Judgment summary
The Tribunal at Nairobi heard an appeal by Habanera Ventures Ltd against a decision of the Commissioner of Customs & Boarder Control confirming a demand for short-levied duty of Kshs 7,013,477.00 on imports of brown sugar from Uganda for the years 2020 to 2024 (para 3).
The Appellant had responded to the demand notice by email objecting and requesting time to reconcile records with its clearing agent and supplier, without providing supporting documentation or grounds of objection (para 4, 52). The Respondent later issued a Review Decision dated 19th March 2025 confirming the tax due (para 5).
The Tribunal found that the Appellant's email did not meet the requirements of Section 229(1)(2) of the EACCMA, which requires a written application stating the grounds of review within thirty days, and held that the review application was not validly lodged, rendering the demand undisputed and due and payable (paras 53-58). The appeal was dismissed and the demand upheld, with each party bearing its own costs (para 59).
Background
Habanera Ventures Ltd is a private limited company engaged in manufacturing and trade in sugar, including imports (para 1). The Commissioner of Customs & Boarder Control is a principal officer appointed under Section 13 of the Kenya Revenue Authority Act, Cap 469 Laws of Kenya (para 2).
The Respondent issued a Notice of Demand dated 5th February 2025 for short levied duty of Kshs 7,013,477.00 arising from the Appellant's importation of brown sugar from Uganda for the years 2020 to 2024, citing inaccuracy in the declared values (para 3).
By email dated 27th February 2025, the Appellant objected to the demand and sought more time to liaise with its clearing agent to reconcile records (para 4). The Respondent issued its Review Decision dated 19th March 2025, confirming the tax due (para 5). The Appellant filed its Notice of Appeal dated 26th September 2025, with leave of the Tribunal granted on 3rd October 2025 (para 6).
Core dispute
The Appellant contended that the Respondent had erred in issuing the demand, had acted in bad faith and unreasonably departed from the Transaction Value method under the EACCMA and the WTO Valuation Agreement, and had arbitrarily applied a fixed FOB value of USD 1,000 per metric ton without regard to actual transaction values (paras 7, 18).
The Appellant also argued that the Respondent had not complied with Section 31(8) of the Tax Procedures Act, had breached Article 47(1) of the Constitution, and had failed to properly examine the documentation it had provided, including supplier tax invoices, proforma invoices and payment confirmations (paras 10, 12, 20, 21).
The Respondent maintained that the Appellant's email of 27th February 2025 did not constitute a valid application for review under Section 229 of the EACCMA, as it lacked stated grounds and supporting documentation, and that the Appellant was therefore estopped from raising substantive grounds of appeal before the Tribunal that had not formed part of the review decision (paras 25, 26, 36-40, 43-45).
On the substantive valuation dispute, the Respondent stated that it had departed from the Transaction Value method because the Appellant's declared FOB values, ranging between USD 0.57/kg and USD 0.7/kg, were inconsistent with an average FOB value of approximately USD 1/kg for identical goods imported from the same country of origin, justifying use of the identical goods method under Section 122(4) of the EACCMA (paras 29, 31, 42).
Court findings
The Tribunal identified two issues for determination: whether the Appellant's review application was validly lodged, and whether the Respondent was justified in demanding the short-levied duty (para 48).
On the first issue, the Tribunal noted that Section 229(1)(2) of the EACCMA requires a person aggrieved by a Commissioner's decision to lodge, within thirty days, a written application for review stating the grounds upon which it is made. It found that the Appellant's email of 27th February 2025 objected to the demand and requested more time but did not state grounds of objection or provide supporting documentation, and that no further application was lodged before the statutory deadline of 5th March 2025 (paras 51-54).
The Tribunal held that the Respondent could not be faulted for demanding the short-levied duty on 19th March 2025, as the time for the Appellant to apply for review had lapsed, and that the Appellant's failure to provide documentation or grounds meant it had not discharged its burden of proof, leaving the demand undisputed and therefore due and payable (paras 54, 56). The Tribunal relied on its earlier decision in John Githua Njogu vs Commissioner Investigations and Enforcement TAT Appeal No 101 of 2018 in this respect (para 55).
Having found on the validity of the review application, the Tribunal declined to consider the second issue on the merits of the valuation dispute, treating it as moot (para 58).
Outcome
The Tribunal held that the appeal lacked merit and dismissed it. The Respondent's demand dated 19th March 2025 was upheld, and each party was ordered to bear its own costs (para 59).
Major issues / areas of contention
- Whether the Appellant's review application dated 27th February 2025 was validly lodged under Section 229(1)(2) of the EACCMA.
- Whether the Respondent was justified in demanding the short-levied duty, an issue the Tribunal treated as moot once it found the review application invalid.