The Kenya Revenue Officials (KRA) ordered 40,000 tonnes of sugar imported from Brazil to be shipped back over quality concerns.
The large consignment that was brought into the country by Darasa Limited failed to meet quality specifications laid out by the Kenya Bureau of Standards (KEBS)
A multi-agency team from Kenya Revenue Authority, Kenya Ports Authority, the Kenya Navy, National Intelligence Service, DCI Officers, and the National Police Service undertook a verification test on board the ship to ensure the cargo had not been tampered with before the government ordered for it to be sent back to the country of origin.
The move raised questions because importers are required to submit their products for testing even before being shipped.
The KRA and the importer had agreed to an out-of-court settlement where the importer was to clear Kshs 2.5 billion tax and VAT arrears before the sugar is released.
According to the agreement, Darasa was also required to settle Kshs 547.8 million in 90 days if a waiver of interest and penalties were not granted as per the East African Community Customs Management Act.
The deal brought to an end the prolonged court battle between the tax man and Darasa over the imported Brazilian sugar.
The dispute was pending at the Supreme Court where Darasa was challenging a Court of Appeal decision which had ruled against allowing it to import the sugar duty-free.
The Court of Appeal in Mombasa nullified a decision by the High Court that allowed the company to have the sugar cleared duty-free.
The High Court had ruled that the sugar, imported by Darasa was entitled to be cleared duty-free by the taxman and termed the decision by KRA to levy duty as unlawful.
