The Kenya Revenue Authority (KRA) has moved to the Court of Appeal seeking stay of a decision allowing an importer to offload a disputed consignment of 40,000 tonnes of Brazilian brown sugar to a private warehouse.
Darasa Investments Limited was earlier this month allowed by High Court judge Erick Ogola to move the commodity from the taxman's custody as it fought to recover Sh2.5 billion duty from the firm.
Through lawyer Ken Ogeto, the taxman told the Appellate Court Tuesday that JB Maina warehouse does not satisfy the requirement of a bonded warehouse as stipulated by the East Africa Customs Management Act.
Mr Ogeto told judges Alnashir Visram, Martha Koome and Wanjiru Karanja that if a stay order is not granted and the sugar is to be offloaded at the facility, then the appeal against the decision will be an academic exercise.
“If the order (of the High Court) is implemented, the appeal will serve no purpose,” said Mr Ogeto, who was also appearing together with David Ontweke for KRA.
Mr Ogeto urged the court to consider the fact that there is a potential of loss of Sh2.5 billion if the stay order is not granted.
The lawyer said JB Maina warehouse is not bonded and that it has no contractual relations with the taxman, hence should the sugar get stolen or damaged the taxman will be left exposed while the public suffers.
“I urge the court to grant a stay even if it is a conditional stay,” said Mr Ogeto.
Through lawyers Fred Ngatia and Dennis Mosota, Darasa Investments Ltd opposed the application by KRA saying it should be struck off.
Mr Ngatia said the dismissal of KRA’s application by the High Court is not capable of execution and the application for stay is misconceived.
The lawyer, who through a preliminary objection said the court did not have jurisdiction to hear the matter, said the loss of the cargo would be a tragedy to his clients.
The Court of Appeal will deliver its ruling on February 1.
The High Court had dismissed the application by KRA in which it sought to have court orders issued on December 27 last year directing the sugar to be offloaded to a private warehouse JB Maina Warehouse also known Kipevu Container Depot set aside.
Justice Ogola directed the sugar to be offloaded to JB Maina Warehouse as per the court order issued on December 27 in favour of Darasa Investment Ltd.
Mr Mosota had told the court that Port Sheds were not suitable for storage of sugar as it was far.
“The customs Ports Shed are not suitable because the applicant will incur more costs,” said Mr Mosota adding that the company was not interested in taking possession of the sugar until the case is heard and determined.
In its suit, the firm says the decision by KRA through its letter to levy full duty to its sugar was illegal and unfair as the government had exempted imports in provisions of Gazette No 4536 dated May 12 as amended by Gazette Notice No 9802 dated October 4.
Darasa Investment Ltd said the decision by KRA to levy full duty on its sugar consignment was based on irrelevant considerations, considering that it had satisfactorily answered all questions in regard to when the consignment was loaded in Brazil.