King’a Wear Limited v Commissioner of Customs and Border Control [2024] KETAT 1548 (KLR) | Tariff Classification | Esheria

King’a Wear Limited v Commissioner of Customs and Border Control [2024] KETAT 1548 (KLR)

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King’a Wear Limited v Commissioner of Customs and Border Control (Tax Appeal E274 of 2024) [2024] KETAT 1548 (KLR) (8 November 2024) (Judgment)

Neutral citation: [2024] KETAT 1548 (KLR)

Republic of Kenya

In the Tax Appeal Tribunal

Tax Appeal E274 of 2024

CA Muga, Chair, BK Terer, EN Njeru, E Ng'ang'a & SS Ololchike, Members

November 8, 2024

Between

King’a Wear Limited

Appellant

and

Commissioner of Customs and Border Control

Respondent

Judgment

Background 1. The Appellant is a limited liability company incorporated in Kenya and whose business activity is distributorship of affordable range of clothes and other related items.

2. The Respondent is a principal officer appointed under Section 13 of the Kenya Revenue Authority Act, CAP 469 of Kenya’s Laws(hereinafter “the Act”). Under Section 5 (1) of the Act, the Kenya Revenue Authority is an agency of the Government for the collection and receipt of all tax revenue. Further, under Section 5(2) of the Act with respect to the performance of its functions under subsection (1), the Authority is mandated to administer and enforce all provisions of the written laws as set out in Part 1 and 2 of the First Schedule to the Act for the purposes of assessing, collecting and accounting for all revenues in accordance with those laws.

3. The Appellant imported bedsheets and duvet covers, dyed polycotton bedsheets and pillowcases and dyed 2-piece bedsheets sets between 2018 and December 2023 review period and classified them under tariff code 6302. 39. 00 which attracts import duty at 25%.

4. The Respondent conducted a post clearance audit on the Appellant’s imports and reclassified the Appellant’s products under tariff code 6302. 31. 00 which attracts import duty at 50% and VAT at the rate of 14% or 16% depending on the importation date as stated in its tariff reclassification letter dated 9th May 2023.

5. The Appellant contested the re-classification of its products vide a letter dated 30th May 2023 but the Respondent sustained its reclassification under tariff code 6302. 31. 00 vide a review of tariff letter dated 23rd June 2023.

6. On 4th December 2023, the Respondent issued a notice of demand for short levied duties of Ksh 18,066,110. 00 being import duty of Ksh 15,574,241. 00 and import VAT of Ksh 2,491,869. 00.

7. On 3rd January 2024, the Appellant lodged an application for review of the Respondent’s decision but the Respondent upheld the earlier reclassification under tariff code 6302. 31. 00 and confirmed the additional duties vide their review decision dated 22nd January 2024.

8. Aggrieved by the Respondent’s review decision dated 22nd January 2024, the Appellant filed its notice of appeal dated 21st February 2024 on 6th March 2024.

The Appeal 9. The Appeal was predicated upon the following grounds as laid-out in the Memorandum of Appeal dated and filed on 6th March 2024;i.That the Respondent erred in law and fact by classifying bedsheets & duvet covers, dyed polycotton bedsheets and pillowcase and dyed 2-piece bedsheet sets under tariff code 6302. 31. 00 which covers bed linen made up of cotton.ii.That the Respondent erred in law and fact by ignoring the Kenya Bureau of Standards (hereinafter “KEBS”) test results which evidenced that the imported products were made up of a mix of two fabrics, polyester and cotton with polyester being the predominant fabric, and thus could only be classified under tariff code 6302. 39. 00 which covers “other textile materials” and not tariff code 6302. 31. 00 which covers “bed linen made up of cotton.”iii.That the Respondent misdirected itself by disregarding the material composition of the imported bedsheets & duvet covers, dyed polycotton bedsheets and pillow case and dyed 2-piece bedsheet sets and ignored the fact that the imported products were predominantly made of polyester as was confirmed by the laboratory tests done by the KEBS.iv.That the Respondent erred in law and fact by classifying the imported products for the entire period 2018 to 2023 under tariff code 6302. 31. 00 without procuring sample materials from the Appellant for testing on the composition of the fabrics for every consignment during that period.v.That the Respondent erred in law and fact by failing to consider relevant factual records including the KEBS test results, certificates of origin and other supporting documents lodged by the Appellant in support of their objection.vi.That the Respondent grossly abused the powers donated to them by the Act by raising back taxes for five years through a post clearance audit without conducting any tests on the imported products for that period to satisfy themselves that the products are made of fabric where cotton is predominant.

Appellant’s Case 10. The Appellant’s case is premised on its Statement of Facts were dated and filed on 6th March 2024.

11. The Appellant stated that on various dates between year 2018 to December 2023, the Appellant imported bedsheets and duvet covers, dyed polycotton bedsheets and pillow cases and dyed 2-piece bedsheet sets and declared the same under tariff code 6301. 39. 00 attracting import duty at 25%.

12. The Appellant averred that in the year 2023, the Respondent levied import duty on the said products at 50% after re-classifying them under tariff code 6302. 31. 00 which was a variance from Appellant’s classification under tariff code 6301. 39. 00. Under duress, the Appellant paid the duty to facilitate clearance of its consignment and avoid the high demurrage fees that were likely to ensue.

13. The Appellant further held that after the said incident, the Respondent without conducting any laboratory tests on the fabric composition, conducted a post clearance audit on the Appellant’s imported consignments for years 2018 to December 2023 and unilaterally demanded additional duties totaling Ksh 18,066,111. 00 having reclassified the Appellant’s consignments under tariff code 6302. 31. 00.

14. The Appellant vehemently contested Respondent’s assertion that its sample laboratory test for the entire Appellant’s consignments imported from 2018 to 2023 indicated the fabric as comprising cotton and polyester with cotton being the predominant fabric yet the Respondent has never requested from the Appellant any samples of the imported products apart from the consignment that triggered the audit.

15. The Appellant was categorical that in classification of goods, it should be examined if products fit, prima facie, within the language of a tariff heading as subheadings of the East Africa Community Common External Tariff (hereinafter “EACCET”) were legal text and that the Nomenclature therein is governed by principles provided under the Harmonized System (HS) General Interpretative Rules (hereinafter “GIR”) taken in their appropriate order more specifically GIR 1 which provides as follows:“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…”

16. The Appellant further cited GIR 6 which provides as follows:“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 purpose of this Rule the relative Section and Chapter Notes also apply, unless the context otherwise requires”

17. The Appellant stated that it was not in dispute that according to GIR 1, the imported items were classifiable under tariff heading 6302 which states as follows:“63. 02 Bed linen, table linen, toilet linen and kitchen linen.6302. 10. 00 - Bed linen, knitted or crocheted- Other bed linen, printed:6302. 21. 00 -- Of cotton6302. 22. 00 -- Of man-made Fibres6302. 29. 00 -- Of other textile materials- Other bed linen:6302. 31. 00 -- Of cotton6302. 32. 00 -- Of man-made Fibres6302. 39. 00 -- Of other textile materials6302. 40. 00 - Table linen, knitted or crocheted- Other table linen:6302. 51. 00 -- Of cotton6302. 53. 00 -- Of man-made Fibres6302. 59. 00 -- Of other textile materials6302. 60. 00 - Toilet linen and kitchen linen, of terry toweling or similar terry fabrics, of cotton- Other:6302. 91. 00 -- Of cotton6302. 93. 0 -- Of man-made fibres kg 25%”

18. It was the Appellant’s case that contrary to the Respondent’s alleged tests, the Appellant’s independent laboratory test at KEBS returned the following report on 26th May 2023:“a)Dyed bed sheetsSize 137*203CM – 47. 0% Cellulose, 53. 0% Polyester;Size 228*254CM – 44. 6% Cellulose, 55. 4% Polyester;Size 203*228CM – 43. 0% Cellulose, 57. 0% Polyester;Size 152*228CM – 42. 5% Cellulose, 57. 5% Polyester;b)White duvet cover – 43. 8% Cellulose, 56. 2% Polyester;c)Pillow case – 28. 8% Cellulose, 61. 2% Polyester.”

19. That the results from KEBS, which is an independent body and a state corporation, were conclusive that the products comprised of two materials i.e. cotton and polyester with polyester being the predominant material which gave the products their essential character.

20. The Appellant was apprehensive that it was inconceivable that the Respondent could impose additional duties on a taxpayer for five years without conducting any credible and independent laboratory tests as there were no supporting documentation adduced by the Respondent showing the samples tested for the entire period. Thus, the Respondent’s classification was not based on any factual laboratory tests yet the Respondent was attempting to be the judge, jury and executioner in the Laboratory test matter and was bullying the Appellant to accept a classification not based on facts.

21. The Appellant stated that it also availed the Respondent certificates of origin which contain a description of the product and their respective codes. It was therefore surprising that the Respondent was insistent on classifying the products under tariff code 6302. 31. 00 which deals with cotton items. That the Respondent’s actions reek of gross abuse of power placed upon the Respondent by statute which the courts have equally held as traits of abuse of power.

22. That the appropriate classification of the products was under tariff code 6302. 39. 00 as guided by GIR rules Explanatory Notes (ENs) and the laboratory tests which indicated the material composition of the imported products. Thus, it was wrong for the Respondent to attempt to raise back taxes for five years without conducting any tests and attempting to reclassify the products under tariff code 6302. 31. 00.

Appellant’s Prayer 23. The Appellant’s prayers to the Tribunal were that;a.The Appeal be allowed with costs to the Appellant.b.The Respondent’s decision dated 22nd January 2024 be vacated and set aside in its entirety.c.Any other orders the Tribunal may deem fit.

Respondent’s Case 24. The Respondent replied to the Appeal through its Statement of Facts dated and filed on 5th April 2024 where in refuting Appellant’s assertions it stated as follows:

25. That contrary to Appellant’s assertions, the Respondent had properly re-classified the products under tariff code 6302. 31. 00 since heading 63. 02 provides for classification of “bed linen, table linen, toilet linen and kitchen linen.” More specifically, that the Appellant’s classification under tariff code 6302. 39. 00 covers “other textile materials” therefore the most appropriate classification was under tariff code 6302. 31. 00 which covers “bed linen made up of cotton.”

26. It was the Respondent’s case that its reclassification was based on results of valuation and verification testing conducted by the Respondent contrary to Appellant’s allegations noting that the most specific description can only be found from scientific analysis of the product or the physical analysis of the product. In so doing, the Respondent placed reliance of the EACCET and the ENs, 2022 as read together with the GIRs which should be read not to distort the true classification but to give meaning as couched under GIR 1 and GIR 6.

27. The Respondent cited the following provision of GIR 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, in so far 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.”

28. The Respondent asserted that it was the entity mandated to classify imported goods pursuant to section 236 of the East Africa Community Customs Management Act, 2004 (hereinafter “EACCMA”) which gives it power to inspect and audit documents to ascertain imports and their correct classification and that in this case the correct classification was under tariff code 6302. 31. 00 as guided by GIR 1 and GIR 6. That as a result it was within the law for the Respondent to demand short-levied taxes for the 2018 to December 2023 review period as provided for under Section 135 (1) and (2) of the EACCMA which was well within timelines as couched under Section 235 of the same Act. The Appellant’s assertions as laid out in its Memorandum of Appeal and Statement of Facts were unfounded in law and not supported by evidence.

Respondent’s Prayer 29. The Respondent made the following prayers:i.That the Tribunal upholds the review decision dated 22nd January 2024 as proper in law.ii.That the Tribunal strikes out the Appeal herein with costs for want of merit.

Parties’ Written Submissions 30. On 11th September 2024, the Tribunal adopted the parties’ written submissions.

31. The Appellant’s written submissions dated and filed on 20th August 2024 and filed on 28th August 2024 wherein the Appellant submitted on two issues for determination as hereinunder;

i. Whether the Respondent was just in classifying the bedsheets and duvet covers, the dyed polycotton bedsheets and pillowcase, and the dyed 2-piece bedsheet sets under Tariff Code 6302. 31. 00. 32. The Appellant submitted that Kenya was governed by the EACCET which codified and adopted the World Custom Organization (hereinafter “WCO”) Harmonized Commodity Description Coding System and its GIRs of classification of goods and the same was upheld by the High Court in the case of Beta Healthcare International Ltd v Commissioner for Customs Services [2010]eKLR as follows:“Kenya is a signatory to the International Convention on the Harmonized Commodity Description and Coding System, Kenya became a contracting party to the convention on 29th January 1988. The entry into force of the convention came into effect in Kenya on 1st January 1989. ”

33. The Appellant avowed that whereas EACCET was derived from and informed by the International Convention on the HS to which Kenya was a signatory, the GIRs provide the framework for classifying goods in the nomenclature which ensures consistency and accuracy in the classification process. That in the case herein, the relevant rules included Rule 1, Rule 3(a) and (b) as well as GIR 6.

34. The Appellant asserted that the stated rules require that in arriving at a proper classification, part of the examination requires that there is consideration if the products, prima facie, fall within the language of a tariff heading as the sub-heading of the EACCET were legal texts and that was why it was not in dispute that the imported items were classifiable under tariff heading 6302.

35. The Appellant contested the Respondent’s re-classification under Tariff code 6302. 31. 00 arguing that the re-classification ignored the actual product composition of cotton and polyester wherein polyester was the predominant fabric and that the most specific classification as guided by Rule 3(b) was under tariff code 6302. 39. 00 as it appropriately reflects the mixed composition of the product which consist predominantly polyester which gave the products their essential character which was also confirmed by KEBS test results.

36. The Appellant submitted that unlike the Respondent who failed to adduce any laboratory test, it availed KEBS test results together with certificate of origin to corroborate its classification under tariff code 6302. 39. 00 as required by Section 56(1) of the Tax Procedures Act (TPA) which provides as follows:“In any proceedings under this Part, the burden shall be on the taxpayer to prove that a tax decision is incorrect.”

37. It was the Appellant’s case that having successfully demonstrated on a prima facie basis that the predominant fabric in the imported products was polyester, the burden of proof shifted to the Respondent to refute this evidence but the Respondent failed to controvert the same before the Tribunal. It was therefore unclear, how the Respondent arrived at its conclusion for the entire consignment imported for the period without having tested the product which put to question the accuracy and credibility of the Respondent’s findings.

38. The Appellant averred that the Respondent assumed the role of judge, jury and executioner and was using its position as the collector and administrator of taxes to coerce the Appellant into accepting classification that was not supported by factual laboratory tests that had not been subjected to an independent verification by a body such as KEBS or the Government chemist; therefore, the Respondent’s actions were arbitrary and unsupported by factual evidence on record which constituted a gross abuse of power. The Appellant buttressed its argument through the case of Republic vs Institute of Certified Secretaries of Kenya ex parte Vipinchndra Bhatt T/A A.J Bhatt & Co HCMA 285/2006 (Nairobi) where it was held as follows:“In the absence of a rational explanation, one must conclude that the decision challenged can only be termed irrational within the meaning of Wednesbury unreasonableness, was in bad faith and constitutes a serious abuse of statutory power since no statute can ever allow anyone on whom if confers a power to exercise such power arbitrarily and capriciously or in bad faith.”

39. The Appellant further stated the Respondent’s actions were not merely administrative errors buts constituted an oppressive exercise of power and a violation of the principles of fair administrative action, the Appellant relied on the case of Keroche Industries Ltd vs Kenya Revenue Authority & 5 Others[2007]eKLR where it was held as follows:“Therefore, whereas this court is not entitled to question the merits of the decision of the taxing authority, that authority must exercise its power fairly and there ought to be a basis for the exercise of such powers. A taxing authority is not entitled to pluck a figure from the air and impose it upon a taxpayer without some rational basis for arriving at that figure and not any other figure. Such action would be arbitrary, capricious and in bad faith. It would be an unreasonable exercise of power and discretion that would justify the court in intervening….”

40. The Appellant insisted that the Respondent disregarded crucial evidence that would have led to a different classification and acted in bad faith by imposing additional duties based on unsupported reclassification of goods without proper justification or adherence to established procedures for determining the correct tariff classification.

(ii) Whether the prayers sought should be granted. 38. The Appellant insisted that since the KEBS test results clearly indicated polyester was the predominant material in the imported products, the Appeal herein should be granted as the demand for additional duties was unlawful since the Appellant demonstrated the correct classification for the imported goods under tariff code 6302. 39. 00. Additionally, that the Respondent’s failure to conduct independent tests on specific consignments imported invalidated the basis for short levies duties.

49. In its written submissions dated and filed 20th August 2024 the Respondent identified a single issue for determination which it analysed as hereinunder:

Whether the Respondent’s review decision dated 22nd January 2024 was proper in law. 49. The Respondent stated that tax statutes must be interpreted strictly and cited the case of Cape Brandy Syndicate vs Inland Revenue Commissioner (1920)1 KB. Further, the Respondent averred that the legal regime guiding HS classification in East Africa was the EACCMA as read together with the WCO ENs, a position that was upheld in the following cases; Engineering Supplies 2001 Limited v Commissioner of Domestic Taxes

Keroche Breweries Limited v Commissioner of Domestic Taxes

Wiener S.I. GmbH v Hauptzolamt Emmerich

49. More specifically, the Respondent stated that Rule 1 begins by establishing that titles are provided for ease of reference only and have no legal bearing on classification which shall be determined according to terms of the headings and relative Section or Chapter Notes.

50. It was the Respondent’s case that its post clearance audit on the Appellant’s imported bedsheets and duvet covers, dyed polycotton bedsheets and pillowcases, and dyed 2-piece bedsheets established that the proper tariff line was 6302. 31. 00 instead of the Appellant’s classification under 6302. 39. 00 as guided by GIR 2(b) and GIR 6.

51. The Respondent asserted that the most specific description could only be found from scientific analysis of the product or the physical analysis of the product and further submitted that the correct description and classification of the item in consideration of GIR 1 and GIR 6 was ‘bed linen made up of cotton’ under HS Code 6302. 31. 00.

Issues For Determination 49. The Tribunal having carefully considered the parties’ pleadings, documentation and submissions adduced before it notes that two issues distill for its determination as follows;i.Whether the Respondent erred in reclassifying Appellant’s products from tariff code 6302. 39. 00 to tariff code 6302. 31. 00. ii.Whether the Respondent’s review decision dated 22nd January 2022 demanding short levied duties of Kshs. 18,066,110. 00 was justified.

Analysis And Findings 49. The Tribunal having established two issues for determination proceeds to analyze them as follows;

i. Whether the Respondent erred in re-classifying Appellant’s products from tariff code 6302. 39. 00 to tariff code 6302. 31. 00. 49. The Tribunal notes that the instant dispute emanated from a post clearance audit that resulted in tariff re-classification by the Respondent of the Appellant’s imported products from tariff code 6302. 39. 00 which attracts import duty at 25% to tariff code 6302. 31. 00 which attracts import duty at 50% and VAT at the rate of 14% or 16% depending on the importation date. The reclassification yielded short levied duties of Kshs. 18,066,110. 00 between the year 2018 to December 2023 review period.

50. The Tribunal notes that it was not in dispute the Appellant’s products namely, bedsheets and duvet covers, dyed polycotton bedsheets and pillowcase and dyed 2-piece bedsheet, were classifiable under tariff heading 6302. The bone of contention was which is the most appropriate tariff code with the Respondent insisting on tariff code 6302. 31. 00 on one hand and the Appellant asserting tariff code 6302. 39. 00 on the other hand. The two contending HS codes under the heading 6302 provide as follows;“63. 02 - Bed linen, table linen, toilet linen and kitchen linen6302. 31. 00 -- Of cotton6302. 39. 00 -- Of other textile materials “

49. The Tribunal notes that in classification of products, GIR 1 and GIR 6 provides as follows:“GIR 1The 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…”While GIR 6 provides as follows:“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 purpose of this Rule the relative Section and Chapter Notes also apply, unless the context otherwise requires”

49. The Tribunal notes that the gist of the matter at hand is the material composition of the imported fabrics. The Appellant insisted that the predominant material in the product was polyester whilst the Respondent claimed that the predominant material in the fabric was cotton. In attempting to resolve the dispute, the Tribunal is guided by GIR 3 which provides as follows;“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, in so far 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.”

49. The Tribunal notes that whereas the Appellant based its classification upon laboratory tests conducted by KEBS and products certificate of origin, both of which were adduced in evidence and indicated that polyester was the predominant material, the Respondent stated that its re-classification was based on results of valuation and verification testing conducted which indicated cotton as the predominant material.

50. The Tribunal notes that by the Respondent’s own admission at paragraph 22 of its statement of facts, the most specific description could only be found from scientific analysis or the physical analysis of the product. However, the Respondent did not adduce as evidence any such analysis in support of its case.

51. The Tribunal notes that apart from the Appellant’s KEBS laboratory test results and products certificate of origin, the Tribunal neither sighted the valuation or scientific analysis nor sample test results done by the Respondent in support of its re-classification. The Tribunal associates with the following holding in the case of Commissioner of Domestic Taxes v Trical and Hard Limited (Tax Appeal E146 of 2020) [2022] KEHC 9927 (KLR) :“From the above, it is clear that the evidential burden of proof rests with the taxpayer to disprove the Commissioner and that once competent and relevant evidence is produced, then this burden now shifts to the Commissioner. I have emphasized and underlined ‘competence’ and ‘relevance’ because it is only evidence that meets these two tests that demolishes presumption of correctness and swings the burden to the Commissioner.”

49. The Tribunal upon examining and internalizing the evidence placed before it by both parties notes that the Appellant adduced documentation that explained its position and basis of classification of its product under tariff code 6302. 39. 00. The Respondent on the other hand made mere averments that were never substantiated with documentary evidence. The Tribunal reiterates the Court holding in the case of Republic -vs- KRA (exparte J. Mohamed) Civil Application Number 312 of 2011 where it was held as follows:“Whereas this Court is not entitled to question the merits of the decision of the taxing authority, that authority must exercise its powers fairly and there ought to be a best exercise of such powers. A taxing Authority is not entitled to pluck a figure from the air and impose it upon a taxpayer without some rational basis for arriving at that figure and not another figure. Such an action be would be arbitrary, capricious and in bad faith. It would be an unreasonable exercise of power and discretion and that would justify the Court intervening.”

49. It is the Tribunal’s finding that the Respondent erred in re-classifying Appellant’s product from tariff code 6302. 39. 00 to tariff code 6302. 31. 00.

ii. Whether the Respondent’s review decision dated 22nd January 2022 demanding short levied duties of Ksh 18,066,110. 00 was justified. 49. Having established that the Respondent erred in the reclassification of the Appellant’s products, it follows that the assessment of the short-levied duties was without basis in law. The Tribunal also relies on the following Court holding in the case of Republic v Commissioner of Domestic Taxes Large Tax Payer’s Office Ex-Parte Barclays Bank of Kenya Ltd [2012]eKLR:“…for the proposition that the decision to tax must have a legal basis and that section 56(1) does not empower the appellant to make speculative assessments…”

49. In view of the foregoing, the Tribunal finds and holds that the Respondent’s review decision dated 22nd January 2024 demanding short levied duties of Kshs. 18,066,110. 00 was not justified in the circumstances.

Final Decision 49. The upshot of the foregoing is that the Appeal herein is merited and the Tribunal accordingly proceeds to make the following Orders:a.The Appeal be and is hereby allowed.b.The Appellant’s products; Bed bedsheets and duvet covers, dyed polycotton bedsheets and pillowcases and dyed 2-piece bedsheets sets are classifiable under tariff code 6302. 39. 00. c.The Respondent’s tariff ruling dated 22nd January 2024 be and is hereby set aside.d.Each party to bear its own costs.

49. It is so Ordered.

DATED AND DELIVERED AT NAIROBI ON THIS 8TH DAY OF NOVEMBER, 2024. ………………………………….CHRISTINE A. MUGA - CHAIRPERSONBONIFACE K. TERER - MEMBERELISHAH N. NJERU - MEMBEREUNICE N. NG’ANG’A - MEMBEROLOLCHIKE S. SPENCER- MEMBER