Judgment summary
Urgent Cargo Logistics Limited, a clearing and forwarding agent, procured various Customs Security Bonds from the Commissioner for Customs & Border Control as security for taxes under Sections 106 and 107 of the East African Community Customs Management Act, 2004 (EACCMA).
Following correspondence between the parties over outstanding bonds recorded on the Simba platform, the Commissioner issued a final demand on 29th August 2024 for Kshs. 19 million in interest and penalties for late cancellation of transit bonds. The Appellant appealed this decision, raising twelve grounds including legitimate expectation, expiry of bond liability, breach of the statutory audit period, lack of a statement of reasons, and misapplication of EACCMA provisions on ownership and agency.
The Tribunal framed the sole issue as whether the Commissioner's decision of 29th August 2024 declining waiver of penalty and interest of Kshs. 19 million was justified. It found that the Appellant had not produced evidence supporting its contention that cancellation requests for the disputed bonds, particularly Bond Number RCTG17/03958KE, were submitted on time, and that the claim of misplaced documents could not be sustained. Applying the burden of proof provisions under Section 223 of EACCMA and Section 30 of the Tax Appeals Tribunal Act, the Tribunal held that the Appellant had failed to discharge its burden.
The Tribunal accordingly dismissed the appeal, upheld the Commissioner's decision dated 29th August 2024, and ordered each party to bear its own costs.
Background
The Appellant is a private limited company registered in Kenya providing logistics integrated services, including clearing and forwarding services (para 1). The Respondent is the principal officer appointed under Section 13 of the Kenya Revenue Authority Act (para 2).
The Appellant procured various Customs Security Bonds as security for taxes payable to the Respondent under Sections 106 and 107 of EACCMA, 2004, through the Respondent's Simba platform (para 3).
On 9th April 2024, the Respondent wrote to the Appellant regarding outstanding bonds in the Simba system, demanding Kshs. 23,443,101.00 (para 4). On 15th May 2024, the Appellant requested facilitation with accounting for and cancellation of the listed bonds (para 5). On 16th May 2024, the Respondent demanded Kshs. 16,826,499.00 inclusive of penalties and interests, and the parties engaged in further correspondence (para 6).
On 29th August 2024, the Respondent issued its final demand rejecting the Appellant's appeal on interest and penalty for late cancellation of transit bonds, demanding Kshs. 19 million (para 7). The Appellant, aggrieved, filed the present Appeal via a Notice of Appeal dated 22nd December 2025, with leave of the Tribunal (para 8).
Core dispute
The Appellant contended that liability on the Special and General Security Bonds had been extinguished by the lapse of one year and three years respectively, in accordance with the Respondent's own Bond Procedure Guidelines, giving rise to a legitimate expectation that the bonds would be cancelled (paras 12-15).
The Appellant also argued that the Respondent had audited it beyond the five-year statutory period under Section 235 of EACCMA, had failed to provide a statement of reasons for the Kshs. 19 million figure under Section 49 of the Tax Procedures Act, and had wrongly treated the Appellant as owner of the goods under Section 145 of EACCMA despite its role as agent (paras 17, 36-37).
The Appellant further submitted that delays in cancellation of certain bonds, including Bond Number RCTG17/03958KE, were caused by the Respondent's own staff misplacing documents, and that the Respondent should have pursued the bond underwriter, APA Insurance Limited, or the principal importers/exporters rather than the Appellant (paras 25-31).
The Respondent maintained that it had properly applied Sections 106, 107, 108, 109 and 147 of EACCMA and Regulation 104 of the EACCMA Regulations 2010, that the Appellant had failed to file for bond cancellation within the mandatory 30-day period, and that there was no evidence to support the claim that documents had been misplaced (paras 44-55). The Tribunal identified the issue for determination as whether the Respondent's decision dated 29th August 2024 declining waiver of penalty and interest of Kshs. 19 million was justified (para 59).
Court findings
The Tribunal noted that the appeal was confined to the narrow issue of whether the Appellant's cancellation requests for the bonds were submitted on time, since it was the alleged late submission that led to the interest and penalty being declined by the Respondent (para 64).
Having reviewed the pleadings, correspondence and documents on record, the Tribunal found no evidence supporting the Appellant's contention that its cancellation application was submitted on time, and held that the argument that documents were misplaced between offices could not be sustained, as it was inconsistent with the claim that submission was timely (para 65).
The Tribunal referred to Section 223 of EACCMA, 2004, on the burden of proof in proceedings under the Act, Section 234(3) of EACCMA on production of documents, and Section 30 of the Tax Appeals Tribunal Act (cap 469A) on the Appellant's burden of proof (paras 66-68). It also cited its own prior decision in Abyssinia Iron and Steel Ltd -vs- Commissioner of Customs and Border Control (TAT No. 435 of 2022) on the shifting burden of proof between the parties (para 69).
The Tribunal concluded that the Appellant did not sufficiently support its appeal on waiver of interest and penalty for late cancellation of transit goods, and held that the Respondent's decision dated 29th August 2024 was justified (para 70).
Outcome
The Tribunal held that the Appeal lacked merit and dismissed it. The Respondent's Decision dated 29th August 2024 was upheld. Each party was ordered to bear its own costs (para 71).
Major issues / areas of contention
- Whether the Respondent's decision dated 29th August 2024, declining waiver of penalty and interest of Kshs. 19 million for late cancellation of transit bonds, was justified.
- Whether liability on the Special Security Bonds and General Security Bonds had been extinguished upon the lapse of one year and three years respectively under the Respondent's Bond Procedure Guidelines, giving rise to legitimate expectation.
- Whether the Respondent had audited the Appellant beyond the five-year statutory period under Section 235 of EACCMA, 2004.
- Whether the Respondent failed to provide a statement of reasons for the computation of the Kshs. 19 million demand, in breach of Section 49 of the Tax Procedures Act.
- Whether the Appellant, as agent rather than owner of the imported/exported goods, could properly be held liable under Section 145 of EACCMA, 2004.
- Whether delays in bond cancellation, particularly for Bond Number RCTG17/03958KE, were caused by the Respondent misplacing the Appellant's documents.
- Whether the Respondent should have pursued the bond guarantor, APA Insurance Limited, or the principal importers/exporters instead of the Appellant.
- Whether the Respondent's demands were ambiguous, given differing figures cited in the letters of 29th August 2024 and 26th November 2025.
- Where the burden of proof lay as between the Appellant and the Respondent in respect of timely submission of bond cancellation documents.