The Commissioner Customs, Uganda Revenue Authority v Testimony Motors Ltd (Civil Appeal 33 of 2014)

Court of Appeal · [2023] UGCA 344 · 2023 Appeal Partly Allowed ✦ AI-generated summary ↓ Download

Jurisdiction

Uganda

Case Type

First civil appeal from High Court Commercial Division judgment

Decision

Appeal partly allowed; aggravated damages award set aside, findings on unlawfulness of valuation method and reassessment upheld

The full judgment

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Treatment recorded in citing cases followed in 1 Derived from citing cases in the Wakilii corpus — not an assertion that this case is good law.

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Holding

The Court of Appeal held that the Commissioner Customs had no power under section 122(1) of the EACCMA and the Fourth Schedule to suspend or exclude the Transaction Value Method, which is the mandatory primary method of customs valuation, and that the Fall Back Method could only be used after sequentially exhausting the prior methods. The suspension was therefore unlawful and the respondent was entitled to reassessment of customs duty on its imported vehicle. However, the appeal partly succeeded on aggravated damages: as the appellant's conduct involved no malice or arrogance, the trial Judge erred in awarding UGX 20,000,000 aggravated damages, which was set aside.

Facts

On 19 April 2010 the Commissioner Customs of the Uganda Revenue Authority issued a directive appraising all second-hand motor vehicles imported into Uganda for customs purposes using alternative valuation methods rather than the Transaction Value Method. On 30 July 2010 the respondent, an importer of used vehicles, imported a used Jaguar from Japan, declaring a transaction value of USD 5,200, on which taxes of UGX 8,008,416 would have been due. The appellant rejected the declared value and applied the Fall Back Method, raising the customs duty to UGX 19,558,879. The respondent sued, contending that suspension of the Transaction Value Method was unlawful and that it was entitled to revaluation and a refund. The High Court declared the directive unlawful, ordered reassessment with a possible refund plus interest, and awarded aggravated damages of UGX 20,000,000. The Commissioner appealed.

Issues

Whether the trial Judge erred in holding that the appellant's suspension of the Transaction Value Method of customs valuation for all imported used motor vehicles was unlawful.
Whether the respondent was entitled to reassessment of customs duty and a refund of overpaid duty.
Whether the trial Judge erred in awarding the respondent aggravated damages of UGX 20,000,000.

Orders

The appeal fails on Grounds No. 1, 2, 3 and 4.
The award of aggravated damages of UGX 20,000,000 is set aside.
Costs of 4/5 (80%) thereof, in this court and the court below, are awarded to the respondent.

Key headnotes

Customs Valuation — Transaction Value Method — Mandatory Primary Method under EACCMA s.122(1)

Under section 122(1) of the EACCMA and the Fourth Schedule, the value of imported goods liable to ad valorem duty must be determined primarily by the Transaction Value Method, and the Commissioner Customs has no power to suspend or exclude that method.

Customs Valuation — Sequential Application of Alternative Methods — Fall Back Method

Where the Transaction Value Method cannot establish the customs value, the alternative valuation methods in the Fourth Schedule must be applied sequentially, and the Fall Back Method may be used only after paragraphs 2 to 7 have been exhausted.

Powers of Commissioner Customs — Ultra Vires Directive

A directive by the Commissioner Customs to value imported goods by an unspecified alternative method, in disregard of the statutory primary method, is ultra vires the powers conferred by the EACCMA and unlawful.

Aggravated Damages — Requirement of Malice or Arrogance

Aggravated damages are compensatory but enhanced by aggravating conduct such as malice or arrogance on the part of the defendant; absent such conduct, an award of aggravated damages cannot be sustained.

Appellate Interference with Damages — Wrong Principle

An appellate court will not interfere with a trial court's award of damages unless the trial court acted upon a wrong principle of law or the amount is so high or low as to be an entirely erroneous estimate.

Legislation cited (12)

East African Community Customs Management Act 2004 s.5(2)
East African Community Customs Management Act 2004 s.3
East African Community Customs Management Act 2004 s.19(1)
East African Community Customs Management Act 2004 s.122(1)
East African Community Customs Management Act 2004 s.122(6)
East African Community Customs Management Act 2004 s.144(2)
East African Community Customs Management Act 2004 s.211
East African Community Customs Management Act 2004 s.253
East African Community Customs Management Act 2004 Fourth Schedule Part II paragraphs 2-8
Judicature Act s.33
Judicature (Court of Appeal Rules) Directions rule 30(1)(a)
Treaty for the Establishment of the East African Community Article 49(1)

Cases cited (8)

Republic v the Customs and Excise Department & Others. Misc. Application No. 329 of 2005
Mandela Auto Spares Ltd v. Commissioner Customs. HCT-00-CC-CS-201-2011
Makula International Ltd v His Eminence Cardinal Emmanuel Nsubuga [1982] HCB 11
Uganda Revenue Authority v Wanume David Kitamirike (Civil Appeal No. 43 of 2010)
Robert Coussens v Attorney General (Civil Appeal No. 8 of 1999)
Kifamunte Henry v Uganda (Criminal Appeal No. 10 of 1997)
Bank of Uganda v Betty Tinkamanyire (Civil Appeal No. 12 of 2007)
Basiima Kabonesa v Attorney General & Anor (Civil Appeal No. 16 of 2021)

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