Acceler Global Logistics Ltd v Commissioner, Investigation & Enforcement (Tax Appeal E1053 of 2025) [2026] KETAT 139 (KLR) (3 July 2026) (Judgment)
Table of Contents
Case Information
Court: Tax Appeals Tribunal at the Nairobi Registry
Case number: Tax Appeal No. E1053 of 2025
Citation: Acceler Global Logistics Ltd v Commissioner, Investigation & Enforcement (Tax Appeal E1053 of 2025) [2026] KETAT 139 (KLR) (3 July 2026) (Judgment)
Applicant: Acceler Global Logistics Limited
Respondent: Commissioner, Investigation & Enforcement
Jurisdiction: Kenya
Judgment date: 3 July 2026
Judgment Summary
The Tax Appeals Tribunal heard an appeal by Acceler Global Logistics Limited against a review decision of the Commissioner, Investigation & Enforcement dated 10th July 2025 [5, 6].
The dispute concerned the tariff classification of imported items described as solid state drives. The Commissioner had reclassified the items from HS Codes 8471.70.00, 8471.80.00 and 8471.90.00, which attract an import duty rate of 0%, to HS Code 8523.51.00, which attracts an import duty rate of 10%, resulting in an assessment [3, 49, 71].
The Tribunal framed two issues for determination: whether the Respondent was justified in reclassifying the Appellant's goods under HS Code 8523.51.00, and whether the Respondent was justified in demanding Kshs. 5,457,008.00 in short-levied taxes [69].
The Tribunal found that the heading which gave the imported items the most specific description was heading 84.71 and not 85.23. It held that the Respondent was not justified in reclassifying the items under HS Code 8523.51, and that it followed that the Respondent was not justified in demanding the short-levied taxes [81, 82].
The Tribunal allowed the appeal and set aside the Review Decision dated 10th July 2025, with each party to bear its own costs [83].
Background
The Appellant is an international freight and logistics service company dealing with freight and logistics services, customs brokerage, warehousing, cargo transportation, distribution and supply chain management services in Kenya and in the East and Central African regions [1].
The Respondent is a principal officer appointed under Section 13 of the Kenya Revenue Authority Act, CAP 469 of Kenya's Laws [2].
The Respondent conducted an investigation on the Appellant for the periods January 2024 to March 2025. It established that the Appellant's imported items were declared under HS Codes 8471.70.00, 8471.80.00 and 8471.90.00 instead of HS Code 8523.51.00, leading to a tax loss of Kshs. 2,136,186 [3].
The Respondent issued the Appellant with a notice of assessment on 9th May 2025 [4]. The Appellant objected to the tax demand by a letter dated 22nd May 2025. The Respondent rejected the objection and confirmed principal taxes of Kshs. 5,457,008 by its Review decision dated 10th July 2025 [5].
Dissatisfied with the Review decision, the Appellant filed the appeal on 24th September 2025 [6].
Core Dispute
The core of the dispute was the correct tariff classification of the Appellant's imported items described as solid state drives (SSDs) [71, 74].
The Appellant declared the items under HS Codes 8471.70.00, 8471.80.00 and 8471.90.00, which attract an import duty rate of 0%. The Respondent reclassified them under HS Code 8523.51.00, which attracts an import duty rate of 10% [3, 49, 71].
The Appellant maintained that the dispute was anchored upon the correct appreciation of the nature of the items' specifications including their characteristics, functions and intended use, and that the items were internal solid state drives correctly classifiable under heading 84.71 [12, 75]. The Respondent maintained that the items were solid-state non-volatile data storage devices for recording data from an external source, classifiable under HS Code 8523.51.00 [53, 74].
Court Findings
The Tribunal noted that both parties agreed that solid state drives were classifiable under 84.71 whereas solid state non-volatile data storage devices were classifiable under 8523, and that what remained in contention was the real attributes and functionality of the Appellant's items [74].
The Tribunal observed that the impugned reclassification followed a post clearance audit and that the disputants did not have the benefit of the physical items at the time the dispute arose, as the goods had been delivered to the Appellant's clients and subsequently sold [77].
The Tribunal noted that the items were classifiable in more than one classification heading, a position the Respondent expressly acknowledged, and analysed General Interpretation Rule 3 [78, 79].
Upon analysing the functional description of the goods, the Tribunal observed that Heading 84.71 as read together with Note 6(C) provided a precise and functionally aligned description of the goods as units of ADP machines, whereas Heading 85.23 was residuary and generic. It noted that the WCO explanatory notes to heading 85.23 refer to devices used for recording data from an external source [80].
The Tribunal was persuaded that in the absence of samples for evaluation the functional description remained the basis upon which to determine the dispute. Guided by the Appellant's explanation of functionality and the WCO explanatory notes on chapter 85.23, the Tribunal found that the heading giving the imported items the most specific description was heading 84.17 and not 85.23, and that the Respondent was not justified in reclassifying the items under HS Code 8523.51 [81].
Having found that the reclassification was in error, the Tribunal found the Respondent was not justified in demanding the short-levied taxes [82].
Outcome
The Tribunal found that the appeal was merited and allowed it. It set aside the Respondent's Review Decision dated 10th July 2025. Each party was ordered to bear its own costs [83].
Major Issues / Areas of Contention
- Whether the Respondent was justified in reclassifying the Appellant's goods under HS Code 8523.51.00 [69, 70].
- Whether the Respondent was justified in demanding Kshs. 5,457,008.00 in short-levied taxes [69].
Read the full judgment (PDF) (Source: AfricanLII)