Judgment summary
The Tribunal considered an appeal by Farmers Choice Ltd against the Commissioner of Customs & Border Control concerning the reclassification of imported goods and subsequent tax demands.
The Tribunal identified two issues for determination: whether the appeal was valid, and whether the demanded tax was due and payable.
Having found that the appeal was lodged outside the statutory 45-day period prescribed under Section 230 of the EACCMA, the Tribunal held the appeal to be invalid and incompetent, and did not proceed to determine the second issue, which it considered moot.
The appeal was struck out and the Respondent's review decision dated 10th April 2025 was upheld, with each party bearing its own costs.
Background
The Appellant, Farmers Choice Ltd, is a company incorporated in Kenya whose principal activity is the production of fresh meat and meat products, including sausages, ham and Vienna (paragraph 1).
The Appellant imported two consignments on 15th October 2024 under Entry Nos. 24EMKIM401024686 and 24EMKIM401028296, declared under HS Code 2106.90.90 (paragraphs 3, 10).
The Respondent requested destination verification on 17th October 2024 and subsequently reclassified the goods under HS Code 2106.90.20 by way of a Tariff Ruling (paragraphs 4, 10, 81, dated variously as 19th February 2024 in paragraph 4 and 19th February 2025 elsewhere in the judgment).
The Appellant applied for a review of the tariff ruling on 19th March 2025, and the Respondent issued a Review Decision on 10th April 2025 upholding the original classification (paragraphs 5, 11, 82).
The Appellant stated it decided not to appeal the confirmed tariff classification review decision but agreed, in protest, to comply with the reclassification (paragraph 12, 87).
The Respondent subsequently issued two demand letters on 9th May 2025: Ref KRA/C&BC/ICDN/ENF/DEMAND/054/2025 for Kshs 2,371,579.00 and Ref KRA/C&BC/ICDN/ENF/DEMAND/055/2025 for Kshs 1,068,514.00 (paragraphs 17, 83).
The Appellant lodged applications for review of both demands on 5th June 2025 under Section 229 of the EACCMA (paragraphs 18, 53). Demand 054/2025 was withdrawn by the Respondent on 31st July 2025 (paragraphs 22, 53), while demand 055/2025 was maintained, revised, and enforced through further correspondence, meetings, detention of consignments, and execution of a bank guarantee by the Appellant on 7th November 2025 (paragraphs 23, 24, 54-58).
The Respondent issued a further Review Decision on 17th December 2025 revising the demand under Ref 055/2025 to Kshs 1,042,452.00 (paragraphs 25, 57).
The Appellant filed its Notice of Appeal on 16th January 2026 (paragraph 6).
Core dispute
The Appellant contended that the Respondent failed to communicate its review decision on demand 055/2025 within the 30-day period prescribed under Section 229(4) of the EACCMA, so that the review application was deemed allowed by operation of law under Section 229(5), rendering the subsequent revised demand and review decision unlawful.
The Appellant also argued that the Respondent violated the doctrine of legitimate expectation by withdrawing demand 054/2025 while continuing to enforce demand 055/2025 in respect of the same product and review process.
Further grounds included alleged application of an erroneous Railway Development Levy rate of 2% instead of 1.5%, an erroneous import duty rate of 25% instead of 10% under EAC Legal Notice No EAC/154/2024, incorrect VAT computation, and the contention that goods under Tariff No. 2106.90.20 remained listed in the First Schedule of the VAT Act 2013 (as amended) and were therefore not taxable.
The Appellant also alleged bad faith in repeated reclassification of the same goods, unlawful enforcement under Sections 203 and 135 of the EACCMA, and unlawful detention of consignments causing commercial loss.
The Respondent maintained that the substantive tariff classification issue (HS Code 2106.90.20) had already been finally determined by the tariff ruling of 19th February 2025 and the review decision of 10th April 2025, which the Appellant did not appeal, and that the subsequent demand notices were not separately appealable decisions. The Respondent argued that Section 229(5) did not apply, that the withdrawal of demand 054/2025 was properly explained by the different import regime applicable to that entry, and that the demanded taxes were due and correctly computed.
Court findings
The Tribunal framed two issues for determination: whether the appeal was valid, and whether the demanded tax was due and payable (paragraph 79).
The Tribunal noted that Section 230 of the EACCMA requires a person dissatisfied with the Commissioner's decision under Section 229 to lodge an appeal to the Tribunal within forty-five days of being served with the decision (paragraph 84).
The Tribunal found that the Appellant ought to have appealed within the statutory timelines following the Respondent's letter of 10th April 2025, which upheld the tariff ruling of 19th February 2025 (paragraph 86).
The Tribunal observed that the Appellant instead chose to engage the Respondent through correspondence and meetings on the demand notices, without regard to the procedural timelines for appeal, and that although the Appellant asserted it paid in protest, no protest note had been sighted by the Tribunal (paragraphs 88-89).
The Tribunal held that the period between the Respondent's tariff review decision of 10th April 2025 and the Appellant's Notice of Appeal filed on 16th January 2026 was well outside the statutory timelines under Section 230 of the EACCMA, rendering the appeal incompetent (paragraph 89).
Having found the appeal invalid, the Tribunal did not proceed to determine whether the demanded tax was due and payable, treating that issue as moot (paragraphs 90-91).
Outcome
The Tribunal found the appeal to be bereft of merit and made the following orders: the appeal was struck out; the Respondent's review decision dated 10th April 2025 was upheld; and each party was to bear its own costs (paragraphs 92-93).
Major issues / areas of contention
- Whether the appeal was validly and timeously lodged under Section 230 of the EACCMA
- Whether the demanded tax under demand Ref KRA/C&BC/ICDN/ENF/DEMAND/055/2025 was due and payable (not determined, treated as moot)
- Whether the Respondent's failure to communicate a review decision within 30 days under Section 229(4) of the EACCMA meant the review application was deemed allowed under Section 229(5)
- Tariff classification of the imported product PRO FIT 1:50 under HS Code 2106.90.90 versus 2106.90.20
- Whether the Respondent's differing treatment of demand 054/2025 (withdrawn) and demand 055/2025 (maintained) breached the doctrine of legitimate expectation
- Whether the correct import duty rate under EAC Legal Notice No EAC/154/2024 was 10% rather than 25%
- Whether the correct Railway Development Levy rate was 1.5% rather than 2%
- Whether goods under Tariff No. 2106.90.20 remained listed in the First Schedule (exemption list) of the VAT Act 2013 as amended