Brief Facts:
This ruling was in respect of an Application challenging the classification of imported valves to be used by a hydraulic turbine under the HSC code and the proper calculation of the tax due. The Applicant classified valves under subheading 8410.12, attracting 0% import duty, instead of subheading 8481.80, attracting 10% import duty.
The main task of the Tribunal in this matter was to determine whether the ball valves are disassembled parts of a Pelton Turbine or stand-alone items. If they are parts, they attract 0% under HSC 84.10. If not, they attract the rate of 10% under HSC 84.81
Issues for Determination:
- Whether the Applicant is liable to pay the import duty assessed by the Respondent?
- What remedies are available to the parties?
Tax Appeals Tribunal Decision:
- The Tribunal held that a turbine is a piece of machinery while a valve is a mechanical appliance.
- That the framers of the EAC CET (East African Community Customs External Tariffs Book) made turbines attract a custom rate of 0%. They did not intend the rate to extend to other appliances used in a hydraulic power generating system. While the ball valves are part of a hydraulic power generating system, they are not part of a Pelton turbine.
- The ball valves imported by the Applicant ought to have been classified under HSC 84.81, attracting a duty rate of 10%.
The Applicant was ordered by the Tax Appeals Tribunal to pay UGX 171,059,811 in taxes to the Respondent.
