Containers with various imported goods at the port of Mombasa.
The battle over 18 containers carrying assorted goods belonging to more than 917 small scale traders imported from China has escalated to the High Court over the decision by the Kenya Revenue Authority (KRA) to detain the consignment.
Real Image Logistics Ltd, which finances, sources and forwards consignment from China on behalf of its customers, has challenged the taxman’s decision to detain the cargo over what it terms historical debts not linked to the goods in question.
“The customs and or tax liability KRA relied upon does not arise from the present 18 containers but from an earlier and separate shipment,” said the firm.
According to the company, the goods are owned by independent small scale traders shipping under consolidation who should not be punished for liabilities to which they are not connected.
“The present consignments belong to different traders who have no connection whatsoever with the earlier shipment,” the company argues.
Court documents show that Real Image Logistics Ltd has filed a suit against the taxman, with North Link Cargo Ltd, Greatmail Logistics Limited and Nuh Mohamud listed as respondents.
CFS Makupa has been listed as an interested party in the suit.
Through its advocate, the firm filed a certificate of urgency seeking immediate court intervention to secure the release of the goods.
“The Plaintiff’s cargo comprised in eighteen containers presently lying within the port and customs custody chain at Mombasa remains under detention by KRA,” states the certificate of urgency.
The company says it finances, sources and forwards goods from China on behalf of its customers and holds a direct commercial, beneficial and possessory interest in the consignments, with the immediate right to demand delivery upon lawful clearance.
It adds that it engaged North Link Cargo Ltd, Greatmail Logistics Limited and Nuh Mohamud to receive, consolidate, ship, insure, clear and facilitate delivery of the goods to Kenya.
“The Plaintiff performed its obligations and expected release of the goods upon payment of lawful charges attributable to the present shipment only,” the court papers state.
'Unentered goods'
However, upon arrival in the country, the firm laments that KRA allegedly detained the containers, classified the cargo as unentered goods and threatened sale or auction based on an alleged customs liability arising from an earlier shipment.
The firm insists that the current consignments is not party to the alleged historical debt and that the continued detention of the shipment is unlawful and oppressive.
“The continued detention is causing daily accrual of storage charges, demurrage and other incidental costs,” the firm states.
The company warns that the taxman’s move exposes it to claims and possible lawsuits from the owners of the goods, while the value of the consignments continues to diminish.
It argues that unless urgent orders are granted, the charges may exceed the value of the goods and render the case meaningless.
“Unless urgent interim orders are granted, the goods may continue wasting in value and the suit itself may be rendered nugatory,” the firm says.
In its application, the company is seeking orders restraining KRA from advertising, auctioning, selling, transferring, disposing of or in any way interfering with the goods in the eighteen containers.
The firm is also seeking a mandatory order compelling the taxman to release the cargo upon payment of any undisputed customs duties, port charges, storage charges and other lawful sums strictly tied to the current consignments.
“The orders sought are necessary to preserve the subject matter of the suit and to compel the release of the goods to the plaintiff for onward transmission to the owners,” it said in court papers.
A client seeking services at KRA headquarters, Times Tower, Nairobi on February 23, 2024.
Alternatively, the firm has proposed the provision of security, bond or undertaking, as the court may direct, to secure the release of the goods, limited strictly to the present consignments.
It has also sought the assistance of the Officer Commanding Station at Port Police Station Makupa to enforce any orders issued by the court.
“The balance of convenience overwhelmingly favours release of the goods upon payment of any undisputed lawful charges tied only to the present consignments,” the firm said.
The application is supported by an affidavit sworn by Philip Njuguna, with the company insisting it has established a strong prima facie case with a high probability of success.
“Unless the orders sought are granted, the plaintiff and the owners of the goods will suffer grave and irreparable harm,” he stated in the affidavit.
The High Court has since issued temporary orders stopping KRA from advertising, offering for sale or auctioning the detained goods pending the hearing and determination of the case.
KRA had not filed any response to the petition by the time of going to press.
The case will be heard on April 8.
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