About 40,000 tonnes of sugar imported by Darasa Investment Limited was on Friday shipped back to Brazil after failing to meet Kenya Bureau of Standards (Kebs) specifications
The vessel carrying the consignment, MV Iron Lady, left the Mombasa port at around 3.30pm.
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 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.
KRA Customs and Boarder Control acting commissioner Kenneth Ochola confirmed the that the sugar was sent back to Brazil.
The KRA and the importer had agreed to an out-of-court settlement where the importer was to clear arrears in taxes before the sugar is released.
Darasa Ltd was to clear the Sh2.5 billion tax and VAT arrears.
According to the agreement, Darasa was also required to settle a Sh547.8 million in 90 days if waiver of interest and penalties is 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 had allowed the appeal by KRA and set aside a decision by the High Court which ruled that the sweetener imported by Darasa was entitled to be cleared duty free.
Appellate Judges Alnashir Visram, Wanjiru Karanja and Martha Koome unanimously said the appeal by KRA had merit before setting aside the orders issued by High Court Judge Eric Ogola.
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.
Justice Ogola also ruled that he was satisfied that the vessel that carried the consignment from Brazil could not dock at the port of Mombasa due to its size hence the sugar had to be trans-shipped in Dubai.
Darasa had termed a decision by KRA to levy duty on its sugar consignment as irrational and unreasonable.