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Setback for importer as sugar fails quality test

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KRA Customs and Border Control acting Commissioner Kenneth Ochola confirmed the development. FILE PHOTO | NMG 

Darasa Investment Ltd has suffered a big blow following reshipment of its 40,000 metric tonnes Brazilian sugar that has been at the centre of a tax dispute with KRA after it failed quality tests.

The vessel carrying the sugar left the port of Mombasa Friday evening, heading back to the country of origin.

The reshipment was done after the sugar allegedly failed quality test conducted by Kenya Bureau of Standards (Kebs).

The firm had reached an out of court settlement with KRA but the release of sugar was still subject to further quality tests by Kebs and other agencies.

KRA Customs and Border Control acting Commissioner Kenneth Ochola confirmed the development, noting that return to point of origin had served to conclude the matter.

Earlier, a Multi-agency team from KRA, KPA (Kenya Ports Authority), Kenya Navy, National Intelligence Service and the Police Undertook a verification on board the Ship to ensure the Cargo had not been tampered with before it was approved for the re-shipment of the cargo.

This is a big setback to Darasa which had in September settled out of court tax dispute with KRA. The firm had agreed to settle the Sh2.5 billion duty and VAT arrears.

The taxman had further indicated that the firm is required to settle a Sh547,846,969 in ninety (90) days if waiver of interest and penalties is not granted as per the East African Community Customs Management Act.

The tax was subject of a long running court battle, and Supreme Court in May stopped KRA from demanding the sh2.5 billion from the sugar importer.

Darasa Investment had contested the tax arguing that it brought it in during the tax waiver period granted last year and accused the taxman of discrimination.

But the entry of the sugar into the country was subject to further clearance from Kebs, Port Health, Agriculture & Food Authority and the Radiation Board.

In February, KRA lost the tax claim at the high court after Justice Eric Ogola ruled that Darasa Investment Ltd was entitled to be cleared duty-free by the taxman and termed the decision by KRA to levy duty on it as unlawful.

The Judge ruled that he was satisfied that the sugar was loaded at a port in Brazil between May 12 and August 31, the period covered by tax waiver period, destined to Mombasa port as per the conditions set in a Gazette Notice.

But the decision was overturned by Appeal court prompting Darasa to move to Supreme Court.

KRA says it resorted to resolving the dispute through Alternative Dispute Resolution (ADR) as provided for in Article 159 (2)(c) of the Constitution, noting that so far the move has raised Sh8.3 Billion from 181 companies.

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