1.The Appellant is a private limited liability Company incorporated in Kenya. Its main form of business is the importation and sale of printing papers.
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 Respondent conducted a desk review of imports under tariff 4802.56.00 for the period 2nd August 2018 to 8th February 2022 which concluded that there was a short levy of taxes as a result of the application of a duty rate of 10% instead of 25%.
4.The Respondent issued a demand notice dated 8th February 2022 to the Appellant for liability of Kshs. 185,517,310.25 being Import duty and VAT.
5.The Appellant responded vide a letter dated 16th February 2022 through its Advocates and applied for a review. The Respondent issued its review decision dated 15th March 2022.
6.Dissatisfied with the decision, the Appellant filed the instant Appeal on 14th April 2022.
7.The Appeal is premised on the grounds in the Memorandum of Appeal dated 13th April 2022 and filed on 14th April 2022 as follows:-a.There is no law that imposed a duty rate of 25% on paper and paperboard products in the period between 2nd August 2018 and 27th January 2022 in view of the fact that:i.The East African Community Council of Ministers has never approved nor formally passed any law imposing a duty rate of 25% on paper and paperboard products imported under HS Code 4802.56.00 since 20th June 2014.ii.No Gazette Notice has ever been published by the East African Community imposing a rate of 25% on paper and paperboard products imported under H.S. Code 4802.56.00 since 20th June 2014.iii.The mandate of the Respondent under Section 5 of the Kenya Revenue Authority Act is confined to SOLELY administering and enforcing tax legislations set out in the First Schedule to the said Kenya Revenue Authority Act, and not any other law which is not set out therein.b.Even if it were to be said that a law exists which imposed a duty rate of 25% on paper and paperboard products imported under H.S. Code 4802.56.00 (which is denied), and even if it were to be said that the Respondent is lawfully entitled to administer and enforce such law (which is denied); it would still be illegal and unconstitutional for the Respondent to make and enforce compliance with the impugned decision or to issue the impugned demand notice on the following grounds:i.It is the Respondent (and not the Appellant’s nor their clearing agents) who actually applied the duty rate of 10% on all paper and paperboard products imported into the country under H.S. Code 4802.56.00 between 2nd August 2018 and 27th January 2022 by feeding into their Tradex System (otherwise known as Simba System) the duty rate of 10% as the Mandatory duty rate that all importers of paper and paperboard products under H.S Code 4802.56.00 had to pay before they could get their goods cleared, as the system was configured by the Respondent to automatically “pick” the duty rate of 10% once the H.S. Code 4802.56.00 is keyed in. Consequently, the Respondent cannot found a cause of action against the Appellant’s from their own actions.ii.It is the Respondent (and NOT the Appellant nor their clearing agents) who instructed their ICT officers to approve online form C.17B customs entries that had indicated 10% as the mandatory duty rate for paper and paperboard products imported under H.S. Code 4802.50.00. Consequently, the Respondent cannot found a cause of action against the Appellants from their own actions.iii.It is the Respondent (and NOT the Appellant nor their clearing agents) who instructed their Customs and valuation officers tasked with the responsibility of verifying and approving the correctness of Import Duty charged and paid with respect to paper and paperboard products imported under H.S. Code 4802.56.00 to insist on payment of duty at a rate of 10% before such goods could be allowed to leave the port of entry.iv.The impugned decision as well as the impugned demand notice violates the Appellant’s right to fair administrative action, right to property, the right to access justice, and the right to protection of the law.v.The Appellant had a legitimate expectation that the Respondent would not labour to put in place such expensive and tamper-proof infrastructural, technological, administrative, surveillance and monitoring systems as were necessary for purposes of inducing, encouraging, and coercing the Appellants into paying customs duty at the mandatory rate of 10% for all paper and paperboard products imported under H.S Code 4802.56 only to subsequently change their mind and punish the Appellants for having paid duty at the rate of 10% and not 25% (which the Appellants could not have done even if they wanted at the time because the Simba System would not permit them to do so).vi.It is unconstitutional, illegal, unfair, irrational, capricious, in bad faith, and abuse of office for the Respondent to encourage, induce, and coerce the Appellants into paying duty at the rate of 10% for goods which the Respondent knew- or ought to have known - were meant to be sold out to third parties, only for them to subsequently demand that the Appellants pay duty at 25% long after the goods have been sold and used up by the third-party purchasers at which point in time the Appellants cannot recover the uplifted duty from the third party purchasers.vii.The Respondent is institutionally bound by and cannot resile from its previous interpretation of the effect of the purported deletion of paragraph 2 of Legal Notice No. EAC/69/2018, which interpretation informed its decision to configure the Simba System to “pick” Import Duty for paper and paperboard products imported under H.S. Code 4802.56.00. at the rate of 10%.viii.The Appellant’s liability to tax cannot be made wholly dependent on the personal idiosyncrasies of the individual occupants of the office of the Commissioner of Customs and Border Control as the Respondent seems to opine. Consequently, the fact that the Respondent holds different views with regard to the effect of the purported deletion of paragraph 2 of Legal Notice No. EAC/69/2018 from a previous holder of the same office should have no effect whatsoever on the Appellant’s tax liabilities.ix.Section 135 of the EACCMA was intended to deal only with situations where the tax paid is less than what the Respondent, honestly, sincerely, and for good reasons, believed to be due and payable at the time, and NOT- as is the case herein - where the tax paid is what the Respondent honestly and sincerely and for good reasons believed to be payable at the time, save for the fact that a different occupant of the same office subsequently hold the view that the previous occupant of the same office should have collected more tax than he did.x.The Respondent has been guilty of inordinate delay in carrying out the Post Clearance Audit.xi.The Respondent’s decision to conduct a post-clearance audit and to issue the impugned Notice was actuated by malice, bad faith and improper motive.xii.By initiating a post-clearance audit as aforesaid and issuing the impugned demand notice, the Respondent acted unreasonably and did not take into account proper considerations.xiii.The Respondent having issued tax compliance certificates to the appellant is estopped from changing their position and now averring against the Appellants that they have outstanding taxes.
The Appellant’s Case
8.The Appellant’s case was premised on its Statement of Facts dated 13th April 2022 and filed on 14th April 2022 where it reiterated verbatim the grounds in the Memorandum of Appeal and presented the summary of Facts as follows:
9.By a gazette Notice No. EAC/21/2014 dated 20th June 2014, the Council reduced the tariff rate for paper and paperboard products imported under HS Code 4802.56.00 from 25% to 10%.
10.On 30th June 2017, the Council, vide Legal Notice No. EAC/85/2017 reviewed and modified the East African Community Common External Tariff (EAC CET) to model it along the lines of the 2017 version of the Harmonized Commodity Description and Coding System version 2012 of the World Customs Organization. It averred that the purpose of that review was to merely harmonize the commodity description and coding system of the EAC CET with that of the 2012 version of the World Customs Union CET, and not to review any tariff. This was later developed into the 2017 version.
11.In line with Legal Notice No. EAC/85/2017 the Secretariat developed and published the 2017 version of the Harmonized Commodity Description and Coding System which was modeled after the 2012 version of the World Customs Union CET in which the Secretariat mistakenly indicated the tariff rate for paper and paperboard products at 25% without any approval and publication in the EAC gazette by the Council.
12.Following the publication of the 2017 version of the EAC CET and upon noticing the purported erroneous change in the tariff rate for HS Code 4802.56.00, the Respondent consulted the EAC Secretariat for clarification on whether the tariff rate for H.S. Code 4802.56.00 had been increased from 10% to 25% and it was clarified that the Council had not increased the duty rate stating that the 25% appearing next to the impugned H.S. Code occurred mistakenly during the transposition process of trying to comply with the 2012 version of the WCO CET.
13.The EAC Secretariat erroneously tried to correct the mistake in the 2017 version of the EAC CET by causing the council to reduce the rate from 25% to 10% vide Legal Notice No. EAC/CET/69/2018 dated 30th June 2018.
14.The Council then realised that Legal Notice No. EAC/CET/69/2018 was mistakenly published as it purported to reduce the tariff code that was never formally increased, the Council published Legal Notice No. EAC/CET/112/2018 deleting paragraph 2 of the previous Legal Notice No EAC/CET/69/2018 thereby the Legal Notice No. 112/2018 did not have any impact on the tariff rate which had never been formally reviewed.
15.Being influenced by the foregoing events, the Respondent configured its Simba System to automatically detect and issue the goods imported under H.S Code 4802.56.00 and the duty rate as well as the total tax payable.
16.In these circumstances, it would be dishonest and in bad faith for the Respondent to allege that the rate of 10% was not the correct rate for H.S code 4802.56.00 which it applied on its Simba System by itself.
17.On 27th January 2022, the Respondent through a Memo to its Customs Officers by one John Gathatwa instructed customs officers to conduct Post Clearance Audits on all goods cleared under HS Code 4802.56.00 between 2nd August 2018 and 27th January 2022. That the Respondent claimed that it had discovered that Legal Notice No. EAC/112/2018 deleted Paragraph 2 of Legal Notice No. EAC/69/2018 with the effect of imposing the duty rate of 25% for H.S Code 4802.56.00 and that clearing agents were applying the rate of 10% instead of 25%; which claim was dishonest and in bad faith as the Respondent knew that the agents were applying the 10% rate yet it instructed its officers to update the customs system to pick Import duty at 25%.
18.The official position of the Respondent at the time of the Memo was that the tariff rate was 10% because since 20th June 2014 when it was set at 10% and the consequent deletion of Paragraph 2 of Legal Notice No. EAC/69/2018 had no effect on the duty rate for the H.S Code 4802.56.00.
19.Following the said Memo, the Respondent’s 0fficers calculated duty rates for all consignment of goods that were cleared under H.S Code 4802.56.00 between 2nd August 2018 and 8th February 2022, and proceeded to demand what it felt was the tax shortfall together with penalties and interests.
20.The demand notice was served on the Appellant for Kshs. 185,517,310.25 which was objected to with a review decision issued by the Respondent on 15th March 2022 rejecting the Application for Review.
The Appellant’s prayers.
21.The Appellant consequently prayed that the Tribunal:-a.Allows this Appeal;b.Annuls the impugned decision as well as the impugned demand notices; andc.Awards the costs of this Appeal to the Appellant.
The Respondent’s Case
22.The Respondent’s case is premised on its Statement of Facts dated 12th May 2022 and filed on 13th May 2022.
23.It stated that in raising the tax demand dated 8th February 2022, it was well within its mandate of enforcing revenue statutes to which the EACCMA is one of the said statutes.
24.It reiterated that the post-clearance audit that was carried out was sanctioned by Sections 235 and 236 of the EACCMA and its action of carrying out the Post Clearance Audit only raised demand on the Appellant based on a rate in force for the period between 2nd August 2018 and 8th February 2022 to the date of the demand in accordance with Section 5 of the Kenya Revenue Authority Act and Section 120 of the EACCMA.
25.On the issue of the mandatory rate of 10% and applied rate of 25%, the Respondent contended as follows:-a.The law adjusting the Import duty rate from 10% to 25% was operational at the time the Appellant was importing its products as the East African Community Secretariat had published the gazette notices on their website adjusting the excise duty rate from 10% to 25% on paper and paper-related products.b.The notices were available to the public; these notices usually highlight changes effected by the Council of Ministers to the EACCMA 2004 and the EAC CET.c.The EAC Gazettes usually indicate the date the legal notices come into effect hence the Appellant’s claim that there was no law that imposed a rate of 25% on paper and paperboard is not correct and the Respondent’s mandate of calling for short-levied duties is constitutional.d.The Respondent’s Simba System platform is administrative in nature and issues arising therein are subject to the provisions of the law in existence meaning any configuration of the system cannot be made contrary to the law.e.Post-clearance audit is provided for in law and is parallel to the provisions and procedures leading to the payment of the duty and the Respondent is empowered to act under Sections 235 and 236 of the EACCMA to ensure effective clearance of goods from the point of entry making the purpose of the audits to be verification of the accuracy and authenticity of the declarations.f.The post-clearance audit was conducted within the statutory timelines and did not infringe on any of the Appellant’s rights. There is no legitimate expectation arising from the Appellant’s payment of duty at the incorrect rate.g.The Appellant’s reliance on the Respondent’s internal communications gotten through dubious means is illegal.h.Tax Compliance Certificates are issued based on the information provided by the Appellant and have a caveat that should new information about the taxpayer’s liability arise, the same can be withdrawn. A Tax Compliance Certificate does not absolve a taxpayer from a post-clearance audit which results in outstanding tax liabilities.
26.The Respondent averred that although the Customs System had not reflected the correct rate as per the provisions of the Gazette Notice No. EAC/112/2018 dated 2nd August 2018 resulting in short levied taxes of Kshs. 22,210,577.00, the published legal notice had adjusted the duty rate of items imported under tariff 4802.56.00 from 10% to 25%. It added that the change in the law preceded the change in the Simba System and at all times both parties are to be guided by the provisions of the law.
27.It opposed the Appellant’s reliance on the Respondent’s Internal Memo dated 27th January 2022 and email dated 23rd February 2018 to advance its case because:a.it is illegal and should be expunged from the record;b.it has been obtained using undisclosed, dubious means;c.The correspondence is protected under the Access to Information Act whose sanctity should be protected;d.the email is not of consequence to this case since it is a discussion happening in February 2018 and does not reflect the other legal notices of August 2018;e.The correspondence must be contextualised with a look at earlier and subsequent correspondences details that are not of consequence in the instant case.
The Respondent’s prayers
28.The Respondent prayed that the Tribunal:-a.Dismisses the Appeal;b.Awards the Respondent the cost of the Appeal.
The Parties SubmissionsOn whether KRA can administer or enforce non-existent revenue law
29.The Appellant relied on the following provisions of the law and their contents:a.Section 110 (1) of the EACCMA: Liability to duty shall be paid on goods at the rate and the circumstances specified in the Protocol.b.Article 12(3) of the Protocol for the Establishment of the EAC:- “The Council may review the common external tariff structure and approve measures designed to remedy any adverse effects which any of the Partner States may experience by reason of the implementation of this part of the Protocol or, in exceptional circumstances, to safeguard Community interests.”c.Chapter 5 of the EAC treaty Protocol duty rates[Article 14(5) of the EAC Treaty:- “The Council shall cause all regulations and directives made or given by it under this Treaty to be published in the Gazette, and such regulations or directives shall come into force on the date of publication unless otherwise provided therein.”
30.The Appellant submitted that a directive under the treaty must be gazetted first and then published. It contended that the EAC Council of Ministers fixed the duty rates of paper and paperboard products at 10% through Legal Notice No. EAC/21/2014 which was gazetted and published on 20th June 2014 and no other directive has been issued by the EAC Council of Ministers to increase the duty rate for paper and paperboard products from 10%.
31.It argued that the directive under Legal Notice No. EAC/85/2017 was only to harmonize the EAC CET that had the classification systems of the 2012 version of the World Customs Organization and not to change or review any duty rate on any product which states:
32.It quoted Article 71 of the EAC treaty to submit that the EAC Secretariat does not have the power to review any Common External Tariff and therefore the document published by the EAC Secretariat purporting to rate the duty of paper and paperboard products at 25% was erroneous and had no legal effect.
33.It relied on the following authorities:a.Whartman’s Law Lexicon, Universal Law Publishing Co. Pvt Ltd, 15th Edition’s definition of Publish.b.Regulation 14(3)(d) of the Treaty for the Establishment of the EAC:-c.Article 16 of the Treaty for the Establishment of the EAC:
34.It submitted that the Kenya Revenue Authority acted ultra vires and in contravention of Section 5(2)(a) of the Kenya Revenue Authority Act which only permits the Respondent to administer and enforce provisions of written laws and not administer and enforce non-existent laws.On whether KRA can keep changing its position on a matter and then punish taxpayers for every changed position
35.The Appellant submitted that the Respondent’s action of adapting one interpretation of a law one moment and resiling the same another moment with the resultant effect of imposing new taxes on taxpayers as punishment is legally impossible. It added that doing so goes against the principle of precedence which also applies to administrative bodies and will be tantamount to collective irrationality.
36.It cited the definition of collective irrationality as per the Article published by the Australians, Hon. Justice Stephen Gageler and Brenden Lim; Collective irrationality and the doctrine of precedence, Melbourne Law Review Vol 38: 525 at pages 534, 528, and 544 where it was defined as
37.It further relied on the opinion of Ray Jay Davis, the Doctrine of Precedent as Applied to Administrative Decisions, West Virginia College of Law Volume 59 issue 2 at pages 125-126
38.It submitted that the publication used by the Respondent emanates from the EAC Council of Ministers which capped the rate at 10% prompting the Respondent to configure its system to adapt the rate in 2014 thus the Respondent cannot depart from it as doing so would amount to collective irrationality and actions that are ultra vires.On whether KRA can punish the taxpayers for faithfully obeying its directions as per the Simba System
39.The Appellant argued that the Respondent is estopped from alleging that the duty rate should have been 25% instead of 10% after configuring its digital revenue collection infrastructure to collect duty for paper products making it impossible for the taxpayer to pay duty at any other rate even if it wanted to.
40.It submitted that the Simba System is an automated tax collection and import clearance system which ascertains the applicable rate of duty law. This is what informs the tax payable by the Appellant therefore if the system reflects the rate of 10%, it is only fair for the Appellant to pay the tax thereon which it did. It added that there was no rational explanation for why the Respondent did not reflect the change on the Simba System thus they cannot purport to push a taxpayer for being compliant with the terms in the system.
41.It relied on the case of Kenya Revenue Authority v. Export Trading Company Limited (2020) where the court cited the case of R v. Institute of Certified Public Accountants ex parte Vipivhandra Bhatt T/A Bhatt & Company Nairobi HCMA No. 285 of 2006 where the court stated that:-
42.To buttress its submission that the Respondent cannot impose a punitive rate on the Appellant, it cited the case of Krish Commodities Ltd. v Kenya Revenue Authority (2018) eKLR where the court held:On whether KRA can lawfully punish taxpayers for the acts and/or omissions of their own officers
43.The Appellant submitted that the allegations that the taxpayer made a wrong declaration is an admission that four officers of the Respondent who, by law, independently confirmed and certified that the duty rate indicated on the declaration was the correct rate in law and whose certifications were accepted by the taxpayer as correct misled the taxpayer into paying a wrong duty.
44.It relied on the case of Krish Commodities Limited v Kenya Revenue Authority (Supra) where it was held:
45.It also relied on the case of Kenya Revenue Authority v. Export Trading Company Limited (2020) where the court cited the reasoning of Odunga J in the case of Republic v Kenya Revenue Authority ex parte Cooper K - Branis Limited (2016) who reasoned thus:On whether any decision taken by KRA under Sections 135, 235, 236, and 249 of EACCMA can lawfully be impugned for violating the Appellant’s right to legitimate expectation.
46.The Appellant argued that its right to fair administrative action under Article 47 of the Constitution was violated by the Respondent’s demand for duty at the rate of 25% long after the Appellant was lured and coerced into paying a 10% rate and the goods had been sold to third parties who cannot be asked to pay additional duty. It added that the Respondent’s mandate to conduct a post-clearance audit and demand short levies taxed under the EACCMA can be challenged and invalidated for violation of the right to fair administrative action.
47.It relied on the case of Export Trading Company v. Kenya Revenue Authority (2018) eKLR where the court found:
48.It quoted Paragraph 33 of the Export Trading Company case (supra) where the principle of legitimate expectation was elaborated upon in the case of Keroche Industries Limited vs. Kenya Revenue Authority & 5 Others Nairobi  eKLR where the Court held that:
49.The Appellant argued that just because the Respondent has the mandate in the law to conduct a Post Clearance Audit does not mean that it is lawful and proper to conduct the same within 4 years where the taxpayer cannot recover the additional taxes since the subject goods have already been sold and consumed by third parties.
50.It relied on the Export Trading 2020 (supra) case where it was held:
51.It quoted the case of Republic v. Kenya Revenue Authority Ex Parte Universal Corporation Ltd (2016) eKLR where it was discussed as follows:
52.It further quoted the case of Republic v. Kenya Revenue Authority Ex Parte Universal Corporation Ltd  eKLR which was an appeal by KRA against the above decision where the Court of Appeal, in upholding the High Court’s decision held that:-On whether there is a rational explanation for KRA’s failure to collect taxes at 25%a.The Appellant submitted that the Respondent had no authority to collect taxes as they claim they should have and the decision is irrational and made in bad faith. It relied on the case of Fleur Investments Limited v. Commissioner of Domestic Taxes and Another (2018) eKLR where the court observed as thus:On Whether the email annexed by the Appellant in its Statement of Facts is admissible
53.The Appellant quoted Section 79 of the Evidence Act to submit that the email by the Respondent is admissible as it is a public document. It maintained that the Respondent is an official body established under the KRA Act and email was circulated to its Senior Customs officers from the Post Clearance Audit Manager with the same being shared by public officials.
54.It quoted Section 82 of the Evidence Act to contend that an email falls within the ambit of a proceeding of a corporate body and the same being printed and shared/published with clearing agents should be relied on as prima facie evidence and admitted by the Honourable Tribunal for consideration.On whether the Respondent applied the correct duty rate in assessing the Appellant
55.The Respondent submitted that the Appellant failed to note that the rate indicated for imports under H.S. Code 4802.56.00 as of July 2017 was 25%. The rate was effected through Legal Notice No EAC/85/2017 of 30th June 2017 and although Item number 2 of the Legal Notice No. EAC/69/2018 published on 30th June 2018 sought to change the rate of imports under H.S. Code 4802.56.00 from 25% to 10%, the change was short lived and was subsequently corrected by deleting item no. 2 of Legal Notice No. EAC/112/2018 of 2nd August 2018.
56.It reiterated that the deletion of item no. 2 of Legal Notice No. EAC/69/2018 means that changes effected through it had ceased to have any legal effect and thus repealed. The 10% rate on imports under H.S. Code 4802.56.00 became invalid and no longer applicable and the rate applicable would therefore be 25% as provided under Legal Notice No. EAC/85/2017 of 30th June 2017.
57.It relied on the case of Jimi Wanjigi & Another v. Inspector General of Police & 3 others  eKLR where the court found that:
58.It reiterated that the rate applicable is 25% because it reverted to the provisions of the applicable law that operated before the change on 30th June 2018 thus the Legal Notice No. EAC/85/2017 is operational in the instant case and the Respondent applied the correct rate in raising and demanding the short levied taxes.On whether the Appellant has a tax shortfall for which the Respondent can demand for payment
59.The Respondent argued that it was within the law in carrying out the Post Clearance Audit and quoted Sections 235 and 236 of the EACCMA together with the finding in the case of Republic v Commissioner General Kenya Revenue Authority Ex - Parte Mount Kenya Bottlers Ltd & Another  eKLR where it was held that:-
60.To buttress its position that the demand for short levied tax and demand notice dated 7th January 2022 was made within the precincts of the law and within the five-year timeline, the Respondent quoted Section 135(1) of the EACCMA
61.It asserted that the tax due must be collected and relies on the decision in the case of Republic v Kenya Revenue Authority Ex - parte Bata Shoe Company Kenya Limited  eKLR where it was held:
62.It further cited the case of Jumbo Steel Mills Limited v Commissioner of Customs & Border Control, Nairobi TAT Appeal No 11 of 2021 where it was held:On whether the Respondent violated the Appellant’s legitimate expectation and right to property, fair administrative action, and access to justice
63.The Respondent submitted that there may have been inadvertent administrative/system lapse that failed to capture the correct rate but system errors cannot and should not oust the express provisions of the law or estop the Respondent from demanding the correct amount of duty payable under Section 135 of EACCMA. It further relied on Section 120(1) of the EACCMA.
64.It contended that the correct rate applicable at the time of importation of the Appellant’s goods was 25% and even though the duty was paid at the rate of 10%, the law foresees such inadvertent administrative/system lapse empowering the Respondent to issue a demand for any short levied taxes thus the Appellant should have paid the tax as a short levy arising from application of duty rate at 10%.
65.It then cited the Jumbo Steel Mills case (supra) where the Tribunal held:
66.It asserted that levying duty on the Appellant’s import at the rate of 10% instead of 25% is contrary to Section 120 of the EACCMA and by seeking to set aside the Respondent’s Review Decision and tax demand, the Appellant is using the Tribunal to enforce an illegality. It added that for the Tribunal to enforce an expectation, it has to be legitimate and the expectation the Appellant seeks to enforce is not legitimate but an illegality.
67.It relied on the case of Republic v Principle Secretary, Ministry of Transport, Housing and Urban Development Ex Parte Soweto Residents Forum CBO  eKLR where the High Court held as follows:
68.It argued that the determination of whether a right has been violated or not is a preserve of the High Court and that the Tax Appeals Tribunal does not have jurisdiction to make a finding of whether a right under the Constitution has been violated or not, denying that it violated the Appellant’s rights. It cited Articles 165(3) and 23 of the Constitution of Kenya, 2010 and relied on Section 29 of the Tax Appeals Tribunal.On whether the Respondent is guilty of inordinate delay in carrying out the Post Clearance Audit
69.The Respondent argued that the Appellant’s averment that the Respondent was guilty of inordinate delay in carrying out the Post Clearance Audit is an acknowledgement that indeed the Respondent was justified in carrying out the post clearance audit with the only contention being the time taken to do so.
70.It submitted that there was no inordinate delay in carrying out the Post Clearance Audit because the law allows the Respondent to carry out a Post Clearance Audit and demand for short levied taxes within five years therefore within the timelines as the oldest audit was three years.On whether the Appellant should be allowed to rely on the alleged Respondent’s internal correspondences to argue appeal herein
71.The Respondent opposed the Appellant’s reliance on an email from the Respondent’s officer dated 23rd February 2018 and an Internal Memo dated 27th January 2022 to argue its Appeal case against the Respondent for being inadmissible and lacking of any probative value as the Appellant has not disclosed the source of the two documents alleging that the same were obtained illegally and should be expunged from the Tribunal’s record.
72.It relied on the Supreme Court ruling in the case of Njonjo Mue & Another v Chairperson of the Independent Electoral and Boundaries Commission and 3 Others  eKLR where the court stated:
73.It submitted that the Appellant has not established whether it followed due process in law in obtaining the two documents as such, the Tribunal should expunge the correspondences from its records and consequently strike out any reference to them in the Appellant’s Appeal document.
74.It concluded that the Appellant has failed to demonstrate that the review decision was incorrect or that the Respondent did not follow the due process of law in carrying out Post Clearance Audit.
Issue For Determination
75.After perusing the pleadings and documentation produced before it, the Tribunal is of the view that the following is the main issue for determination:
Analysis And Findings
76.The Tribunal wishes to analyse the issue as herein-under:
77.In the instant Appeal, the Appellant averred that there has never been any law that changed the duty rate of imports under H.S. Code 4802.56.00 at 25% since 20th June 2014.
78.The Respondent submitted that the 2012 Version of the East African Community CET provides the rate of paper and paperboard products imported under H.S. Code 4802.56.00 at 25% and following subsequent deletions of various Legal Notices that changed the rate from 25% to 10%, they shall revert to this 2012 version which charges the rate of the products at 25%.
79.In determining the correct duty rate for imports under H.S. Codes 4802.56.00, the Tribunal will look at the chronology of events, the actions of the stakeholders involved, and their propriety thereof.
80.The 2012 version of the EAC CET provides as thus:-
81.Item 2 of Legal Notice No. EAC/21/2014 provides “4802.56.00; Paper and Paperboard- Decreased the duty rate from 25% to 10% on the following HS Codes… 4802.56.00…”
82.It is the Tribunal’s finding that this Legal Notice is what prompted the Respondent to change its systems to conform and charge the rate of 10% for paper and paperboard products imported under H.S. Code 4802.56.00. There thus doesn’t seem to be any error or mistake in implementing the changes in its system as the same were in conformity with the Legal Notice.
83.Later, Legal Notice No. EAC/85/2017 was published which stated as follows:- “In Exercise of the powers conferred upon the Council of Ministers by Article 42(2) (1) of the Protocol on the Establishment of the East African Community Customs Union, the Council of Ministers has reviewed and modified the EAC Common External Tariff into a 2017 Version in conformity with the Harmonised Commodity Description and Coding System Version 2012 of the World Customs Organisation. The EAC Common External Tariff 2017 Version comes into force on 1st July 2017. This Notice shall come into force on the 1st day of July 2017.”
84.The Tribunal agrees that the Legal Notice did not purport to change or overturn or amend the provisions of Legal Notice No. EAC/21/2014 with regard to paper and paperboard products imported under H.S. Code 4802.56.00, if indeed that were the intentions of the Council, the same would have been clearly indicated by the Secretariat. This provision, therefore, does not change the provisions of Legal Notice No. EAC/21/2014.
85.The process and manner in which a tariff is supposed to be changed and published by the Council is well coded in the law. Article 12(3) of the Protocol for the Establishment of the EAC states as follows:-
86.Further, Chapter 5 of the East African Community Treaty Protocol duty rates provides under Article 14(5) as follows:-
87.This is not the Procedure followed by the East African Community Council of Ministers when it published the 2017 version of the East African Community Common External Tariff which indicated the duty rate for products imported under H.S Code 4802.56.00 at 25% (matching the 2012 version) instead of 10% in accordance with the duly passed and published Legal Notice no. EAC/21/2014.
88.The Tribunal opines that, it is for this reason that the Council purported to the correct changes by publishing Legal Notice No. EAC/69/2018 which states as thus:-
89.It is however noted that in order to change the tariff code, as aforementioned, specific procedures need to be followed. It is therefore the Tribunal’s position that the said Legal Notice No. EAC/69/2018 erroneously tried to make changes to a tariff code without a sound procedure under the law, therefore, the Tribunal finds that Legal Notice No. EAC/CET/112/2018 which provides as thus:-“2. A Correction is hereby made to the EAC Gazette Vol. AT. 1 – No. 8 dated 30th June 2018, in Legal Notice No. EAC/69/2018 by deleting item No. 2.” merely purported to correct the erroneous mistake of procedure occasioned by publishing Legal Notice No. EAC/69/2018.
90.Having established the foregoing, it therefore follows that the law reverts to the only properly enacted and published Legal Notice which is Legal Notice No. EAC/21/2014 which remains unchanged and unamended to date. Thus, the proper rate to be applied on products falling under the H.S. Code 4802.56.00 is 10% and not 25%.
91.The upshot of the foregoing is that the Appeal is meritorious and the Tribunal consequently makes the following Orders;-i.The Appeal be and is hereby allowed;ii.The Respondent’s review decision dated 15th March, 2022 be and is hereby set aside; andiii.Each party to bear its own costs.
92.It is so ordered.