A tax dispute tribunal has dismissed an appeal filed by a Nakuru-based trader who had sought to recover 15 imported motorcycles impounded by the Kenya Revenue Authority (KRA) over tax evasion.
The trader had declared the imports from Japan as motorcycle parts imported from Japan—meaning that tax on the full units would be avoided.
The motorcycles were impounded by KRA’s investigations and enforcement unit on March 2, 2009, a day after they arrived at the port for clearance.
The goods were cleared on March 1, 2019, and forwarded to its Nakuru premises by its clearing agent, Magot Freight Services Ltd. The following day officers from KRA arrived at the trader’s shop and impounded them.
KRA impounded the consignment upon establishing that the company had imported used motorcycles and misdeclared them as motorcycle parts.
The Notice of Goods Deposited in Customs Warehouse described the goods deposited as 15 disassembled motorcycles of various types from Japan.
KRA stated that the Certificate of Conformity indicated the goods as motorcycle units but in the declaration (entry), the importer classified the motorcycles under a tariff for the classification of engines.
The taxman linked its action to the fact that there was misclassification contrary to Section 203 of the East African Community Customs Management Act, 2004.
The trader however said it was illegal for the KRA team to visit the importer’s shop/warehouse immediately after the goods had been officially verified and released by the Commissioner of Customs & Border Control and conduct an illegal supervision of offloading and leaving the premises under police guard for two weeks.
The Tax Appeals Tribunal dismissed an appeal filed by the importer, El -Amigos Auto Enterprises Limited, disputing impounding of the consignment. The tribunal said the appeal was incompetent because the importer failed to challenge the decision through the internal remedies mechanism as provided for in the law.
“The Tribunal is alive to the principle that where a specific dispute resolution mechanism is prescribed by the Constitution or a statute, parties should first resort to that mechanism before invoking the jurisdiction of the court,” said the tribunal chaired by Mr Eric Wafula.
The tribunal heard that the misclassification was confirmed during the offloading where on verification the Commissioner found fully assembled motorcycles missing only seats and wheels.
As a result, the commissioner rejected the release of the goods because they would operate without being properly registered by the National Transport and Safety Authority (NTSA) therefore hindering the KRA from collecting revenue.
The Commissioner stated that it impounded the goods because the company had imported used motorcycles and misdeclared them as motorcycle parts.
