Master Power Systems Limited v Commissioner Customs and Border Control [2024] KETAT 1017 (KLR)

Master Power Systems Limited v Commissioner Customs and Border Control (Tax Appeal E631 of 2023) [2024] KETAT 1017 (KLR) (12 July 2024) (Judgment)

Neutral citation: [2024] KETAT 1017 (KLR)

Republic of Kenya

In the Tax Appeal Tribunal

Tax Appeal E631 of 2023

RM Mutuma, Chair, M Makau, EN Njeru, B Gitari & AM Diriye, Members

July 12, 2024

Between

Master Power Systems Limited

Appellant

and

Commissioner Customs And Border Control

Respondent

Judgment

Background 1. The Appellant is a limited liability company duly incorporated in Kenya and a registered taxpayer, whose principal business activity is electro-mechanical contractors.

2. The Respondent is a principal officer appointed under and in accordance with Section 13 of the Kenya Revenue Authority Act, the Authority is charged with the responsibility of among others, assessment, collection, accounting, and the general administration of tax revenue on behalf of the Government of Kenya.

3. The Appellant imported an apparatus on 23rd June 2023 specified to be a sandwich type busbar trunking presented with accessories vide entry number 23EMKIM400679715 and declared the said items in 2022 EAC/CET Code 8536. 90. 00. Following verification findings and tariff classification enquiry, the Respondent suggested that the consignment be classified under 2022 EAC/CET Code 8544. 42. 00.

4. The Respondent and the Appellant held a consultative meeting on 10th July 2023 which led to a Tariff Ruling dated 11th July 2023 classifying the imported items under 2022 EAC/CET Code 8544. 49. 00. The Appellant appealed the Respondent’s Tariff Ruling vide a letter dated 13th July 2023 requesting that the imports be classified under HS Code 8536. 90. 00 or 8537 as the correct code. The Respondent considered the Appeal and upheld its tariff classification of the goods under 2022 EAC/CET Code 8544. 49. 00 as guided by GIR 1 & 6 through a letter dated 20th July 2023.

5. The Appellant further Appealed this decision vide letter dated 16th August 2023 urging the Respondent to review its ruling and uphold that HS Code 8536. 90. 00 as the correct code.

6. The Respondent issued its Review Decision vide a letter to the Appellant on 22nd August 2023 upholding the classification of the item in 2022 EAC/CET Code 8544. 49. 00.

7. The Appellant being dissatisfied with the Respondent’s decision, lodged its Notice of Appeal dated and filed on 15th day of September 2023.

The Appeal 8. Vide the Memorandum of Appeal dated 15th September 2023 and filed on 25th September 2023, the Appellant appealed on the following grounds:a.That the Respondent erred in law and fact by falsely invoking the provisions of Heading 85. 44, specifically under sub-head 8544. 49. 00 (other) under the East African Community Common External Tariff 2022 Version (EAC/CET 2022) to reach the erroneous and illegal finding that the said tariff applied to the Appellant’s products, sandwich type busbar trunking with accessories.b.That The Respondent, erred in law and fact in classifying the sandwich type busbar trunking with accessories as falling within the classification prescribed under Heading 85. 44, of the EAC/CET 2022 which provides as follows: - “insulated (including enamelled or anodised) wire, cable (including co-axial cable) and other insulated electric conductors, whether or not fitted with connectors; optical fibre cables, made up individually sheathed fibres, whether or not assembled with electric conductors or fitted with connectors” disregarding the fact that the sandwich type busbar trunking with accessories imported by the Appellant is the Busbar Trunking with Switching/Protecting Devices (1250 Ampere Breaker and 300A and 100A Breaker in Output) and certainly did not fall within any of the categories specified under the said heading.c.The Respondent misdirected himself in law by disregarding the express provisions as to classification and description of the Appellant’s products prescribed under the EAC/CET, 2022, Heading 85. 36, which provides “Electrical apparatus for switching or protecting electrical circuits (for example, switches, relays, fuses, surge suppressors, plugs, sockets, lamp-holders and other connectors, junction boxes), for a voltage not exceeding 1,000 volts; connectors for optical fibres, optical fibre bundles or cables” and specifically, Sub-head Tariff Code 8536. 90. 00 (other apparatus) which the Appellant correctly declared in its Import Declaration Form (DE) and other supporting documents.d.The Respondent fundamentally misapprehended the provision of the Tariffs Classification General Rules of Interpretation (GIR), particularly GIR 1 & 6 which states that the classification is determined principally by the terms of the headings and the relative section or chapter notes and that 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 respectively, in finding a nexus between the sandwich type busbar trunking with accessories and the other conductors classified under sub heading 8544. 49. 00 of EAC/CET, 2022. e.The Respondent erred in both law and fact by failing to apply the relevant provision to the interpretation of the tariff and relying upon an erroneous legal provision, in the circumstances and without basis.f.The Respondent erred in law and fact by failing to fully address his mind to the provisions of EAC/CET, 2022, the Tariffs Classification General Rules of Interpretations (GIR), particularly GIR I & 6, the submissions and supporting documents by the Appellant that the declared Tariff Code 8536. 90. 00 for other electrical connectors tallies with the Appellant’s imported products.g.The Respondent misdirected himself in law by introducing other electrical conductors to the sandwich type busbar trunking with accessories as criteria for considering the tariff classification, when such criteria is secondary to the Tariffs Classification General Rules of Interpretations (GIR), particularly GIR 1 & 6 as the Appellant’s products matches the description other, electrical connectors under subhead 8536. 90. 00 EAC/CET, 2022. h.The Respondent erred in law in failing to appreciate the provisions of the General Interpretation Rules, the Section Notes as well as the Chapter Notes that emphasises on the form of the product rather than on the intention of the product as the basis for classifying goods.i.The Respondent erred in law and fact by failing to consider and/or apply Heading Tariff Code 85. 38 (Parts suitable for use solely or principally with apparatus of heading 85. 35, 85. 36 or 85. 37), and specifically, Sub-head Tariff Code 8538. 90. 00 (other) which the country of origin, India Customs Department correctly declared in its Shipping Bill Summary ahead of classifying the Appellant’s product under Heading Tariff Code 85. 44, electrical conductors.j.The Respondent erred in law and fact by failing to consider and/or apply Heading Tariff Code 74. 07 (Copper bars, rods and profiles) since the Appellant’s product sandwich type busbar trunking with accessories is a Copper Bar for making electrical connections and could fall in this Heading ahead of Heading Tariff Code 85. 44, electrical conductors.k.The Respondent misapplied himself in law and fact by failing to appreciate the form in which the product was imported, copper components material (full round edge), 99. 9% pure ETP grade and that its rated operational and insulation voltage is 1,000 Volt, AC and rather based his tariff classification on its secondary use only.l.The Respondent erred in law by failing to consider his Ruling on a similar item imported under entry no. 23MBAIM401252635 wherein he ruled that copper busbar is classified under Sub-head Tariff Code 8536. 90. 00 (other electrical apparatus).

The Appellant’s Case 9. The Appellant’s case is premised on its;a.Statement of Facts dated 15th September 2023 and filed on the 25th September 2023 together with the documents attached thereto;b.Written submission dated 25th April 2024 and filed on 28th April 2024; and,c.The witness statement of Prakash Modashiya dated and signed on 19th April 2024 and filed with the Tribunal on 25th April 2024. Adopted as evidence in chief by the Tribunal on the 15th May 2024.

10. The Appellant’s case is that it imported sandwich type busbar trunking with accessories under the declared tariff classification H.S. Code Heading 85. 36 and specifically, sub-head Tariff Code 8536. 90. 00 (other apparatus) under the East African Community Common External Tariff 2022 Version (EAC/CET 2022) from C & S Electric Limited (India), import entry number 23EMKIM400679715.

11. According to the Appellant, the said declared tariff classification corresponds with the description of the goods as per the Declaration Form/Single Administrative Document (SAD), the Shipping Bill Summary, Kenya Bureau of Standards (KEBS) Certificate of Conformity issued on 22nd June 2023, packaging lists and invoices thereto.

12. The Appellant stated that it declared that the said product falls within the provision of the Sub-head Tariff Code 8536. 90. 00 (other apparatus) under the East African Community Common External Tariff 2022 Version (EAC/CET 2022), which refers to descriptions of other electrical apparatus. To further support the tariff declaration and the product description, solutions, characteristics and features, the Appellant relied on expert’s manual on the product from Eta-Com, Global Specialist for Power Busbars.

13. The Appellant stated that upon inspection on or about 10th July 2023, the Respondent reclassified the said copper busbars under Heading 85. 44, of the EAC/CET 2022 with heading, “Insulated (including enamelled or anodised) wire, cable (including coaxial cable) and other insulated electric conductors, whether or not fitted with connectors; optical fibre cables, made up individually sheathed fibres, whether or not assembled with electric conductors or fitted with connectors” specifically under sub-head 8544. 49. 00 (other) under the East African Community Common External Tariff 2022 Version (EAC/CET 2022).

14. By a letter dated 11th July 2023, the Appellant averred that the Respondent delivered a Tariff Ruling stating that: “The apparatus is specified to be a sandwich type busbar trunking presented with accessories. It is used as a means for vertically distributing electrical power along multiple storey building using insulated copper busbars. Its key feature is a moulded case circuit breaker (MCCB) which is used to protect an electrical circuit from overload or short circuits. It works by automatically cutting off the power supply when a fault or overcurrent situation arises, thus preventing any damage to the electrical system or circuit.”

15. The Appellant stated that the Respondent’s view is that Heading 85. 44 covers the classification of insulated (including enamelled or anodised) wire, cable (including coaxial cable) and other insulated electric conductors, whether or not fitted with connectors; optical fibre cables, made up of individually sheathed fibres, whether or not assembled with electric conductors or fitted with connectors. The Respondent proceeded to hold that the sandwich type busbar trunking is classified in 2022 EAC/CET Code 8544. 49. 00 as guided by GIR 1 & 6. Therefore, the declared 2022 EAC/CET Code 8536. 90. 00 was at variance with the Tariff Ruling.

16. The Appellant was dissatisfied with the Tariff Ruling therefore it filed an objection vide letter dated the 13th July 2023. Consequently, the Respondent issued its Review Decision through a letter dated 20th July 2023. The Appellant appealed against the Review Decision vide letter dated 16th August 2023 but Respondent upheld the Tariff classification ruling dated 11th July 2023 through the letter dated 22nd August 2023.

17. The Appellant stated that even though it was still aggrieved with the Respondent’s decisions and having its goods still held at the Customs Service Department, it made a request for release of the goods on 19th July 2023 and consequently, in compliance with the law and in good faith offered a bank guarantee in respect to the import duty on entry number 23EMKIM400679715 on 20th July 2023.

18. The Appellant relied on the witness statement of the Appellant’s director one Prakash Modashiya filed on 25th April 2024 wherein the witness stated that no laboratory examination was ever relied upon and/or carried out by the Respondent to establish key product components such its voltage capacity and impedance before reclassifying it. Therefore, the witness stated that the Respondent was quick to reclassify the product as a cable and/or wire under Heading 85. 44 instead on considering its most relatable Heading 85. 36 which provides for electrical apparatus for making connections for voltage not exceeding 1,000 volts.

19. According to the witness, what is of utmost importance is that the sandwich type busbars trunking is enabled and/or built to carry power up to 1000 volts which unequivocally places the product under the Heading 85. 36 and hence the Respondent erred in reclassifying the product under Heading 85. 44.

20. The witness also testified that unlike wires and cables contemplated under Heading 85. 44 which are used to connect electrical power from point A to B the sandwich type busbar trunking is solely used for distribution of electricity to various equipment within factories and high-rise buildings to power various points and/or floors. Further, the witness stated that the sandwich type busbars trunking is not used on its own but rather needs to be complemented with other equipment and/or components for it to properly distribute electrical power. The witness gave an example of plug in boxes/units and fire barriers which are not present in cables and wires.

21. The witness stated that going by the material components of the product: 99. 9% pure ETP grade copper (full round edge) the Respondent erred in reclassifying the product to Heading 85. 44 instead of Heading 74. 07 where copper products including copper bars and busbars are provided for.

22. The Appellant in its written submissions identified two issues for determination, namely:a.Whether the Respondent erred in law and fact in classifying the sandwich type busbar trunking under HS Tariff Code 8544. 49. 00; and,b.Whether products herein are classifiable under HS Tariff Code 8536. 90. 00 or under HS Tariff Code 8544. 49. 00.

23. With regards to rules of determining a proper classification, the Appellant relied on the Judgment of the Canadian Court in Puratos Canada Inc. vs. Canada (Customs and Revenue), 2004 Can LII 57069 (CA CITT) where it was stated that;“the General Rules for the Interpretation of the Harmonized System referred to in section 10 of the Customs Tariff originated in the International Convention on the Harmonized Commodity Description and Coding System. They are structured in cascading form so that, if the classification of the goods cannot be determined in accordance with Rule 1, then regard must be had to Rule 2, and so on. Rule 1 reads 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.The above legislation requires the Tribunal to follow several steps before arriving at the proper classification of goods on an appeal: first, to examine the schedule to see if the goods fit prima facie within the language of a tariff heading; second, to see if there is any thing in the chapter or section notes that precludes the goods from classification in the heading; and third, to examine the Classification Opinions and the Explanatory Notes to confirm classification of the goods in the heading.”

24. The Appellant further cited the case of Kenya Breweries Limited vs. Commissioner of Customs and Boarder Control Appeal No. 282 of 2020 where it was observed as follows:“The Tribunal having considered arguments by both parties and various materials placed before it, is of the view that the General Interpretative Rule I (GIR 1) is the foremost rule of classification. For legal purposes classification is determined by the terms of the headings, section or Chapter Notes where relevant, and if necessary and allowable, the other GIRS.”

Appellant’s Prayers 25. Consequently, the Appellant prayed for the Tribunal to find that:a.The whole of the Tariff Classification Appeals Decision of the Respondent delivered on 22nd August 2023, be set aside;b.The sandwich type busbar trunking with accessories import entry No. 23EMKIM400679715 be classified under Tariff Code 8536. 90. 00; and,c.The Costs of this Appeal be provided for.

The Respondent’s Case 26. The Respondent’s case is premised on its;a.Statement of Facts dated and filed on 27th October 2023; and,b.Written submissions dated and filed on 30th May 2024.

27. The Respondent asserted that contrary to the Appellant’s contention that the Respondent misdirected itself in law and fact by classifying the sandwich type busbar trunking with accessories under Heading 85. 44, the Respondent averred that it rightfully classified the goods pursuant to the Common External Tariff and the General Interpretative Rules.

28. The Respondent’s case is that the classification of goods in the East Africa Community is done pursuant to the Harmonized Commodity Description and Coding system (also known as the Common External Tariff hereinafter “CET”). It asserted that the classification under the Harmonized System (HS) Nomenclature is done in line with the General Interpretative Rules (GIRs) and the Explanatory Notes (EN) to the HS.

29. According to the Respondent, the General Interpretation Rules (GIR) as cited in EACCMA, governs the classification of goods. It argued that according to GIR 1, classification shall be determined according to the terms of the headings and any relative section or chapter notes and, provided the headings or notes do not require otherwise. Further, the Respondent relied on GIR 6 which provides that;“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.”

30. In response to ground three of the Memorandum of Appeal, the Respondent stated that upon valuation and verification, it noted that the apparatus is specified to be a sandwich type busbar trunking with accessories used as a means for vertically distributing electric power along a multiple story building using insulated copper busbars. Further, the Respondent stated that it noticed that the item’s key feature is a moulded case circuit breaker (MCCB) which is a safety device used to protect an electrical circuit from overload or short circuits which works by automatically cutting off the power supply when a fault or overcurrent situation arises, thus preventing any damage to the electrical system or circuit.

31. According to the Respondent, Heading 85. 44 covers the classification of insulated (including enamelled or anodised) wire, cable (including co-axial cable) and other insulated electric conductors, whether or not fitted with connectors; optical fibre cables, made up of individually sheathed fibres, whether or not assembled with electric conductors or fitted with connectors.

32. The Respondent relied on the Explanatory Notes to Heading 85. 44 which state that;“The goods of this heading are made up of the following elements:a.A conductor - this may be single strand or multiple, and may be wholly of one metal or of different metals.b.One or more coverings of insulating material - the aim of these coverings is to prevent leakage of electric current from the conductor, and to protect it against damage. The insulating materials mostly used are rubber, paper, plastics, asbestos, mica, micanite, glass fibre yarns, textile yarns (whether or not waxed or impregnated), varnish, enamel, pitch, oil, etc.c.In certain cases a metal sheath (e.g., lead, brass, aluminium or steel); this serves as a protective covering for the insulation, as a channel for an insulation of gas or oil, or as a supplementary conductor in certain co-axial cables.”

33. Based on the properties of the conductors of Heading 85. 44 as stated in the above notes, the Respondent stated that the subject sandwich type busbar trunking is consistent with all three elements as follows: first, it has a busbar that serves as the conductor, second it has a multilayer class B/F insulation of polyester, and third, it has a protective steel housing.

34. The Respondent averred that the HS Rules of General Interpretation 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, 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.”

35. According to the Respondent, the first rule gives provision for the most specific description and that the most specific description can only be found from the scientific analysis of the product or the physical analysis of the product. It is the Respondent’s case that upon valuation and verification of the product, the Respondent reclassified the items under HS Code 8544. 49. 00 which heading fits the description of the sandwich type busbar trunking. It asserted further that the basis of re-classification, and applicable Explanatory Notes were clearly enumerated in the Respondent’s demand notice as well as in its Review Decision.

36. The Respondent further stated that under Section 236 of the EACCMA, the Respondent has the powers in relation to the inspection and audit of importation or exportation operations of a taxpayer to:a.Verify the accuracy of the entry of goods or documents through examination of books, records, computer stored information, business systems and all relevant custom documents, commercial documents and other data related to the goods;b.Question any person involved directly or indirectly in the business, or any person in the possession of documents and data relevant to the goods or entry;c.Inspect the premises of the owner of the goods or any other place of the person directly or indirectly involved in the operations; andd.Examine the goods where it is possible for the goods to be produced.

37. Contrary to the Appellant’s assertion that the Respondent erred in law by failing to consider its ruling on a similar item imported under entry 23MBAIM401252635 wherein the copper busbar was classified under Tariff Code 8536. 90. 00 as other electrical apparatus, the Respondent averred that upon analysis of the item, it found that the copper busbars are a different item as compared to the sandwich type busbar trunking and they lack the elements stated in Explanatory Notes to Heading 85. 44. The Respondent maintained that it classified the item according to the specific description as required by the provisions of the General Interpretation Rules.

38. The Respondent further stated that the Appellant has failed to discharge its burden in proving that the Respondent’s decision was erroneous as required by the provisions of Section 30 of the Tax Appeals Tribunal Act and Section 56 of the Tax Procedures Act. Therefore, the Respondent asserted that it was justified and proper in law in reclassifying the Appellant’s items and prayed that this Honourable Tribunal finds that the same and uphold the same.

39. The Respondent in its written submissions identified one issue for determination, namely:Whether the Respondent erred in classifying the Appellant’s imports under HS Code 8544. 49. 00.

40. The Respondent emphasized that the sandwich type busbar falls under Heading 85. 44. Further, the Respondent submitted that in arriving at its decision, it analysed the law and the imports in detail.

41. Whereas the Appellant relied upon Hs Code Heading 8536. 90, the Respondent submitted that the main function of the item in dispute is a conductor that offers a means for vertically distributing electrical power along a multiple storey building using insulated copper busbars and not for making connections to or in electrical circuits, thus Heading 8536. 90 is an incorrect Heading.

42. The Respondent also submitted that the item in issue is a complete device with a defined function and cannot neither be considered as part of Heading 85. 36 as suggested by the Appellant nor Heading 74. 07 copper bars or rods as it is an entirely different item compared to the sandwich type busbar trunking.

43. The Respondent submitted that the Copper Busbar is a metallic strip or bar, typically housed inside switchgear, panel boards and busway enclosures for local high current power distribution; it is used to connect high voltage equipment at electrical switchyards, and low voltage equipment in battery banks; it is generally uninsulated and have sufficient stiffness to be supported in air by insulated pillars. According to the Respondent, these features allow sufficient cooling of the conductors and the ability to tap in at various points without creating a new joint. The Respondent thus concluded that it is oblivious of the Appellant to claim that the Respondent erroneously classified the imports under HS Code 8544. 49. 90 while all the laws have been observed.

44. The Respondent thus submitted that from the First Rule of Interpretation which is of the most specific description can only be found from the physical analysis of the product.

45. The Respondent relied on the case of Republic v. Commissioner General & Another Ex-Parte Awal Ltd [2008] eKLR wherein the court held that;‘‘In the end I must conclude that looking at the material placed before me and the submissions tendered by learned counsels, the Respondent had the statutory duty to impose duty according to the tariff classification provided by law under the Customs and Excise Act and under the Harmonised Commodity Description and Coding System provided by the World Custom Organization explanatory notes in which Kenya is a signatory.”

Respondent’s prayers 46. The Respondent prayed to this Honourable Tribunal to find that:a.The Appeal herein lacks merit and be dismissed with costs; and,b.The Tariff Classification Decision dated 22nd August 2023 be upheld.

Issues for Determination 47. The Tribunal having considered the Memorandum of Appeal, the parties’ Statements of Facts and submissions, puts forth the following issue for determination:Whether the Respondent erred in reclassifying the goods in issue under 2022 EAC/CET Code 8544. 49. 00 instead of HS Code 8536. 90. 00.

Analysis and Findings 48. The Tribunal wishes to analyse the issue as hereunder.

49. The 2022 EAC/CET Code 85. 36. provides as follows:‘‘Electrical apparatus for switching or protecting electrical circuits, or for making connections to or in electrical circuits (for example, switches, relays, fuses, surge suppressors, plugs, sockets, lamp-holders and other connectors, junction boxes), for a voltage not exceeding 1,000 volts; connectors for optical fibres, optical fibre bundles or cables.’’

50. Firstly, a reading of Hs Code 85. 36, the Tribunal noted that the same relates to the apparatus used for switching or protecting electrical circuits, or for making connections to or in electrical circuits. Such apparatus includes switches, relays, fuses, surge suppressors, plugs, sockets, lamp-holders and other connectors, junction boxes. Secondly, the voltage of the apparatus which must not exceed 1,000 volts. Thirdly, with regards to connectors for optical fibres, optical fibre bundles or cables, Note 9 of Chapter 85 of 2022 EAC/CET provides that connectors are used to simply mechanically align optical fibres end to end in a digital line system and they perform no other function, such as the amplification, regeneration or modification of a signal.

51. Pursuant to Section 107 of the Evidence Act, it then follows that the Appellant has evidentiary burden to prove that the imported goods meets the above characteristics.

52. Rule 1 of the General Interpretation Rules for the Classification of Goods (GRI 1), provides that classification shall be determined according to the terms of the headings and any relative Section or Chapter Notes. Consequently, the Appellant has a burden of proof and has to prove that the imported goods falls within HS 85. 36 and not any other.

53. GIR provides for step by step rules that are to be applied in determining how to classify items. In this regard GIR 4 provides that;‘‘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.’’

54. Therefore, it was upon the Appellant to establish a nexus between the imported goods in issue to the proper HS Code.

55. The Appellant relied on HS Code 8536. 90. 00 and submitted that,‘‘the product falls under subheading 8536. 90. 00 – other since it is certainly not a fuse, automatic circuit breaker, an apparatus for protecting electrical circuits, it is not a switch, a lamp holder or a connector for optical fibres. However, It is a Connector for Electrical Circuits Which Carries Voltage Not Exceeding 1,000 Volts specifically used for distribution of electricity in factories and high-rise buildings from one point to the other with the support of other equipment such as plug in boxes.’’

56. The Tribunal observed that the above assertion by the Appellant was in direct conflict with ground two of its Memorandum of Appeal.

57. GIR 4 requires goods to be classified under the heading appropriate to the goods to which they are most akin. This is similar to ejusdem generis rule of interpretation under which, where there are general words following particular and specific words, the general words following particular and specific words must be confined to things of the same kind as those specified, unless there is a clear manifestation of a contrary purpose. Then it follows that if the goods that the Appellant imported are not expressly provided for under HS Code 85. 36, the goods described as ‘other’ under subheading 8536. 90. 00 must be akin to those described under Hs Code 85. 36.

58. Applying the Ejusdem generis rule of interpretation means that the goods described as ‘other’ under subheading Code 8536. 90. 00 have to be the same or aksin to switches, relays, fuses, surge suppressors, plugs, sockets, lamp-holders and other connectors, junction boxes used for switching or protecting electrical circuits, or for making connections to or in electrical circuits and must be for a voltage not exceeding 1,000 volts. For this reason, the Tribunal is of the view that the goods that the Appellant imported do not fall under Hs Code 85. 36 as reasoned below.

59. Whereas the Appellant submitted that it imported goods specifically used for distribution of electricity and declared the same under Hs Code 85. 36, The Tribunal is of the view that the apparatus under Hs Code 85. 36 are not for distribution of electricity. The Apparatus under Hs Code 85. 36 are used for switching or protecting electrical circuits, or for making connections to or in electrical circuits.

60. The Appellant filed expert’s manual on the product from Eta-com, Global Specialist for Power Busbars. The manual was marked as ‘MP2’. The Tribunal examined the filed evidence and noted that Eta-Com describes Busbar Trunking System as a system for electrical distribution. The Report states as follows;‘‘Busbar Trunking System for electrical distribution is an alternative to cumbersome conventional cable distribution system.’’

61. Further, the filed reports also indicated that the system has voltage ratings of 1000 volts.

62. The Tribunal is of the view that the mere fact that the system has voltage ratings of 1000 volts does not imply that the goods can be classified under Hs Code 85. 36.

63. To solidify the position that the Apparatus under HS Code 85. 36 are for switching or protecting electrical circuits and not for distribution of electricity, it is necessary to consider the provisions of HS Code 85. 37 which provides as follows:‘‘Boards, panels, consoles, desks, cabinets and other bases, equipped with two or more apparatus of heading 85. 35 or 85. 36, for electric control or the distribution of electricity, including those incorporating instruments or apparatus of Chapter 90, and numerical control apparatus, other than switching apparatus of heading 85. 17. ”

64. Therefore, for a tax payer to succeed under HS Code 85. 37, the tax payer would have to demonstrate that the imported item is equipped with two or more apparatus of Heading 85. 35 or 85. 36.

65. Whereas. the Appellant relied on HS Code 85. 37, the Appellant did not plead that the goods that it imported are equipped with two or more apparatus of Heading 85. 35 or 85. 36. It is not sufficient to plead that goods can also be classified under HS Code 85. 37 without proper particulars and substantiation of such averments.

66. The Appellant’s assertion that HS Code 85. 37 is also applicable is tantamount to admitting that HS Code 85. 36 is incorrect. If the Appellant’s goods are closely related to description under HS Code 85. 37, the Appellant should have proceeded under that Code.

67. Based on the foregoing, the Tribunal is of the view that the Appellant declared its goods under the incorrect tariff.

68. On the other hand, the Respondent reclassified the goods from HS Code 8536. 90. 00 to Code 8544. 49. 00. The Appellant refuted this HS code on grounds that the electrical apparatus in issue a bar and not a cable or wire as contemplated under HS code 85. 44. HS Code 85. 44 provides as follows:‘‘Insulated (including enamelled or anodised) wire, cable (including co-axial cable) and other insulated electric conductors, whether or not fitted with connectors; optical fibre cables, made up of individually sheathed fibres, whether or not assembled with electric conductors or fitted with connectors.’’

69. The Tribunal is of the view that Appellant discontent on HS Code 85. 44 is challenged by first, HS Code 85. 44 contains a provision on other insulated electric conductors. Secondly, the code deals with insulated electric material whether or not the item is fitted with connectors. Thirdly, the Appellant’s expert’s manual on the product from Eta-com and Global Specialist for Power Busbars, indicates that the product is a conductor material with copper and that it is insulated. And lastly, according to the Appellant’s Single Administrative Document (SAD), the Appellant declared that it imported copper sandwich type busbar with accessories, while the invoices indicates that the product in issue is for electric transmission and power distribution. Based on these facts, the Tribunal is of the view that HS Code 85. 44 is not out of the equation and is akin to what the Appellant’s expert documents state.

70. GIR 3 recognises that an item can fall under different HS Codes. Considering that the Appellant declared its goods under HS Code 8536, the Appellant is bound by the same. Whereas the Appellant sought to rely HS Code 8537, this could be an afterthought as it had declared its goods under a different heading. Even if HS Code 8537 is applicable, the Appellant did not demonstrate what apparatus under HS Codes 8535 or 8536 equips its imported consignment.

71. Under the circumstances, the Tribunal is of the view that the Appellant failed to demonstrate that the tax decision should not have been made or should have been made differently as provided for under Section 30 of the Tax Tribunal Act. For these reasons, the Tribunal is inclined to interfere with the Respondent’s decision.

72. Before penning off, it is important to note that, whereas, the Appellant in its Memorandum of Appeal alleged that the Respondent erred in law by failing to consider its Ruling on a similar item imported under entry no. 23MBAIM401252635 wherein it ruled that copper busbar is classified under Sub-head Tariff Code 8536. 90. 00 (other electrical apparatus), the Appellant did not present the said ruling as part of its evidence for the Tribunal’s perusal and consideration.

73. Consequently, the Tribunal finds that the Respondent did not err in reclassifying the goods in issue under 2022 EAC/CET Code 8544. 49. 00 instead of HS Code 8536. 90. 00. The Appellant’s Appeal therefore fails.

Final Determination 74. The upshot to the foregoing is that the Tribunal finds and holds that the Appeal is unmerited and consequently makes the following orders:a.The Appeal be and is hereby dismissed;b.That the Respondents Review Decision reclassifying the Appellant’s imported goods under HS Code 8544. 49. 00 instead of HS Code 8536. 90. 00 be and is hereby upheld; and,c.Each party to bear its own cost.

75. It is so ordered.

DATED AND DELIVERED AT NAIROBI THIS 12TH DAY OF JULY 2024ROBERT M. MUTUMA - CHAIRPERSONMUTISO MAKAU - MEMBERELISHA N. NJERU - MEMBERBERNADETTE M. GITARI - MEMBERABDULLAHI DIRIYE -M MEMBER