Judgment summary
The Appellant, a limited liability company, appealed against a tariff ruling of the Respondent that reclassified imported solid-state drives, memory cards and flash drives under HS Code 8523.51.00 attracting a 10% import duty rate, instead of HS Codes 8471.70.00, 8471.80.00 and 8471.90.00 which attract 0% [3, 5].
The single issue for determination was whether the Respondent was justified in reclassifying the Appellant's import under heading 8523 instead of heading 8471 as declared by the Appellant [41].
The Tribunal analysed the two headings in light of the General Interpretation Rules and the relevant Chapter Notes, and found that the Respondent erred in reclassifying the imports [55, 59, 60].
The Tribunal allowed the appeal and set aside the review decision dated 24 October 2025, with each party to bear its own costs [61].
Background
The Appellant is a limited liability company incorporated and having its registered offices within the Republic of Kenya [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 a Post Clearance Investigation on the Appellant's declarations of imported solid-state drives, memory cards and flash drives for the period January 2024 to March 2025 [3]. The investigation established that some of the items were declared under HS Codes 8471.70.00, 8471.80.00, 8471.90.00 which attract an import duty rate of 0% instead of HS Code 8523.51.00 which has an import duty rate of 10%, leading to a tax loss of Kshs. 373,407 [3].
The Respondent issued a tax demand letter dated 9th May, 2025, which was not on record [3]. The Appellant protested against the taxes by a letter dated 28th May 2025, and the Respondent responded by a letter dated 19th June 2025 [4]. The Appellant lodged an objection by letters dated 4th September, 2025 and 25th September, 2025 [4].
Upon considering the objection, the Respondent issued a tariff ruling dated 24th October 2025 disallowing the objection and confirming the assessed principal tax of Kshs. 373,407 [5]. The Appellant filed its appeal by notice of appeal dated 21st November 2025 [6].
Core dispute
The dispute concerned the correct tariff classification of imported solid-state drives (SSDS). The Appellant declared the items under HS Codes 8471.70.00, 8471.80.00 and 8471.90.00, which attract a 0% import duty rate, while the Respondent reclassified them under HS Code 8523.51.00, which attracts a 10% import duty rate [3, 10].
The Appellant contended that the SSDS were not imported as standalone units but were pre-installed and shipped as integral components of a larger storage system and could not function independently, and that they were units of an Automatic Data Processing (ADP) system classifiable under heading 84.71 [7c, 16, 17].
The Respondent maintained that the items were solid-state non-volatile storage devices specifically classifiable under HS Code 8523.51.00, and that under GIR 3(a) the heading providing the most specific description should be preferred [24, 30].
Court findings
The Tribunal identified the General Interpretation Rules cited in the EAC-CET as governing classification, and set out GIR 1 and GIR 6 [43, 44]. It cited Republic v Commissioner of Customs & Exparte Mulchand Ramji & Sons Limited on how classification should be done [45].
The Tribunal considered the two headings. It noted that under heading 8471 all storage items must exclusively be used with automatic data processing machines and must not be specified or included elsewhere in the EAC-CET [47, 48]. It set out Note 6(A) to Chapter 84, which defines automatic data processing machines, and found that storage items under heading 8471 must be capable of storing programs to be used by such machines [49, 50].
The Tribunal set out HS Code 8523.51.00 and Note 6(a) and (b) to Chapter 85, noting that storage items under heading 8523 are used for the recording of sound or of other phenomena [51, 52, 53]. It found the difference between the two headings to be that storage items under heading 8471 are for storing programmes by automatic data processing machines, while those under heading 8523 are for general storage and for storing recorded sound or other phenomena [54].
Considering the Chapter Notes and the evidence the Appellant provided, the Tribunal held that there was no way the storage items the Appellant imported could be categorised as solid-state non-volatile storage devices [55]. Applying GIR 2(a) on essential character, the Tribunal found the essential character of the items was that they are used for storing programs for automatic data processing machines, which made them incompatible with items under heading 8523 [56, 57]. Applying GIR 3(a), the Tribunal was of the view that heading 8471 provides the most specific description of the Appellant's items [58, 59].
The Tribunal found and held that the Respondent erred in reclassifying the Appellant's imports under heading 8523 instead of heading 8471 as declared [60].
Outcome
The Tribunal found the appeal meritorious and allowed it. The Review decision dated 24th October 2025 was set aside. Each party was ordered to bear its own costs [61].
Major issues / areas of contention
- Whether the Respondent was justified in reclassifying the Appellant's imports under heading 8523 instead of heading 8471 as declared by the Appellant [41].