Judgment summary
Ashut Plastics Limited, a manufacturer of plastic packaging products, appealed against a decision of the Kenya Revenue Authority reclassifying its imported in-mould printed plastic labels from HS Code 3921.90.90 (25% import duty) to HS Code 4911.10.00 (35% import duty).
The Tribunal found that the printed content on the labels was not merely subsidiary to the plastic substrate, so the goods fell outside Chapter 39 by virtue of Note 2 to Section VII of the EAC/CET. However, the Tribunal also found that the labels did not constitute trade advertising material within the meaning of HS Code 4911.10.00.
The Tribunal held that the correct classification was HS Code 4911.99.90 ("Other"), attracting 25% import duty, and allowed the appeal, setting aside the Respondent's Review Decision dated 5th September 2025.
Background
The Appellant, a private limited liability company incorporated in Kenya, manufactures plastic packaging products for various industries (para 1). The Respondent is a principal officer appointed under Section 13 of the Kenya Revenue Authority Act, CAP 469, responsible for assessing, collecting and accounting for tax revenue under Section 5 of the Act (para 2).
On 2nd July 2025 the Appellant imported a consignment of in-mould printed plastic labels for three dairy products, declared under HS Code 3921.90.90 attracting 25% import duty. The Respondent reclassified the goods under HS Code 4911.10.00 attracting 35% import duty (para 3).
The Appellant disputed the reclassification on 3rd July 2025 and sought release of the goods or a sample draw for tariff ruling (para 4). The consignment was released under bank guarantee on 11th July 2025 pending review (para 5). The Respondent upheld the reclassification by letter dated 18th July 2025 (para 6).
The Appellant applied for a tariff ruling on 28th July 2025 and sought a review of classification on 27th August 2025, asserting the correct classification was 3921.90.90 (paras 7-8). The Respondent upheld its classification under HS Code 4911.10.00 in a Review Decision dated 5th September 2025 (para 9). The Appellant filed its Notice of Appeal on 11th September 2025 and its Memorandum of Appeal on 24th September 2025 (paras 10-11).
Core dispute
The dispute centred on whether the Respondent erred in reclassifying the Appellant's imported in-mould printed plastic labels under HS Code 4911.10.00, attracting 35% import duty, as trade advertising material (para 48).
The Appellant argued that the labels were a statutory requirement for product identification and labelling under Rule 7 of the Weights and Measures (Sale and Labelling of Goods) Rules, and were integral to its plastic packaging products, correctly classifiable under HS Code 3921.90.90 as plastic film, or in the alternative under HS Code 4911.99.90 as other printed matter, not trade advertising material (paras 17-24).
The Respondent maintained that the labels were designed for distribution, promotion and marketing of products, and that although affixed to packaging, they served a distinct function separate from the packaging itself, justifying classification under HS Code 4911.10.00 (paras 43-44). The Respondent also contended it had considered all explanations and documentation submitted before reaching its Review Decision (para 45).
Court findings
The Tribunal noted that it was undisputed that the imported products were in-mould printed plastic labels infused using static electricity to become part of the packaging material, with the parties disagreeing only on functionality (para 51).
Applying GIR 1 and GIR 6, together with Note 2 to Section VII of the EAC/CET, the Tribunal found that the printing on the labels, which included product names, trademarks, logos, ingredients, nutritional information, manufacturer details and volume declarations, was not merely subsidiary or incidental to the plastic substrate (paras 59-62).
The Tribunal held that because the printing was not merely subsidiary to the primary use of the goods, the labels were excluded from Chapter 39 and fell for classification under Chapter 49, disagreeing with the Appellant's primary classification under HS Code 3921.90.90 (paras 63, 67).
However, the Tribunal found that the Explanatory Notes to Heading 4911 required that trade advertising material have the principal purpose of promoting, marketing or advertising goods or services intended to influence purchasing decisions. The evidence did not demonstrate that the labels performed such a function, notwithstanding that branding elements incidentally contributed to product recognition (paras 65-66).
The Tribunal concluded that the Respondent erred in reclassifying the Appellant's imports under HS Code 4911.10.00, and that the correct classification was HS Code 4911.99.90, Other printed matter (para 68).
Outcome
The Tribunal found the Appeal merited (para 69) and made the following orders: the Appeal was allowed; the Review Decision dated 5th September 2025 was set aside; and each party was ordered to bear its own costs (para 70).
Major issues / areas of contention
- Whether the Respondent erred in reclassifying the Appellant's imported in-mould printed plastic labels under HS Code 4911.10.00 (para 48).
- Whether the goods were correctly classifiable under Chapter 39 as plastic articles under HS Code 3921.90.90.
- Whether the goods were correctly classifiable under Chapter 49 as trade advertising material under HS Code 4911.10.00 or, alternatively, as other printed matter under HS Code 4911.99.90.
- Whether Note 2 to Section VII of the EAC/CET excluded the labels from Chapter 39 because the printing was not merely subsidiary to the primary use of the goods.
- Whether the Respondent's Review Decision was unreasonable and procedurally inconsistent for allegedly disregarding the Appellant's explanations and documentation.