles of iron or steel, specifically 7325. 10. 00 was the most appropriate based on other goods which include drain covers which manhole covers is most akin to. The Respondent countered that classification of the composite manhole chambers covers under Tariff code 7325. 10. 00 was not applicable because the product is not made of iron or steel.

85. The Appellant stated that Rule 4 is used as a "last resort Rule" and is mostly used to classify new products. Thus, the Appellant's man hole covers being a new product in the market, the correct HS Tariff code is to other man hole covers it is most akin that being 7325. 10. 00.

86. The Respondent stated that the product under review did not warrant consideration under Chapter 73 by virtue that the terms of the Headings under 73. 25 are not in conformity with the material product in dispute and the notes under the Section, Chapter and subheading have no inclusion of the product therein.

87. The Respondent submitted that consideration of classifying the product under Chapter 39 was then taken in view of the exclusion notes under sub heading 70. 19 that excludes:“a)Semi-finished products and articles obtained by compressing glass fibres, or superimposed layers of glass fibres, impregnated with plastics, if having a hard, rigid character and hence having lost the character of articles of glass fibres.”

88. The Respondent opined that based on the product having multiple usage, sub-heading 39. 22 was limiting in its scope in that it only applied to similar sanitary ware. That further, the conditions to be met under Heading 39. 22 i.e. fittings designed to be fitted permanently, designed for sewerage were not met. That Sub heading 39. 26 was found to be most suitable to classify composite manhole covers presented for tariff review.

89. The Tribunal having considered the submissions by the parties, the Respondent’s witness statement, the laboratory report as well as the sample of the manhole cover presented during the hearing applied the Harmonized Commodity Coding System and the General Rules of Interpretation (GIR) in determining the proper classification of the manhole covers.

90. The Tribunal observed that the Respondent anchored its classification of the product on a laboratory test from a sample whose authenticity could not be ascertained more so after its witness clarified that the sample presented before the Tribunal was from a different consignment other than the one for which the Appellant had sought the Respondent’s advice on classification.

91. The Tribunal further observed that the Respondent averred in its letter of classification that it used GIRs 1 and 6 in arriving at the classification while its witness stated in his statement that the Respondent used GIRs 1 to 5. This inconsistency casts doubt on Respondent’s proper application of GIRs in arriving at the said classification.

92. The Tribunal observes that given the uncertainty on the products’ composition it could not be conclusively classified using GIR 1, GIR 2 and GIR 3(a) hence the Tribunal shifted its focus to GIR 3 (b) which states that:“Mixtures, composite goods consisting of different materials or made up of different components, and goods put up in sets for retail sale, which cannot be classified by reference to 3 (a), shall be classified as if they consisted of the material or component which gives them their essential character, insofar as this criterion is applicable.”

93. The Tribunal reckons that for proper application of GIR 3(b) a laboratory test would have been helpful, however in the prevailing circumstances where the Respondent admits that the sample that was subjected to laboratory test was not from the consignment for which the client sought classification guidance, such results cannot be relied upon. The Tribunal found that it could not rely on GIR 3(b) due to the foregoing.

94. The Tribunal was then left to determine whether GIR 4 could settle the dispute being the Rule of last resort. GIR 4 states that:“Goods which cannot be classified in accordance with the above Rules shall be classified under the heading appropriate to the goods to which they are most akin.”

95. Having examined the HS Codes proffered by both parties, the Tribunal was not persuaded to find an appropriate heading with goods to which the composite manhole cover is most akin.

96. The Tribunal took cognizance of the fact that it does not have the option to order a joint laboratory test for the disputed consignment since goods had already been released to the Appellant and the Respondent through its witness Moses Agufana confirmed that the original sample had been destroyed by the Respondent in keeping with its policy on sample storage.

97. It is the Tribunal’s considered view that for such composite goods which do not fall in any of the headings of the EAC CET directly either by express reading or by sequential application of the GIR’s, a laboratory text is paramount.

98. The Tribunal also notes that the Respondent had vide a letter referenced CUS/V&T/TARI/GEN/175/2019 and dated 1st November 2019 allowed the Appellant to continue applying HS Code 7019. 90. 90 pending determination and resolution of the issue, hence in the absence of authentic laboratory results to determine the dispute. This temporary concession by the Respondent should be upheld.

99. In view of the foregoing, the Tribunal finds that the Respondent erred in classifying the Appellant’s imports under Tariff 3926. 90. 90 on the basis of a laboratory result that was alien to the consignment that was subject of classification in this instance.

Final Decision 100. The upshot of the above is that the Tribunal therefore makes the following final Orders:a.The Appeal be and is hereby partially allowed.b.The Respondent’s review decision of 26th October 2022 be and is hereby set aside.c.The Respondent’s permission granted to the Appellant vide letter CUS/V&T/Tari/GEN/175/2019 dated 1st November 2019 to apply HS Code 7019. 90. 90 be and is hereby extended until a joint laboratory test is conducted to inform proper classification of the product.d.Each party to bear its own costs.

101. It is so ordered.

DATED AND DELIVERED AT NAIROBI THIS 9TH DAY OF FEBRUARY, 2024GRACE MUKUHA - CHAIRPERSONGLORIA A. OGAGA - MEMBERDR. ERICK KOMOLO - MEMBERJEPHTHAH NJAGI - MEMBERTIMOTHY VIKIRU - MEMBER