Marathon Electric Motors (I) Limited v Uganda Revenue Authority (Misc Cause 13 of 2024) [2024] UGCommC 324 (6 June 2024)

## 5 **THE REPUBLIC OF UGANDA**

## **IN THE HIGH COURT OF UGANDA AT KAMPALA**

## **(COMMERCIAL DIVISION)**

## **MISCELLANEOUS CAUSE N0. 0013 OF 2024**

**MARATHON ELECTRIC MOTORS (I) LTD ……………………………… APPLICANT**

#### 10 **VERSUS**

**UGANDA REVENUE AUTHORITY ……………………………………… RESPONDENT**

### **BEFORE: HON. LADY JUSTICE SUSAN ABINYO**

#### **RULING**

#### 15 Introduction:

This application was brought by Notice of Motion under the provisions of section 98 of the Civil Procedure Act, Cap 71, section 33 of the Judicature Act, Cap 13 (as amended), and section 248 (1) (a) of the East African Community Customs Management Act, 2004 (as amended) seeking orders that:

- 20 a) This honorable Court be pleased to grant the Applicant an order directing the Uganda Revenue Authority to approve the re-exportation of Motors back to India, which it had previously exported to Uganda through Mombasa. - b) Costs of the application be provided for.

#### 25 Applicant's evidence

This application is supported by an affidavit of Mr. Mitul Zaveri the Director of the Applicant Company, deponed in paragraphs 1-14 and summarized as follows: -

That the Applicant is a company duly incorporated under the laws of India with the capacity to sue and be sued. That on 3rd November 2022, the Applicant

30 received a purchase order (Annexture "D") from Chemique Adhesives & Sealants Limited (the buyer), to supply motors that were to be exported from India to Uganda through Mombasa by sea.

- 5 That on the 9th day of February, 2023, the Applicant shipped 1X20 FCL containers of 27(Twenty Seven) pallets of motor description TCA 0052A1113 GACD11, TCA 250 M 55KW 4P 400V 50HZ, 33 IP55 TEFC IC411 SI CLASS F 50C CASL/0714/23, under Invoice No. 6019010102295 T, and on the 8th day of March, 2023, the Applicant further shipped 1X20 FCL containers of 32 (Thirty Two) pallets of motor description - 10 TCA 250 M 55KW 4P 400V 50HZ, 33 IP55 TEFC IC411 SI CLASS F 50 DEGREE CELSIUS, TCA 225 M 24 KW 4P 400V 50HZ 33 CASL/0714/23, all from India through Mombasa to Uganda in favor of Chemique Adhesives & Sealants Limited.

That the said goods were to be shipped to Chemique Adhesives & Sealants Limited, based in Industrial area, Mulwana road. That when the goods (Motors)

15 arrived in Mombasa, the buyer Chemique Adhesives & Sealants Limited in Uganda, stopped communicating, and the Applicant failed to trace it.

That the goods are in Mombasa under the control of both Kenya Revenue Authority, and Uganda Revenue Authority Customs Departments. That he has been advised by their Lawyers whose information he verily believes to be true that

20 the law requires the Applicant to acquire approval, and clearance from both Uganda Revenue Authority, and Kenya Revenue Authority to enable the Applicant re-export the goods.

That they managed to get the required approval to re-export the goods from Kenya Revenue authority as seen in a copy of the approval herein attached and 25 marked Annexture "G".

That when the Applicant approached Uganda Revenue Authority for similar approval, it asked for a Court order directing it to approve the re-exportation of the goods, as seen in a copy of the correspondence from Uganda Revenue Authority herein attached, and marked Annexture "H".

30 That it is just, and equitable that the Applicant be granted the orders sought herein.

## Respondent's evidence

The Respondent opposed this application in an affidavit in reply deponed in paragraphs 1-16, by Ms. Christine Mpumwire an officer Litigation from the Legal

35 Services and Board Affairs Department of the Respondent, which is summarized as follows;

- 5 That the Respondent is only a nominal party in this application, and that the mandate of the Respondent is to collect government revenue as provided for under the law. That the suit goods were consigned to Chemique Adhesive, and Sealants Ltd. - That from her training as a Lawyer, she knows that the consignee should have 10 been added as a party to this application in order not to be condemned unheard. That the suit goods are currently still at the port in Mombasa pending customs clearance, and payment of customs duties. That the customs duties are a debt to the Government of Uganda, and the same is due, and supposed to be paid by the consignee, Chemique Adhesive and Sealants Ltd. - 15 That the Applicant has not adduced any evidence to support its claim of nonpayment of goods by the Consignee, and that the Applicant has not attached any approval purportedly obtained from Kenya Revenue Authority.

That if this Honorable Court is inclined to grant the prayers being sought, the Applicant should be ordered to take out an indemnity to the Respondent in the 20 event that any third –party claims arise over the suit goods.

## Representation

The Applicant was represented by Counsel Stewart Kasingye of M/S Angualia Busiku & Co. Advocates, and the Respondent was represented by Ms. Eseza Victoria Sendege of the Legal Services & Board Affairs Department, Uganda 25 Revenue Authority.

## Issue for determination

Whether the Applicant is entitled to the reliefs sought?

## Submissions by Counsel for the Applicant

Counsel reiterated the averments of the Applicant in the affidavit in support to 30 submit that the Applicant has adduced sufficient evidence to the claim, and or interest in the suit goods and that this Court has jurisdiction to grant the remedies sought.

Counsel contended that the Applicant was never informed of the requirement to pay customs duty, and that they should have paid the same if they were

35 informed, and that the Applicant is ready, willing and undertakes to pay the customs duty assessed according to the law.

- 5 Counsel further contended that there is no proof of any person or entity that has claimed interest in the goods since 9th February, 2023, when the last container was shipped to Mombasa except the Applicant, and that the Respondent has not shown that anyone has ever approached her for purposes of paying the relevant customs duty. - 10 Counsel submitted that the Respondent's prayer that the Applicant takes out an indemnity is not supported by any evidence, and not justifiable in the circumstances, more so when the Applicant undertakes to pay the assessed customs duty in the suit goods. That the Applicant's evidence is sufficient for this Court to grant the reliefs sought for in the application.

## 15 Submissions in reply by Counsel for the Respondent

Counsel submitted that Chemique Adhesives & Sealants is a key party in the described transaction but was not added as a party. That the grant of this application will be against the principles of natural justice, which provide for a right to a fair hearing under Article 28 (5) of the Constitution. That for this reason

20 the Respondent prays that this Honorable Court finds that the suit goods should not be re-exported to India before the Court hears from all the necessary parties.

Counsel further submitted that should this Honorable Court be inclined to grant the Applicant's prayer of an order to re-export, the Applicant should be directed to take out an indemnity in favor of the Respondent, which would insulate the

25 Respondent in the event of any third party claims over the suit goods, and that costs be awarded to the Respondent.

## Decision

I have taken into account the above evidence of the parties herein, and the submissions of both Counsel to find hereunder.

30 Section 248 (1) of the East African Community Customs Management Act, 2004, (as amended) provides that:

"248. (1) Goods imported into a Partner State and are still under Customs control, may be-

- (a) re-exported from a Partner State;" - 35 (b) destroyed; - (c) abandoned.

5 (2) A person re-exporting goods under subsection (1) shall comply with all necessary conditions and formalities as prescribed by the Commissioner including commercial policy measures." [Emphasis is mine]

It is my considered view that the above provision, read together with Regulation 131 of the East African Community Customs Management Regulations, 2010*,* 10 gives the Commissioner, the powers to make decisions in regard to payment of duties from a Partner State.

The proposition of the law is that, whoever alleges given facts, and desires the Court to give judgment on any legal right or liability dependent on the existence of any fact, has the burden to prove that fact unless it is provided by law that the 15 proof of that fact shall lie on another person. *(See sections 101 and 103 of the*

*Evidence Act, Cap 6* and *Jovelyn Barugahare Vs Attorney General, SCCA No. 28 of 1993[1994] KALR 190)*

In the instant case, the burden of proof lies with the Applicant to adduce evidence to prove that the suit goods belong to Chemique Adhesive, and 20 Sealants Ltd ("the consignee")

The Applicant adduced evidence in Annexture "F", a correspondence dated 1/02/2023, addressed to the Applicant by Chemique Adhesive, and Sealants Ltd, together with a proforma invoice undated on the subject; shipping instructions, and a purchase order dated 3rd November, 2022, in which the goods described 25 therein, was to be shipped to Chemique Adhesive, and Sealants Ltd, Industrial

Area, Mulwana Road not later than the end of November, 2022.

A purchase order is a document authorizing a seller to deliver goods with payment to be made later. *(See Black's Law Dictionary, 9th Edition pg.1354)*

In the instant case, this Court finds that the purchase order in Annexture "D" 30 adduced by the Applicant, proved that the suit goods belong to Chemique Adhesive, and Sealants Ltd, Industrial Area, Mulwana Road, the consignee, who allegedly went mute upon the arrival of the suit goods to Mombasa.

A bill of lading is a legal document issued by the carrier to a shipper that details the type, quantity, origin and destination of the goods being carried. It is a 35 document of title, and or a receipt for shipped goods, for which a contract exists between a carrier, and a shipper. *(See Words and Phrases legally defined, Vol.1: A-C pg. 171)*

- 5 This Court finds that the first Bill of Lading dated 8th March, 2023, in respect of the goods (Thirty Two) pallets of motor description TCA 250 M 55KW 4P 400V 50HZ, 33 IP55 TEFC IC411 SI CLASS F 50 DEGREE CELSIUS, TCA 225 M 24 KW 4P 400V 50HZ 33 CASL/0714/23, and the second Bill of Lading dated 24th March, 2023, in regard to the goods (Twenty Eight) pallets of motor description TCA 0052A1113 GACD11, - 10 TCA 250 M 55KW 4P 400V 50HZ, 33 IP55 TEFC IC411 SI CLASS F 50C CASL/0714/23, are in the name of Chemique Adhesive, and Sealants Ltd, Industrial area, Mulwana road as the consignee, and the Applicant is the shipper, and or exporter, in which a contract exists between the two said parties.

In reference to Annexture" F", it is notable that the shipment of the suit goods to 15 the consignee by the Applicant, was to be executed not later than the end of November, 2022, therefore time was of essence, and the fact that the suit goods are commercial in nature.

This Court, therefore, finds that it is only fair, and just that the said goods be disposed in a manner that the Commissioner deems fit in the circumstances, and 20 or to mitigate further loss to the Applicant.

In addition, without prejudice to the above, this Court further finds that the Applicant did not exercise due diligence to trace the whereabouts of Chemique Adhesive, and Sealants Ltd, Industrial area, Mulwana road, in the absence of a search certificate from Uganda Registration Services Bureau(URSB), in which the

25 Applicant ought to have established the following; whether the said Company is registered in Uganda, if so, who are the Directors, address and location, before coming to a conclusion that they failed to trace it.

Nonetheless, it is the Applicant's evidence that they are willing to pay the customs duties on the said goods, and have attached a document marked Annexture

30 "H", which reads:

"**From**: services @ura.go.ug

**Sent**: Monday, August 21, 2023 6:00pm

**To**: [Ruth. Munyao@bollore.com](mailto:Ruth. Munyao@bollore.com)

**Subject**: [H23081403336]

35 **Importance:** High

Dear East African Community & Shipping Co. Ltd,

5 In reference to your support request with ticket number H23081403336, submitted on 14-08-2023 16:03 with the subject seeking no objection to return shipment back to origin. We request that you provide a response to issues raised below to aid our analysis so that we devise an appropriate solution.

Please note that the Court order has to be issued by a Ugandan Court since the 10 cargo was initially meant for Ugandan Consignee.

Client Service Representative Uganda Revenue Authority Developing Uganda Together.

15 For further assistance, please call us on 0800217000/0800117000(toll free) or o417444602/3 (not toll free) or reach us on Email: services@ura.go.ug... "

It's trite law that where certain facts are sworn to in an affidavit, the burden to deny them is on the other party and if he does not, they are presumed to have 20 been accepted. *(See Samwiri Massa Vs Rose Achen [1978] H. C. B 297)*, cited by Counsel for the Applicant.

From the reading of the above document marked Annexture "H", and in the absence of any contrary evidence by the Respondent in reply, this Court finds that the Respondent is agreeable to release the suit goods except for a Court 25 order to re-export the said goods.

It is also the Respondent's evidence that if this Honorable Court is inclined to grant the prayers being sought, the Applicant should be ordered to take out an indemnity to the Respondent in the event that any third –party claims arise over the suit goods.

30 In the given circumstances, I find that this is a proper case, in which to invoke the Court's inherent powers as provided under section 98 of the Civil Procedure Act, Cap 71, to make orders as may be necessary for the ends of justice for the parties herein.

It's settled law that where the Court is required to exercise discretionary powers, 35 the discretion is not subject to any definite rules, but should be exercised in a judicial and reasonable manner, and upon proper material. *(See Yahaya Kariisa Vs Attorney General and Another, SCCA No. 7 of 1994[1997] H. C. B 29*; *Famous Cycle Agencies Ltd & 4 ors Vs Mansukhal Ramji Karia & Others, SCCA No. 16 of*

# 5 *1994,* cited with approval in *Betuco (U) Ltd Vs Barclays Bank of Uganda Ltd & 3 Others, 2018 UGSC 39*.

Accordingly, I find that there is merit in this application.

Consequently, this application is allowed, and Court makes orders that:

- 1. The Applicant is directed to run an advertisement of the suit goods in the 10 Newspaper for a period of 14 days. - 2. The Respondent is directed to assess customs duty on the suit goods for payment by the Applicant. - 3. The Respondent is directed to approve the re-exportation of the suit goods after the procedure in (1), and payment in (2) above. - 15 4. The Respondent shall be indemnified by the Applicant in case of any third party claims in the suit goods. - 5. Each party shall bear own costs of this application.

Dated, and delivered electronically this 6th day of June, 2024.