Big win for BIDCO as court sets aside Ksh1.3b order

In what is viewed as a big win for the industry, the Tax Appeal Tribunal has set aside an order requiring BIDCO Refinery to pay a revenue amounting to KShs.1,377,505,229.00 in respect of crude palm oil, palm stearin and crude palm kernel oil imported by BIDCO.

“The Respondent’s Tax Assessment vide its letter dated 19th April 2012 for the sum of KShs.1, 377,505,229.00 is hereby annulled and set aside,” court ruled.

The company had argued that the demand for extra revenue of KShs. 1,337,505,229.00 is not in accordance with the law and therefore urged the court to set aside the decision by the Tax Commissioner dated 19th of April 2012 in the sum of KShs. 1,377,505,229.00 be set aside and further order that no tax is payable.

In its ruling the Tribunal noted that Respondent adjusted the price actually paid on the basis of sum assured and adjusting the insurance actually paid was not in accordance with the provisions of Section 122 and Fourth Schedule to the East African Customs Management Act, 2004.

The Tribunal further stated that: “That the Respondent erred in rewriting and setting up a new parameter of determination of value and assessment of duty contrary to the mandatory statutory regime that Kenya together with other members of the EAC established under the East African Community Customs Union to be the customs law of the EAC.”

According to papers filed before the tribunal, the dispute between the Refinery Company and the Customs Services Department of the Kenya Revenue Authority arose out of a contract for import of edible oils and related products from Josovina Commodities PTE Singapore wherein customs alleged an undervaluation of duty payable on imports under the said contract.

BIDCO disputed the alleged undervaluation of duty payable: “That the Respondent failed to appreciate that Section 122 (1) of the EACCMA provides that value of imported goods ought to be determined in accordance with the Fourth Schedule to the EACCMA and duty is paid on that value,” they argued.

However, the Respondent submitted that it proceeded to assess the extra taxes based on the law, failed to appreciate that Section 122 (1) of the EACCMA provides that value of imported goods ought to be determined in accordance with the Fourth Schedule to the EACCMA and duty is paid on that value.