Civil Reference No. 7 of 2004
Jovet Tanzania Limited, an importer and sole agent for 'Bavaria' beverages, imported the goods between September and November 2014 and warehoused them at a bonded warehouse (Modern Warehouse No. 570) pending payment of import duties and taxes. The warehousing period was extended upon application. The appellant later claimed some goods developed flakes and were unfit for sale, although the manufacturer certified the flakes were organic and the goods were safe. The appellant sought inspection for destruction by the Tanzania Food and Drugs Authority and Kinondoni Municipality, copying the Commissioner General (TRA). TRA reminded the appellant to pay duties before disposal. The appellant then applied for remission of customs duties to allow disposal of the allegedly unfit goods; this was refused because the goods had been examined and complied with requirements at importation. The appellant then applied for abandonment of the goods, which was also refused, and a subsequent request for review of that refusal was likewise unsuccessful. The appellant appealed to the Tax Revenue Appeals Board, which held the appellant liable for duties and taxes since the goods were not abandoned (they expired in the warehouse due to the appellant's failure to pay taxes). The Tax Revenue Appeals Tribunal upheld the Board's decision, finding that abandonment under section 56(1) EACCMA required the Commissioner's permission, which had been refused, and that section 57 EACCMA (relied upon by the appellant) did not apply because it concerned re-warehousing and sale of commercially viable goods, not abandonment. The appellant appealed to the Court of Appeal.
(1) Whether the Tax Revenue Appeals Tribunal erred in holding that abandonment of goods without the Commissioner's permission was invalid and unsupported by law. (2) Whether the Tribunal erred in holding that there was no abandonment or remission of duties and taxes by operation of law for goods that overstayed in the bonded warehouse because they were not commercially viable. (3) Whether the Tribunal erred in holding the appellant liable to pay taxes and duties on the goods since they were not abandoned. The overarching issue for the Court's determination was whether the goods in question were legally 'abandoned'.
The appellant, through counsel Mr. Shayo, argued that the Tribunal misapplied sections 56 and 57 of the EACCMA by failing to recognize that the goods had been abandoned either voluntarily or by operation of law. He contended that under section 56, the owner could decide to abandon goods, and the Commissioner's role was merely to permit abandonment subject to conditions, which the appellant did not accept; thus abandonment nonetheless occurred. He further argued that section 57 should be interpreted to mean that once the Commissioner refused to re-warehouse non-commercially viable goods, they became abandoned by operation of law and were subject to public auction under section 57(2)-(4), and that TRA's own correspondence indicating it could auction the goods showed it treated them as abandoned. He submitted it was illogical and illegal to require payment of duties on goods still under customs control that were never released, relying on Commissioner General TRA v. Mamujee Products Limited & Two Others and the Indian Supreme Court decision in Nirmal Kumar Parsan v. Commissioner of Commercial Taxes. He also raised, for the first time, that there was no law empowering the Commissioner to charge duties on goods still under customs control. The respondent, through State Attorney Mr. Maswanyia, argued that abandonment under section 56(1) EACCMA is discretionary and requires the Commissioner's permission, which was refused; that Regulation 143, not section 56, governs applications for abandonment; that section 57 was inapplicable because it deals with commercially viable goods subject to re-warehousing and auction, not with remission applications like the appellant's; and that there is no concept of automatic abandonment by operation of law under the existing statutory scheme. The respondent further argued that duties were payable because the goods complied with requirements at importation and no permission for abandonment was ever granted, and that the appellant's new argument about the lack of legal basis to charge duties on goods under customs control was improperly raised for the first time on appeal, contrary to Rule 113(1) of the Court of Appeal Rules.
The Court of Appeal dismissed the appeal with costs, holding that the goods were not legally abandoned and the appellant remained liable to pay customs duties and taxes. On the first ground, the Court held that under section 56(1) of the EACCMA, section 16(3), and Regulation 143 of the Regulations, abandonment of warehoused goods requires the Commissioner's discretionary permission, which was refused by letter dated 5th January 2016; hence there was no valid abandonment. On the appellant's alternative reliance on section 57, the Court held that this provision concerns re-warehousing of goods not removed within six months and the subsequent public auction procedure for commercially viable goods that are not re-warehoused; it does not create or address abandonment of goods, and in any event contemplates commercially viable goods, whereas the goods here were not commercially viable. There being no application for or grant of the Commissioner's permission, and no statutory basis for abandonment by operation of law or unilateral abandonment by the owner, this ground failed. On the second ground, the Court held that it raised a purely factual matter over which it had no jurisdiction under section 25(2) of the Tax Revenue Appeals Act, which limits appeals to the Court of Appeal to questions of law. Nonetheless, the Court observed that the goods had complied with all customs requirements and were certified fit for consumption at importation, and they expired only because the appellant failed to pay duties/taxes timeously; thus, if abandonment was sought, it appeared motivated by brand preservation rather than genuine unfitness, and proper procedure to obtain the Commissioner's permission was not followed. This ground also failed. On the third ground, since the goods were not abandoned, the appellant remained liable for customs duties and taxes, and this ground was found unmerited. Finally, the Court declined to consider the appellant's new argument (that no law empowers the Commissioner to charge duties on goods still under customs control) because it was not raised or determined by the Board or Tribunal, and section 25(1) of the Tax Revenue Appeals Act confines the Court's jurisdiction to matters first heard and determined by the Tribunal.
This judgment clarifies the statutory scheme under the East African Community Customs Management Act, 2004, distinguishing between the abandonment of warehoused goods under section 56 (which requires the Commissioner's discretionary permission and results in remission of duty) and the re-warehousing/auction mechanism under section 57 (which applies to commercially viable goods not removed within the statutory warehousing period and does not itself constitute or authorize abandonment). It confirms that there is no concept of abandonment 'by operation of law' or unilateral abandonment by the owner absent the Commissioner's permission under the EACCMA and its Regulations (notably Regulation 143). The decision also reinforces procedural limits on appeals from the Tax Revenue Appeals Tribunal to the Court of Appeal, confirming that such appeals lie only on points of law under section 25(2) of the Tax Revenue Appeals Act, and that new issues not raised before the Board or Tribunal cannot be entertained on appeal under section 25(1), consistent with Rule 113(1) of the Court of Appeal Rules. The case is instructive for importers and customs practitioners regarding the procedural requirements for lawfully abandoning warehoused goods to avoid liability for duties and taxes.
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