20000229 TZHC Dar es Salaam

IN THE HIGH COURT OF TANZANIA DAR ES SAL/AM DISTRICT REGISTRY ~----. AT DAR ES SALAAM CIVIL. CASE N0,160 OF lg97 1. KISHIMBA INTERNATIONAL TRADERS COMPANY LII'JTITED •••••••••••••••• 1ST ELAINTIFF 2. JUMANNE KI~3HIMBA • •••••••••••••••• 2ND PLAITIFF VERSUS TANZANIA REVENUE AUTHORITY ••••••• DEFENDANT JUDGMENT ____.,. - ·f O- • BUBESHI 1 ~!. The. p1ajntif.!s 1rr.tere aggrieved by the Demand Notices calling issued by the Defendant dated 10/1/'7 µpon ·them to pay a total sum of Slts.7,~,,e99,61~/c being taxes on good~ imported into the 1ountty, Tl\e t se·cond pla.intiff a shareholder and diret'tor of the . 1st plaintiff 'diled a plain, thrqugh h;i eounsel,. · Mr. Muecadam learned advocat·e. He preyed ~or this .c-ourt to declare that the "noti•es were inju,tified as no goods have been imported end thet .the defendant be restrained from is~uing distres1 watrenta:upoa. his property and or further hal!'rasiag the plaintiffs ... He also.prayed for any other relie.1'-aa.the eourt may s~em appropriate _as well as co~t,, : The defendants on thelr ,ai-t, tdmitted hav1ng sent '€he demand noti•es to the plei11tilf.s atd prayed for a declaration that the plsintJ,ffs &~ indebted ~5 In course .of hearing this fllatter it WfG ordered tha~ he who alleges must prove. The defendant$ were ordered to start their ea..se so ,s to ·e,;eblift, the tax liability on the part of the plaintit!, The following issues were aotordingly Ire.med•,., ,,,,i,.-· 2 whether the plaintiff/s did import the go~ds as claimed and if so whether the duties were duly paid. The defendant wummoned seven witnesses to prove their claim~ DW 1 captain Claus Gaetje t·estified inQ.mJ.rt that he owns three vessels; MV 'Uzinzal MV 'Thor' and MV'Orion' all of which ply in Lake Victoria. He told the court that he owns Kamanga Ferry Ltd. He agreed to have hired these boats vessels to the 1st plaintiff !;::: and would be paid for services rendered. He tendered in court Receipt Book No.l of 31/10/94 as evidence of cash payments in US dollars from the plaintiff. Same was admitted as Exhib~t D 1. He.told the court that at times he would ferry the boat from Mwanza to Kisumu and back •. That they carried an assortment of merchandise. That while at Kisumu they l(:,,:ld_ed the goods under the watchful eye of the custom Supervision Unit. From Kisumu they were given sailing clearance and cargo manifest by the customs! : He testified seeing the plaintiff's agent at Kisumu as well as at Mwanza South. He explained that after docking at'.:·Mwanza South, the customs officer wuld come and take the.documents and after they have been taken they were allowed to offload the goods. He told th8 court that once or twt.ce he saw the plaintiff at Mwanza port. However at Kisumu port he rarely saw him. Duving cross examination he agreed knowing the 2nd plaintiff and that once or twice he supervised loading· of goods at Kisumu. As for him he was only interested to ferry the gpods but he did not check item by item; He agreed to that whil'e the Receipt Book Exhibit D 1 was also used by other people, thirty receipts were u issued under the name of the 1st plaintiff. He added that when goods are being off loaded, custom officers,· security officers and the police were always there to check and verify. That he handed over the Cargo Mainifest to the officers at Mwanza a.nd whether duties/ taxes were paid or not_ he wouldnt know,. 3 DW 2 William Mazura testified that he attended MV 11 Thor 11 as the First Officer since 1994. He moved between Mwanza and Kisumu. That fer the outward journey they would c2rry cotton ~eeds and from Kisumu they would carry general goods. He testified having £err~ed goods belcmging to the 1st plaintiff from Kisumu to Mwanza. Like the evidence of DW 1 he confirmed that from Kisumu they would be cleared by the custom and be issued with inwJrd cl.2arance certificate - which wculd. name the crew and . general . goods being ferried. That these documents would ' be handed over to the custoffi officers at Mwanza port •. while at Mwanza he saw custom officers and agents from 1st plaintiff, he was not aware whether duties were paid or not. During cross examination he stated that doods would be offload~d after eustoms have checked them and clearance obtained; and that officers from TRA would It- 0 :~-::lly get into the vessel and are the ones who gave clearance before offloading was done. This witness tendered in court for Identification purposes 27 sets of document of outward certificates of clearance and outward cargo manifest for 1995 and 11 sets of documents for the year 1996. These were admitted as ID I and ID 2 respectively. ·-- The third witness for the Defence was Paulo Mayornbya. DW 3 is a tax investigator s~2tioned at the Head Office in Dar es 0 alaam. He informed the court that following allegations of tax avoidanee being done by some businessrne.n in Mwanza, he was assigned to conduct a tax investigation both in Kisumu, Nairobi and Mwanza. He stated that he was accompanied by one Manyanga where they spent a w2ek from 11/1/97. Thereafter they moved on to Mwanza. That he went through Export Entres and manifest documents for 1994, 1995 and 1996. That while in Mwanza they c_ompared the documents they got from Kenya (Kisumu) these documents were outward manifest and clearance certificates. They also checked the inward manifest at Mwanza and discovered th.gt these documents listed the goods as general ♦ argo or mixed goods. According to DW 3 such deserip~ion was.inproper - •••. /4 -.. 4 i terns v-1ere requ:Lred to be i ternised singularly~ He further infor-med the court that wbile at Mwanza they checked·the export entries forms i-:rom Kisumu and com-oared them with the import entries. -'- That they discc:vc:re¢\ that documents belonging to certain companies h,gd defects in that they indica-ted incqrrect tax amounts or no taxes at all. DW 3 named the companies being;- Mag:P-urn North Port clearing and Forwarding, KITCO and Jurnanne Kishimba, Mohamed Omari 1 Rugcslm Ibrahim and Rugesha Investment. He further informed the court that they took copies of Expert Entries and 0 utward Manifest from Kisumu and matchc:>d them against corresponding inward manifest and Import entries found at Mwanza. That in course of this exercise, for example, they discovered that Export Entries and manifest of 17/2/96, shows that loading into, MV 'Thor 1 was supervised but there is no corresponding document authorising offloading. The witness tendered in court and which was admitted in court for identification ouly a set . ; document~ as ID 3 of goods which were loaded onto MV 'Thor' ~-s per manifest dated 15/4/96. Another j manifest dated 25/3/96 co,vering various goods and loaded into MV 'Thor' was admitted as ID 4. According to DW 3 some of those documents in 1.J?....i had goods consigned to KITCO, Jumanne Kishimba, Mohamed Omari,Rugesha Investment and Rugesha Ibrahim. He added that all th0: goods were loaded in a vessel hired by one person - and that some indicated duties had .been paid but had incorrect calculations. To cement his evidence DW 3 gave a list of documents giving a summary of 360 Export Entries with names of KITCO, Jumanne Kishirnba, TJ:ohamed Omari, Rugesha Ibrahim and Rugesha Investment. These were admitted as Exhibi.!_Q,_g_. Be added thnt the exported goods included ~cooking oil, sweets, aluminium sheet~ mattresses,· plastic ware, drugs,flourand sugar. 5 The witness told the court that while in Kisurnu, he made photocop5 E-;S of the Export Entries under the supervision of an of~icer from Kenya Tax Authority. He also stated that while the goods were being loaded at Kisumu there was no o-~ficial for the Tanzanian side but he insisted that thi~ documents were checked out by the customs, and neither did he check from tht:: owners of the industries to verify the names of the exporters. On further cross examination the witness stated that he cloesnt know the volurr.e of goods actually ferried to this (".Oun-:ry, and that all the goods that passed i via lVi,,:&D .a port were· cleared by custom officials and that the custodian of the import documents at Mwapza were the custom officials. He conceded too that the procerl.ur ~ was for the _importc~rs to lodge import documents for c:1ectj_ng once ve:--:'if.ied,the goods are released and clearance documents are kept by the custom officials further he told the court that he found no record of goods being detained for non payment of custom duties. DW3 was assertive thot the plaintiff imported into Mwanza various merchandise but did not pay due taxes or paid less than the amount assessed. Tn.e next witness was DW 4 Kaleb Gulab. This was a retirej assistant Commiseioner Customs and Excise from Kenya. }-L:: 1~ ~tired in May 1999 ~ He testified that in June, 1998, he was instructed by the Tanzania / Authorities to certify some export documents the docu1J1ents he certified as being copies of the copies were brought from Kisumu., These were admitted as Exhibit D 3 .. On cross examination h2 stated that he lmew nothing about ·the goods that were being exported to Mwanza. DW 5 was Paul Muliamuri, a Kenyan. He told the k court th3t between 1994 to 1996 he was working at Kisumu w'1.e:ce as a customs Breventi ve Officer Grade I, superiscd goods bej_ng loaded into vessels and those t being of.£' loaded at Kisurnu~ ..... /6 6 During oro.ss examination he stated that as he merely dealt with documents he dealt with documents he ': · would recognise t1,.,e1'" 1~ .:1 th-v ---x· - rtors I:;; , ~ - w11,,n ~ , +1-i~y brcur~ht ;;;,r• - their export documents. DW 6 Kenned\' Ikandi.~ a:ts;., E:e:iyan,, testified to have worked at Ki~l.'"''-'- as Revenue Officer II, under the Keny;::i. ':evenue Authority. He stated that between 1994 - 96 ne was stationed at Kisumu Pier and after he certified documents for exportation, loading j_s done under the supervision of the customs. He testified to have certified - the Export Entric:s concerning goods destined for Mwanza and Shinyanga in Tanzania. On further cross examinatiou. he stateµ that he did not court each and every item but merely dealt with paper work. That it is the exporter who brings his goods at the piero And after his certification· that goods to are leaving Kenya 1 then the export::•r is entitled to · a refund of 15% VAT. ;. On whether goods cculd leave by other means_ a part from that indicated on the document, he agreed that that possibility is there • .And in re examination ,, he stated that it is the exporter who makes the entries. DW 7 was Johnson Obadia Ma.nyanda. He testified that he is working as a principl tax investigation ciff icer under the TRA. He stated that he knows the 2nd plaintiff, and that his duty amongst others entail auditing of documents related to imported goods. He stated that he went to investigate businessmen who .J. import goods via. Mwanza. -1- hese were KITCO, Jumanne Ki$himba, Mohamed Omari Rugesha Ibrahim, Rugesha 1nvestment and Robert Swai. That he specific~lly e.ealt with Export Entries of KITCO - Exh~pit D3. He told the court that when the vessel comes into port custam officers are supposed to be there., However he added that he did net find out who were on duty nor •..... /7 7 cou~d he remember their names. Like DW .3,- mr? s.tated that he was informed that some of the goods went through custc.ms whiJ.e others did not, He also added that when he went to Mwanza he came to knov; the plaintiff through the MEMARTS of his company. Th'::lt he failed. to J.ocat.2 Rugesha IbrahiT?• He stated that assessment of duty is made as per the declaration form and then verit~cation is done after payment of taxes. He told. the court that the amount being claimed from the~ plaintiff was arrived at after cha.eking the documents obtained from Kenya at f. o. b, value. He a@rced to have met some of the exporters in Kisumu -/v~ctoria Distributors,but other industries declined to reveal their orders. He relied on .Entry Export documents but did not see the exporters. He denied knowing who load;:?.d the goods into the . vessel" He informed the court that he failed to trace neither Rugesha Investment nor Rugesh8 Ibrahim. ' For the plaintiff, Mr. Muccadam, learned counsel, led his client as fuJlows. He stated to be a businessman based in Mwanza owning a cornps.ny callc:::d Kishimba Intenational Traders Co. Ltd, herein to be referred. as KITCO. He stated that )1e ovms a supermarket as well as ginning cotton. He told the court that he gets his gooods locally as vvell es importing some from Kenya. He stated that personally he does not go to Kenya to order for goods but he gets the goods from the trad2rs in Mwanza after they have been imported into the country. He agreed hr:.1vinc; hired DW 1 's ferry to send his goods tc Kenya and addGd that on the return journey other people hire the same :Eo ferry their goods to Mwanza. The plaintiff denied._to have imported g~ods worth TShs.;;:',942,899,675/=. ·, He denied to have imported goods without payment of tax/duties. He stgted that if anything he pa~d taxes at the customs and had documents to support his claim. 8 The plaintiff denied kncwing the other traders by the names of Ibrahim Rugesha, Ibrahim Omari.; or Rµgesha Investment.· He denied importing any goods although his nmne appear in Ext1J:.:~l!.,J2_,_g_. He pray2d. to the, court to enter judgment as per plaint. During cross examination by Mr, Teemba for the defendant he agreed to have paid for hire charges of the vessel to and from Kisurnu~ He stated that he has no business in .l.\ enya.·.. He also agreed to have met DW 7 in Kisumu. He denied to have supervised loading of gcods from K.isumu rather his agent one Saffari supervised the goods and collected money from those who used the ferry. - He denied to have dealt with , a person by the name of Ibrahim Regesha. He denied being indebted to the defeno.ant at all.- He informed the court that the custom officers at Mwanza are in a better p1ece to know who are those traders. He prayed for this court to enter judgment as claimed in the plaint.· Issue No .1 is vrhether the plain tiff imported the gO'ods into 'J: anzania. The plaintiff has conceded that he hired the vessel (.s) owned by DVJ 1 captain Claus Gaet.je to ferry his goods to Kenya. That he paid for the ferry transport from Mwanza to Kisumu. He told the court that on the returrf journey the 1 MV' Thor would also carry other traders goods as well. He conceded that the company he owns KITCO gets goods 1ccally and sometimes from Kenya. He told the court that KITCO has a supermarket shop and naturally enough general merch2,ndise would be ordered locally or from other places. He testified that for those item he imported he paid duty/taxes at ht customs. DW 3 WG..s· in my view the star witness in this case. He testified on how he, together with DW 7 visited Nairobi and Kisumu, Kenya, to investigate en tax evasion being perpetrataded by some busnessmen reffident in Mwanza. That they checked the Export Entries for 1994, 1995, and 1996, They checked outward mainfest documents and· clearance cert if ic::::te from Kisumu. On the Mwanza •.. /9 9 side they checked the inward manifest and ½learance certificate. They discovered that these documents had been wrongly entered; That documents had entries on .items reading as "general corgo" er flmixed goods." DW 3 stated-thi~--. to be defect which ho.d to be detacted by the officers at the J\Twanza Port., It would appear through no one from the customs office, police or 'rRA took any action to arrest the situatior1. Again DW 3 & DW 7 discovered that of the export Entries gatherc:d from Kisumu some had no corresponding import entrJ.es at the Mvmnza pert. And yet some documents showed little duty 01..... none paid at all DW 3 and DW 7 also discovered that of the comparric-::s that had not - clared their goods prrJperly these were magrum, North Poer Clearing and Forwarding KITCO, .Jumanne Kishimba Mohamed Omari, Rugesha Ibrahim and .e,ugesha Investment. DW 3 stated that the documc,nt:.:; 1··elating to the above companies had apparent defects and further that they were no corresponding documents from Mwanza. He cited for example manifest of 6/8/96 MV Thor goods were consigned tc KITCO and that Export entries manifest of 17/2/96 and Export Entries show that officers in Kisurnu supcr-v.isecl loading but there is no document authorising offloading. Again as per ID 3 whih contained (4) from sets of documents with vsrious goods such as bundles cf aluminiu!J; shGets, rubber slippers (assorted) which were load2d on rvrv thor en 14/4/96, 15/4/96 and 16/4/96, According to DW 3 some of the manifest were not accounted for and yet at times the export entries were missing al together DVv3 stat2d that the rrd.ssing documents I D 3 and I ID 4 belong to KITCOj Jumanne Kishimba Mohamed Ornari, Rugesha Investment and Rugesha Ibrahim. This court has to satisfy itself, on the evidence . ; tendered whether these other traders are one and same -- · p(zrson as the plaintiffs. On to put it differently whether .the plaintiffs were acting for or were agents of these othe-r traders. , • •• 10 10 •· Mr. '.eeemba, lC:.?arnc-5 counsel for the· defendant has submitted that tho plaintiffs had the duty to collect those taxes from those other traders as those goods were under their control. This is ·indeed an al tractive propostion but Wb;;j there any evidc,nce teiiidered in this regard. Mr. Teemba in his final adciress has stated that the plaintiffs are def~:,12d as .owners of all those goods that were fer:2-ed f;om }Cisumu to Mwanza. Since the plaintiffs paid the hiring f12es. Both DW 3 and DW 7 stated in court that they failed to trace those othertraders. Vvas the pl·aintiff s hiding behind other traders backs? There was no firm testimoney apart mere suspicions. I am satisfied that on the evidence teTiderect, the plaintiffs had good consigned to them frcn: Kenya. The 2nd plaintiff has t,,Jd. this court soo Of what value this court is unclear nor could DW 3 state clearly the vqlume of merchandise ferried in~o Mwanza as the documents were clearly defective in one way of the other. T.h,.:;' 1st is.s•..:e is therefore answered thus; the plaintiffs did i!11port into Mwanza some merchandise whose volumr:~ could net be ascertained by the defendant. Next I mov2 tc thG 2nd issue whether duties/taxes were paid by the plaintiff for-the guods imported. In order to ansvff:r this issu1:: regard must be had on the :;:: rccedure applicable before gc.ocls are released to 1 importers. This procedur8 was c?xpla in,::d by DW 3, DW 1, DW 2. It is this when a vessel ccmes into the harbour, the master cf the vessel hands ,Jv-2r the outward manifest t;_J the custom officials. He declares what cargo is waded in b.is ship. Th2 importers too fill in the nee2ssary documents for checking and verfica·ci,::;n. The custom, TftA and police officers enter the ship/vessel to verify wha.t is in th(? hold. If the export entries tally documents with the import entries then a clearance certificate is issued and goods are released after the declaration have been made and verified and taxes assessed. The goods would be reloasod to importers once clearance has been issued. It is a1so pertinent to add that where taxes due~ have not be2n paid, the goods would not be released by the authorities to the importers. ~ ./.11- 11 Now what happened her2? The ccurt was told that despite those defects detetiJtecl by DW 3 there were no gc,ods detained for non payment of due taxes. All the gocds were released to the importers. BW 3 stated that two off icers---from custom c;lepart-ment - Mr. Mbogo and KKisumu·were on duty at the rnatrial time but denied having any copies of receipts with them., v.fhat does this amount to; si.mply stated is that, the custom officc-'?rs, TRA and police who v•rere on duty 2t the material time • should soulder the blame for their taxity. The plaintiff coult not have managed tc take out his goods unless authorized by the officers on duty. DW3 had conceded that none of the goods belonging to the plaintiffs had been deteined fer non payment of du t1xes DW 3 condnded further 1.:: that the custodian of the missing documents at Mwanza Port are the custom officials themselves. The custom officials at IVIwanza had cleared the goods despite under declarations of t~e taxes due~ cLurt was not told that goods importr.:d did not pass via the authorised routes I am satisified that of the goods imported by the plaintiffs though unascertained, these were cleared by the off ice rs concerned, the defendcrnt included. The saying 11 it takc""s two to tango" is in my view, very relevant in this regard. Mr, Temba learned c;)unsel fer the Defendant had sun.:i tted that rn.r 3 had told the court of how the plaintiffs evaded payment of prcper taxes. Did he DW 3 tc;ld th,~ court that they cc•rnpc1red ccJpies of export entrie·s and cut W,Jrd manifest from KI:3UMU and inward manifest and import entries from Mwanza. Some of these fallied and others did net. He told the court that some:> documents shewed some duties had been paid., Some of the import entries had under value duties. Again, I as cbserved earlier, D'W 3 the star. witnoss in this case. St2ted that he did not know what actual goods were ferred into this country from Kenya. He conceded that all goods were cleared at Mwanza .Port and were cleared by custom officials.,. That even the Mlissing documents were· under their custody•· Surely under those' preva i1 ing circumstances, can this court hold the plaintiff soldy responsible.. I thL:1l,~ not. If indeed the defendant's department is as Ii l2 ef'ficicnt es one wculcl wish to believe, it was rwo.?ssary to summ,:,n those off ice rs who . were on duty at I•:, ~ . the rnat'eriRl period, t ( ) tell this court what happened at Mwanza., Port. The ci tecl cas0? of HE:'-:EDI S.A.IDI VS MOHAFiED MBILU ('J.984) TLR 113 vvould equally apply on the defencLants side. They failed to summon their o±:f ice rs who were cm duty at Mwanza c.):1 the rn2itri3l time .. The defendants would be justified to demand the plaintiff tc pay the TShs.7 1 942,899,675/== ·the exporters in K~nya could certify th8t the importers of all those goods were the plaintiffs; that a':Ll those goods were ferried into Tanzania; that due clearance and certification was dorn~ at Mw::i.nza Port. As it is this court is not satisfied that the deff?ndant has made out a strong case against the plaintiff.. There are gaps to be f ill0d by the defendant the ms elves.. Jmd in view of these short comings which 2,re F,):i;,a-rent · or. the defendants case, it woU..LC. would be unsafe to uplwld the d2fcndants submissiCJn that the plaintiffs have evaded. taxes to the a'n1ount cl.aimed. The second i.ssue is ansvv,.2red in the negative thus the defendant have not sufficiently tendered evidence to prove that the plainfiffs, \on their ovm )1lanaged to av~:.,j,el taxes to the tune of TShs.7,942,899,678/= in total. In that event the distress notices issued on 20/5/97 are without just if icaticn ·and hence unJ.av.rful. Judgement for the plaintiffs as prayed. Delivered before: .ti.. Go BUBESHI Parties. JUDGE 29/2/2000