We are delighted to announce recent victories before the Tax Appeals Tribunal, where we successfully represented our client in three customs disputes against the Commissioner of Customs and Border Control (Kenya Revenue Authority).
The three suits were filed after the Commissioner reclassified our client’s imported products, under a disputed Harmonized System tariff code.
A preliminary issue that was raised by the Commissioner was that the suits were time barred but we were able to demonstrate that the suits had been filed within the prescribed statutory timelines.
The main issue before the Tribunal was whether the products were properly classifiable as fertilizers under Chapter 31 of the East African Customs Union Common External Tariff or as chemical preparations under Chapter 38.
The Commissioner argued that the fertilizer products contained both macronutrients and micronutrients and that the presence of trace elements such as calcium, magnesium, manganese and boron made it a micronutrient preparation excluded from Chapter 31. It was the Commissioner’s position that under the General Interpretative Rules, the product was a chemical preparation classifiable under Harmonized System Code 3824.99.90 as the micronutrients were integral to its composition and purpose.
Our team led by George Muchiri, Partner, successfully argued that the products’ essential character derived from their main components (Nitrogen, Phosphorous, and Potassium) which constitute over 60% of the products’ composition. The trace elements were merely micronutrients that did not change their fundamental nature as fertilizers. We were able to convince the Tribunal that the Commissioner had misapplied the General Interpretative Rules (GIRs) for the Interpretation of the Harmonized System and disregarded established precedent requiring classification based on a product’s essential character.
The Tribunal while ruling in our client’s favour held that the products are fertilizers properly classifiable under Harmonized System Code 3105.20.00 and that the Commissioner erred in reclassifying them under Chapter 38.
These recent victories demonstrate our clients’ continued faith in our handling their tax disputes be it before the Tax Appeals Tribunal, the High Court or the Court of Appeal.
This alert serves the purpose of general guidance and is not intended to constitute specific legal advice. For tailored advice, please contact our Partner at George.Muchiri@CMS-DI.com.
*Contributors
•Sarah Mueni - Associate
