Harley's Limited v Commissioner of Customs & Border Control [2024] KETAT 1620 (KLR)

Harley's Limited v Commissioner of Customs & Border Control (Tribunal Appeal E027 of 2024) [2024] KETAT 1620 (KLR) (25 October 2024) (Judgment)

Neutral citation: [2024] KETAT 1620 (KLR)

Republic of Kenya

In the Tax Appeal Tribunal

Tribunal Appeal E027 of 2024

E.N Wafula, Chair, Jephthah Njagi, G Ogaga & E Ng'ang'a, Members

October 25, 2024

Between

Harley's Limited

Appellant

and

Commissioner of Customs & Border Control

Respondent

Judgment

1. The Appellant is a private limited company whose principal business is the importation and distribution of healthcare goods and equipment within and outside East Africa.

2. The Respondent is a principal officer appointed under Section 13 of the Kenya Revenue Authority Act, Cap 469 Laws of Kenya (KRA Act). Under Section 5 (1) of the Act, KRA is an agency of the Government for the collection and receipt of all revenue. For the performance of its function under Subsection (1), the Authority is mandated under Section 5(2) of the Act to administer and enforce all provisions of the written laws as set out in Parts I and II of the First Schedule to the KRA Act to assess, collect, and account for all revenues under those laws.

3. The Respondent stated that following intelligence/analysis received from the Respondent’s ISO Department and further analysis by its Pre-Audit Unit, it established that the Appellant had been declaring the product Heyer-surgical lights under Heading 2022 EAC/CET Code 9018. 90.

4. On 20th September 2023, the Respondent made a tariff ruling ref. KRA/C&BC/BIA/THQ/733/09/2023 for the product Heyer-surgical lights (three arms) under Import Entry Number 23NBOIM400706109 reclassifying the items under 2022 EAC/CET HS Code 8539. 52. 00.

5. The Appellant applied for a review of the Respondent’s tariff classification for Heyer-surgical lights (three arms) in a letter dated 6th October 2023 and provided the Respondent with additional information in relation to its application on 25th October 2023 and 10th November 2023.

6. The Respondent replied to the Appellant’s application in appeal responses dated 13th October 2023 and 3rd November 2023, and subsequently issued its review decision on 4th December 2023, upholding the classification of the item as per the tariff ruling ref. KRA/C&BC/BIA/THQ/733/09/2023 dated 20th September 2023.

7. Dissatisfied with the Respondent’s review decision dated 4th December 2023, the Appellant filed its Notice of Appeal dated 28th December 2023.

The Appeal 8. The Appeal is premised on the Memorandum of Appeal dated and filed on 11th January 2024 which raised the following grounds: -a.That the Respondent erred in fact and in law in reclassifying the Appellant’s imported Heyer-surgical lights under tariff code HS Code 8539. 52. 00 and which bear import duty at the rate 25%.b.That the Respondent misdirected itself by failing to appreciate that the Appellant’s imported Heyer-surgical lights are classifiable under HS Code 9018. 90. 00, and which is zero rated.c.That the Respondent erred in law and in fact by holding that the Appellant’s imported Heyer-surgical lights are light emitting diode (LED) lamps classified under HS Code 8539. 52. 00. d.That the Respondent misdirected itself by ignoring the professional use and description of the Appellant’s imported Heyer-surgical lights that demonstrates that it is an instrument and/or appliance used exclusively in medical, surgical, dental or veterinary science.e.That the Commissioner erred in law and in fact by failing to appreciate that by applying General Interpretation Rules that the heading which provides the most specific description for the Heyer-surgical light is 9018. 90. 00 as an instrument and appliances used in medical, surgical, dental or veterinary science.

Appellant’s Case 9. The Appellant’s case is premised on the following documents filed before the Tribunal: -a.The Appellant’s Statement of Facts dated and filed on 11th January 2024 and the documents attached to it;b.The Appellant’s witness statement of Collins Kibett dated 28th March 2024 and filed on 2nd April, 2024 that was adopted by the Tribunal in evidence under oath on 16th May 2024; andc.The Appellant’s written submissions dated 29th May 2024 and filed on 31st May 2024.

10. The Appellant stated that on or about 28th January 2023, it imported into Kenya Heyer-surgical lights (three arms) under Import Entry Number 23NBO1M400706109 and declared it under HS Code 9018. 90. 00. That during the process of customs clearance, the Respondent disputed the Appellant’s classification of the H-surgical lights under HS Code 9018. 90. 00.

11. The Appellant further stated it enquired the Respondent on the reasons for its dispute on the classification of the H-Surgical lights (three arms), and that the Respondent via its letter dated 20th September 2023 informed the Appellant that the H-Surgical light is described to be a light unit incorporating the latest LED technology shadow less operating light field.

12. That the Respondent indicated that the surgical lights is considered to be light emitting diode (LED) lamp and proceeded to classify the surgical light under Heading 85. 39 tariff 8539. 52. 00 as a LED lamp.

13. On 6th October 2023, the Appellant responded to the Respondent’s letter dated 20th September 2023 and opposed the classification of the Surgical Lights under Heading 8539. 52. 00 which merely refers to LED Lamps.

14. The Appellant stated that it enclosed in its response a detailed description on the use of the surgical operating lights and the user manual, and argued that the Heyer surgical light is specifically designed for surgical purposes and therefore is a surgical instrument or appliance used exclusively for surgical purposes.

15. The Appellant further stated that on 13th October 2023, the Respondent replied to the Appellant’s application for review and maintained the classification of the H-surgical lights under HS Code 8539. 52. 00 on allegations that as per the explanatory notes to Heading 85. 39 the Heading covers all electric light lamps, whether or not specifically designed for particular use.

16. The Appellant averred that on 4th December 2023 the Respondent issued its decision maintaining the tariff classification of the H-surgical lights under HS Code 8539. 52. 00, which decision the Appellant appealed to the Tribunal.

On the Description, Specification and Use of Heyer-Surgical Lights 17. The Appellant reiterated that its imported Heyer-surgical lights (three arms) is a surgical equipment that is clearly described as a LED surgical light (three arms).

18. That the Heyer-surgical lights (three arms) has the following characteristics particular to surgical lights:a.High illumination/Brightnessb.Colour rendition of Tissuec.Adjustable Colour Temperatured.Shadow Reductione.Limited Heat/Irradiancef.Depth of illuminationg.Anti-bacterial coatingh.Customized surgical mode

19. That the surgical light system consists of a surgical light and a ceiling mounted moveable arm to which the surgical light is attached which allows the surgeon to position the surgical lamp in the most favourable position during surgery.

20. The Appellant stated that the surgical lights consist of:a.Ceiling mountsb.Moveable armsc.Surgical Light User Manuald.A control panele.A camera

21. The Appellant averred that the Heyer-surgical lights are specially manufactured to have specific properties to provide the surgeon and the operating team with optimal illumination in an operating theatre, that is, to provide a certain light intensity, low heat generation, control of shadows and depth of focus and are further equipped with a sterile handle.

22. That the subject lights allow proper visualization intraoperatively of anatomic structures such as nerves, arteries, veins and other glandular structures in order that vital structures are not unintentionally injured.

23. The Appellant asserted that the Heyer-surgical lights are specifically designed for and can only be used solely for medical and surgical purposes and can only be operated by surgeons, doctors or specialized personnel.

24. The Appellant’s Witness highlighted in detail the specifications of the surgical lights that the Appellant imported citing that the specifications are unique to surgical lights which are exclusively designed for use in operation theatres only to enable surgeons to perform operation and surgical procedures. The specifications detailed by the Appellant’s Witness included: intensity and focus, adjustable heat or temperature dissipation, no shadow effect, adjustability and positioning, sterilization and hygiene, regulation and certifications.

25. Under the specification of regulations and certifications of the Heyer-surgical lights, the Appellant’s Witness stated that the surgical lights require authorisation from the Pharmacy & Poisons Board of Kenya (PPBK) and attached as evidence the authorisation obtained by the Appellant from PPBK.

On Tariff Classification of Heyer-surgical lights 26. The Appellant submitted that the basic rule of custom classification is codified under GIR 1 which provides as follows: -“The titles of Sections, Chapters and sub-Chapters are provided for ease of reference only: for legal purposes classifications shall be determined according to the terms of the heading and any relevant Section or Chapters Notes and, provided such headings or notes do not otherwise require, according to the following provisions.”

27. The Appellant’s position was that the Heyer-surgical light is a surgical equipment or appliance and therefore the most specific classification for the surgical light is Chapter 90 which covers optical. photographic, cinematographic, measuring, checking precision, medical or surgical instruments and apparatus: parts and accessories thereof. That the said surgical lights fall under Heading 90. 18 which covers instruments and appliances used in medical, surgical, dental or veterinary sciences.

28. The Appellant submitted further that the Explanatory Notes instruct that Heading 90. 18 covers a "wide range of instruments and appliances which in [the] vast majority of cases are used only in professional practice." That the Heading includes articles used by doctors, surgeons, and dentists "either to make a diagnosis, to prevent or treat an illness or to operate." That the notes further list the instruments and appliances that fall under Heading 90. 18 and include lamps which are specifically designed for diagnostic, probing, irradiation etc. purposes.

29. The Appellant averred that "Diagnosis" specifically means "the identification of a disease or condition on the basis of its signs and symptoms." That in medical terms, "diagnostic" pertains to or subserves diagnosis; [or is] distinctive of or serving as a criterion of a disease, as signs and symptoms." That, therefore, a light system that is configured in such a way as to assist a health professional to detect the "signs and symptoms" of a condition or disease has a diagnostic use.

30. The Appellant reiterated that as per the provisions of the EAC CET, the Heyer-Surgical lights satisfy the description under Chapter 90, Heading 90. 18 tariff 9018. 90. 00 which provides for instruments and appliances for human medicine or surgery and more particularly as highlighted above, lamps which are specifically designed for diagnostic. probing, irradiation etc. purposes.

31. The Appellant contended that the Respondent should be guided by the law in its classification of the Heyer-surgical lights, accordingly, since it is described as a surgical light and not as a lamp and contains specific characteristics particular to surgical lights.

32. The Appellant affirmed that surgical light is further an instrument and appliance which in the vast majority of cases is used only in professional practice as provided in the explanatory notes of Heading 90. 18. That the Heading includes articles used by doctors, surgeons, and dentists either to make a diagnosis, to prevent or treat an illness or to operate and include lamps which are specifically designed for diagnostic, probing, irradiation etc. purposes.

33. The Appellant further submitted that Rule 3 of the General Rules for the Interpretation of the Harmonized System provides that: -“When by application of Rule 2 (b) or for any other reason, goods are, prima facie. classifiable under two or more headings, classification shall be effected as follows: -a.The heading which provides the most specific description shall be preferred to headings providing a more general description. However, when two or more headings each refer to part only of the materials or substances contained in mixed or composite goods or to part only of the items in a set put up for retail sale, those headings are to be regarded as equally specific in relation to those goods, even if one of them gives a more complete or precise description of the goods.b.Mixtures, composite goods consisting of different materials or made up of different components, and goods put up in sets for retail sale, which cannot be classified by reference to 3 (a), shall be classified as if they consisted of the material or component which gives them their essential character, insofar as this criterion is applicable.c.When goods cannot be classified by reference to 3 (a) or 3 (b), they shall be classified under the heading which occurs last in numerical order among those which equally merit consideration.”

34. The Appellant referred to Rule 3 (a) (supra), averring that the most specific description of the Heyer-surgical lights is Chapter 90 of the EAC CET Heading 90. 18 which provides for instruments and appliances used in medical, surgical, dental or veterinary sciences and the Explanatory Notes to Heading 90. 18 provides that the Heading includes articles used by doctors, surgeons, and dentists either to make a diagnosis, to prevent or treat an illness or to operate and include lamps which are specifically designed for diagnostic, probing, irradiation etc. purposes. That the correct classification is therefore tariff number 9018. 90. 00.

35. The Appellant averred that the Respondent erred in reclassifying the imported Heyer surgical lights under tariff 8539. 52. 00 on the basis that the product has a LED light thus classifying it as a LED lamp. That such an interpretation is misguided and lacks legal merit as Chapter 90 Heading 90. 18 Tariff 9018. 90. 00 is the most specific description of the surgical lights which contains unique specifications as it is specially designed for diagnostic, probing, irradiation, etc. purposes for use in medical, surgical or dental procedure.

36. The Appellant argued that the Respondent erred in relying on the term LED in the consignment to reclassify the Appellant’s imported Heyer-surgical light. That the reclassification on that basis is misleading and has no basis in law as it is not anchored in any of the provision of EAC CET.

37. The Appellant submitted that the EAC CET has elaborate rules and procedures for determining the correct classification which involves assessing parameters such as material used, intended use and essential character of the articles imported. The Appellant noted that the presumption of tariff classification under Chapter 85 Heading 8539. 52. 00 does not consider these issues and may lead to misclassification.

38. The Appellant averred that imported articles must be classified based on their objective characteristics and properties as defined by the wording of the relevant tariff headings and not through inferences which may lead to inaccurate classification of goods.

39. The Appellant relied on the case of Westfort Hi-Tech Hospital Limited vs. Commissioner of Customs wherein it was held that: -“Heading 9018. 90 Other instruments and appliances This heading Covers a very wide range of instruments and appliances, which, in the vast majority of cases, are used only in professional practice (e.g. by doctors, surgeons, dentists, veterinary surgeons, midwives), either to make a diagnosis, to prevent or treat an illness or to operate, etc. Instruments and appliances for anatomical or autoptic work, dissection, etc., are also included, as are, under certain conditions, instruments and appliances for dental laboratories. The instruments of the heading may be made of any material (including precious metals). The Commissioner (Appeals) is of the view that these Operation Theatre Lights cannot be treated as having either a preventive, curative or diagnostic purpose. We do not understand how he has come to such a Conclusion. Any surgery or operation will either have a curative or preventive purpose. There are many cases where advice is given for surgical operation in order to prevent certain future complications. In many cases, surgery definitely has curative purposes. Therefore, the Commissioner (Appeals) has adopted a view without any basis. We should also bear in mind that these lights have specifically been designed for Operation Theatre. In that view of the matter, these lights can be considered as Appliances coming under CSH 9018. 19 as Other Electro Medical Apparatus. Therefore, we allow the appeal with consequential relief by setting aside the impugned order in appeal.”

40. The Appellant also relied on the following cases in support of its Appeal:a.Trumpf Medical Systems, lnc. v. United States, 34 Ct. Int'l Trade 1404, 753 F. Supp. 2d 1297 (2010).b.Puratos Canada Inc vs Canada (Customs & Revenue).c.Keroche Industries Limited v Kenya Revenue Authority & 5 Others [2007] eKLR.

Appellant’s prayers 41. The Appellant prayed as follows: -a.That the Appeal be allowed.b.That the Respondent’s review decision dated 4th December 2023 be set aside in its entirety.c.That a declaration be issued that the Appellant’s imported Heyer Surgical Lights (Three Arms) of Import Entry 23NBOIM400706109 is classified as instrument and appliance used in medical, surgical, dental or veterinary sciences of Heading 90. 18 under Chapter 90, tariff 9018. 90. 00 of the HS Codes.d.Costs of this Appeal.e.Any other remedies that the Honourable Tribunal deems just and reasonable.

Respondent’s Case 42. The Respondent’s case is premised on the Respondent’s Statement of Facts dated 9th February, 2024 and filed on 15th February, 2024 with the documents attached to it; and

43. The Respondent averred that the instant dispute arose following intelligence/analysis that it received from the Respondent’s ISO Department, which was also analysed by the Pre-Audit Unit within PCA. That from the intelligence, it was established that the Appellant had been misclassifying the product Heyer surgical lights.

44. The Respondent stated that a review of the Appellant’s consignment established that the Appellant had been declaring these products under Heading 22 EAC/CET Code 9018. 90 but that they should be classified under Heading 22 EAC/CET Code 8539. 52. 00.

45. The Respondent refuted all the grounds advanced by the Appellant and averred that it based its ruling on the results of the sample tested and material information presented by the Appellant as well as the GIR 1& 6.

46. That the results established that Heyer surgical lights (three arms) is specified to be a light unit incorporating the latest LED technology shadow less operating light field, and it has a single colour high performance LEDs with a life of more than 70000hrs.

47. That the results also revealed that the item is ergonomically designed with user friendly features like sterile touch control (STC) to control; light intensity, light field size and height adjustment telescopic tubes 400-420 mm, to aid in the radial, angular and axial ceiling arm rotation.

48. The Respondent averred that the results further revealed that the product has some of the following features:a.Three autoclave handles for each domeb.Focusing adjustment fixed on the arms (touch control) panelc.Streamlined designed, compatible for laminar air flowd.Colour temperature adjustable from 3000-5700ke.Simple to clean and disinfectf.Switch between four modes from warm white to cold white to help on focus

49. That following the GIR Rules, the Respondent concluded that Tariff Heading 85. 39 covers electric filament or discharge lamps including scaled beam lamp units and ultra-violet or infra-red lamps; light emitting diode (LED) light sources.

50. The Respondent stated that the Heading covers electric light lamps consisting of glass or quarts containers of various shapes containing the necessary elements for converting electrical energy into rays (including infra-red or ultra violet rays). That the Heading includes all electric light lamps, whether or not specially designed for particular uses (including flashlight discharge lamps) filament lamps, gas or vapour discharge lamps, arc-lamps and light-emitting diode (LED) lamps.

51. The Respondent submitted that it relied on Sections 135, 235, 236, 229 & 249 of the East African Community Customs Management Act (EACCMA), 2004 and Article 8 and Article 12(4) of the Protocol on the Establishment of the East African Customs Union on the adoption and use of the Harmonized Customs Commodity Description and Coding System as the Common External Tariff.

52. The Respondent concluded that based on the above, H-surgical Light (three arms) are considered to be light-emitting diode (LED) light, classified in 22 EAC/CET HS Code 8539. 52. 00.

Respondent’s prayers 53. The Respondent prayed that the Tribunal finds:a.The Respondent’s impugned decision be upheld.b.The instant Appeal be dismissed with costs.

ISSUE FOR DETERMINATION 54. The Tribunal has considered the facts of the matter and the submissions made by the parties, and is of the view the issue falling for its determination is as follows:Whether the Respondent was justified in issuing its review decision dated 4th December 2023.

Analysis And Findings 55. The Tribunal has analysed the issue that calls for its determination as hereunder, having reviewed all the pleadings and submissions by the Parties concerning the impugned review decision.

56. The crux of this dispute is the Customs tariff classification of Heyer-surgical lights (three arms) imported by the Appellant which the Respondent seeks to reclassify under Tariff Code 8539. 52. 00 while the Appellant argues that they should be classified under Tariff Code 9018. 90. 00

57. The Appellant averred that the Respondent erred in law and fact by treating and classifying the theatre lights as ordinary lights under HS Code 8539. 52. 00 rather than HS Code 9018. 90. 00 which is the HS Code for medical devices including theatre lights.

58. In determining the correct classification of the Heyer-surgical lights (three arms) imported by the Appellant, the Tribunal relied on the General Rules of Interpretation (GIRs) of the EACCET and the World Customs Organization (WCO) Explanatory Notes to the Harmonized System (HS).

59. The Tribunal notes that Heading 9018 of the EACCET covers instruments and appliances used in medical, surgical, dental or veterinary sciences, including scintigraphic apparatus, other electro-medical apparatus and sight-testing instruments.

60. The Tribunal reviewed the Explanatory Notes to Heading 9018 and notes that they state as follows: -“This heading covers a very wide range of instruments and appliances which, in the vast majority of cases, are used only in professional practice (e.g., by doctors, surgeons, dentists, veterinary surgeons, midwives), either to make a diagnosis, to prevent or treat an illness or to operate, etc. Instruments and appliances for anatomical or autoptic work, dissection, etc., are also included, as are, under certain conditions, instruments and appliances for dental laboratories (see Part (II) below). The instruments of the heading may be made of any material (including precious metals).…..On the other hand, this heading includes specialised measuring instruments used exclusively in professional practice, such as cephalometers, dividers for measuring cerebral lesions, obstetrical pelvimeters, etc.It should also be noted that a number of the instruments used in medicine or surgery (human or veterinary) are, in effect, tools (e.g., hammers, or surgery (human or veterinary) are, in effect, tools (e.g., hammers, mallets, saws, chisels, gouges, forceps, pliers, spatulae, etc.), or articles of mallets, saws, chisels, gouges, forceps, pliers, spatulae, etc.), or articles of cutlery (scissors, knives, shears, etc.). Such articles are classified in this heading only when they are clearly identifiable as being for medical or heading only when they are clearly identifiable as being for medical or surgical use by reason of their special shape, the ease with which they are surgical use by reason of their special shape, the ease with which they are dismantled for sterilisation, their better quality manufacture, the nature of the constituent metals or by their get-up (frequently packed in cases or boxes containing a set of instruments for a particular treatment: childbirth, autopsies, gynaecology, eye or ear surgery, veterinary treatment : childbirth, autopsies, gynaecology, eye or ear surgery, veterinary for parturition, etc.).The instruments and appliances classified here may be equipped with optical devices; they may also make use of electricity, either as motive optical devices; they may also make use of electricity, either as motive power or for transmission, or as a preventive, curative or diagnostic agent. This heading also covers instruments and appliances operated by laser or other light or photon beam processes and ultrasonic instruments and other light or photon beam processes and ultrasonic instruments and appliances.”

61. The notes to Heading 9018 further state that this Heading includes instruments and appliances for human medicine or surgery including “(R) Lamps which are which are specially designed for diagnostic, probing, irradiation, etc. purposes. That torches, such as those in the shape of a pen are excluded (heading 85. 13) as are other lamps which are not clearly identifiable as being for medical or surgical medical or surgical use (heading 94. 05).” Emphasis added.

62. Heading 8539 covers “Electric filament or discharge lamps, including sealed beam lamp units and ultraviolet or infra-red lamps; arc-lamps; light-emitting diode (LED) lamps” while tariff code 8539. 52. 00 specifically covers light-emitting diode (LED) lamps.

63. The Tribunal further notes that the the Explanatory Notes to Heading 8539 provide as follows in relation to Light-emitting diode (LED) lamps: -“The light from these lamps is produced by one or more light-emitting diodes (LED). These lamps consist of a glass or plastic envelope, one or diodes (LED). These lamps consist of a glass or plastic envelope, one or more light--emitting diodes (LED), circuitry to rectify AC power and to convert voltage to a level useable by the LEDs, and a base (e.g., screw, bayonet or r bi-pin type) for fixing the lamp--holder. Certain lamps may also contain a heat sink.These lamps are of various shapes, e.g., spherical (with or without a neck); pear or onion shaped; flame shaped; tubular (straight or curved); special fancy shapes for illuminations, decorations, Christmas trees, etc.”

64. Having reviewed the provisions of the Headings in dispute as per the EACCET and the Explanatory Notes to the same, the Tribunal referred to the General Interpretative Rules which are reproduced below and state as follows: -“Classification of goods in the Nomenclature shall be governed by the following principles:1. The titles of Sections, Chapters and sub-Chapters are provided for ease of reference only; for legal purposes, classification shall be determined according to the terms of the headings and any relative Section or Chapter Notes and, provided such headings or Notes do not otherwise require, according to the following provisions:a.Any reference in a heading to an article shall be taken to include a reference to that article incomplete or unfinished, provided that, as presented, the incomplete or unfinished article has the essential character of the complete or finished article. It shall also be taken to include a reference to that article complete or finished (or falling to be classified as complete or finished by virtue of this Rule), presented unassembled or disassembled.b.Any reference in a heading to a material or substance shall be taken to include a reference to mixtures or combinations of that material or substance with other materials or substances. Any reference to goods of a given material or substance shall be taken to include a reference to goods consisting wholly or partly of such material or substance. The classification of goods consisting of more than one material or substance shall be according to the principles of Rule 3. ”3. When by application of Rule 2 (b) or for any other reason, goods are, prima facie, classifiable under two or more headings, classification shall be effected as follows:a.The heading which provides the most specific description shall be preferred to headings providing a more general description. However, when two or more headings each refer to part only of the materials or substances contained in mixed or composite goods or to part only of the items in a set put up for retail sale, those headings are to be regarded as equally specific in relation to those goods, even if one of them gives a more complete or precise description of the goods.b.Mixtures, composite goods consisting of different materials or made up of different components, and goods put up in sets for retail sale, which cannot be classified by reference to 3 (a), shall be classified as if they consisted of the material or component which gives them their essential character, insofar as this criterion is applicable.c.When goods cannot be classified by reference to 3 (a) or 3 (b), they shall be classified under the heading which occurs last in numerical order among those which equally merit consideration.4. Goods which cannot be classified in accordance with the above Rules shall be classified under the heading appropriate to the goods to which they are most akin.5. In addition to the foregoing provisions, the following Rules shall apply in respect of the goods referred to therein:a.Camera cases, musical instrument cases, gun cases, drawing instrument cases, necklace cases and similar containers, specially shaped or fitted to contain a specific article or set of articles, suitable for long-term use and presented with the articles for which they are intended, shall be classified with such articles when of a kind normally sold therewith. This Rule does not, however, apply to containers which give the whole its essential character;b.Subject to the provisions of Rule 5 (a) above, packing materials and packing containers presented with the goods therein shall be classified with the goods if they are of a kind normally used for packing such goods. However, this provision is not binding when such packing materials or packing containers are clearly suitable for repetitive use.6. For legal purposes, the classification of goods in the subheadings of a heading shall be determined according to the terms of those subheadings and any related Subheading Notes and, mutatis mutandis, to the above Rules, on the understanding that only subheadings at the same level are comparable. For the purposes of this Rule the relative Section and Chapter Notes also apply, unless the context otherwise requires.”

65. Going through the Rules, the Tribunal established that Rules 2, 3, 4 and 5 would not apply to the instant case as they relate to the classification of incomplete, unfinished, disassembled or unassembled products; mixtures, incomplete, unfinished, disassembled or unassembled products; mixtures, composite goods and goods in sets, and containers, cases and packaging and packaging materials, respectively. Further, GIR 4 which classifies goods on the basis of items to which they are most akin is a catch all Rule that is used to address gaps in classification where Rules 1 to 3 are not usable in the classification of an item. In the instant case, Rule 1 is applicable as there exists a heading that refers to the specific goods in consideration both by description and by function. The Tribunal, therefore, established that the classification of the items in dispute: surgical LED lights, is determinable by applying Rules 1 and 6 of the GIRs.

66. The Tribunal has gone further to examine the specifications of the items imported by the Appellant and notes that the lights imported by the Appellant are specifically used in surgical procedures and as per the user-manual of the Heyer surgical lights with the manufacturer’s specifications,

67. The Tribunal has further established that importation of medical equipment must be superseded by the application for and issuance of a medical device permit by the Republic of Kenya Pharmacy and Poisons Board. The Tribunal confirmed that the Appellant was issued with the said permit for the importation of the surgical lights.

68. The permit by the Kenya Pharmacy and Poisons Board additionally issued conditions for the importation of the surgical lights as follows:a.That the Applicant must adhere to the conditions stipulated in the permit.b.That each Applicant must retain records of the distribution of all the medical devices imported for a minimum period of between 5 to 10 years depending on equipment specifications.c.That the Applicant of a medical device must keep an up to date log of information of all the devices registered.d.That the Applicant must provide specified reports relating to any problems the use of devices received from all manufacturers.e.That the Applicant must ensure that any medical device within its control is stored and transported in accordance with the instructions and information provided by the manufacturer.

69. It is apparent therefore that the manufacturer’s user manual and the permit by the Kenya Poisons and Pharmacy Board both confirm that the items in question are specifically for surgical use.

70. Further, in understanding the language of the Harmonised System as embodied in the EACCET, the Explanatory Notes (ENs) of the Harmonized Commodity Description and Coding System, which constitute the official interpretation of Description and Coding System at the international level, should be consulted. The Explanatory Notes, although not dispositive or legally binding, provide a commentary on the scope of each Heading, and are generally indicative of the proper interpretation of the EACCET.

71. In this regard, the Tribunal observes that the legal notes to Chapter 90 state, in part, part, as follows: -“1. This chapter does not cover:h.Searchlights or spotlights of a kind used for cycles or motor vehicles (heading 85. 12); portable electric lamps of heading 85. 13; cinematographic sound recording, reproducing or re-recording apparatus (heading 85. 19); sound-heads (heading 85. 22); television cameras, digital cameras and video camera recorders (heading 85. 25); radar apparatus, radio navigational aid apparatus or radio remote control apparatus (heading 85. 26); connectors for optical fibres, optical fibre bundles or cables (heading 85. 36); numerical control apparatus of heading 85. 37; sealed beam lamp units of heading 85. 39; optical fibre cables of heading 85. 44;ij.Searchlights or spotlights of heading 94. 05;”

72. Notably, the Explanatory Notes to Heading 9405 state, inter alia, that:“…This heading also excludes:…1. Medical diagnostic, probing, irradiation, etc., lamps (heading 90. 18).”This provision demonstrates that certain lamps used during medical diagnosis, probing and irradiation are classifiable under Heading 9018.

73. The Tribunal, having considered all the factors outlined in the foregoing paragraphs, established that the subject LED surgical lights are specialized and have specific characteristics that aid in surgical procedures and by the application of GIR 1, their classification shall fall under Heading 9018 which specifically provides for instruments and appliances used in medical, surgical, dental or veterinary sciences, including scintigraphic apparatus, other electro-medical apparatus and sight-testing instruments.

74. That further, Heading 8535 which covers electric filament or discharge lamps, including sealed beam lamp units and ultra-violet or infra-red lamps; arc-lamps; light-emitting diode (LED) light sources refers to the specified lamps in general without clearly providing a description for surgical instruments and appliances.

75. Additionally, in terms of functionality, and contrary to the Respondent’s averments, the lights imported by the Appellant are specifically used in operating theatres for medical surgery and are not items for general use.

76. In view of the foregoing, the Tribunal finds that the Heyer surgical lights (three arms) are properly classifiable under Heading 9018, specifically HS Code 9018. 90. 00 under the EACCET.

77. Consequently, the Tribunal concludes that the Respondent erred in re-classifying the Appellant’s imports under Heading 8539.

Final Decision 78. The upshot of the foregoing analysis is that the Tribunal finds that the Appeal is merited and accordingly proceeds to make the following Orders: -a.The Appeal be and is hereby allowed.b.The Respondent’s review decision dated 4th December 2023 be and is hereby set aside.c.Each party to bear its own costs.

79. It is so ordered.

DATED AND DELIVERED AT NAIROBI THIS 25TH DAY OF OCTOBER, 2024. ERIC NYONGESA WAFULACHAIRMANGLORIA A. OGAGA JEPHTHAH NJAGI MEMBER MEMBEREUNICE N. NG’ANG’AMEMBER