Judgment summary
Maxam Limited, an importer and distributor of alcoholic beverages, appealed against a decision of the Commissioner for Customs & Border Control uplifting the declared customs value of imported Corona Extra Beer from USD 10.37 per case to USD 14.77 per case.
The Tribunal considered whether the appeal was validly before it and whether the Respondent had erred in rejecting the Transaction Value Method under Section 122(1) of the EACCMA in favour of an alternative method.
The Tribunal found that the Respondent's Review Decision of 19th November 2025 was issued on time and was the operative decision for the appeal. On the substantive issue, the Tribunal held that the Respondent had not discharged its evidentiary burden to show the declared transaction value was unreliable, and allowed the appeal, setting aside the Review Decision.
Background
The Appellant is a limited liability company incorporated in Kenya, engaged in importing and distributing alcoholic beverages (para 1). The Respondent is the principal officer appointed under Section 13 of the Kenya Revenue Authority Act, an agency mandated with collection and administration of tax revenue (para 2).
In or around June 2025, the Appellant imported consignments of Corona Extra Beer under customs entry numbers 25EMKIM700366764 and 25NBOIM405048915, declaring the value based on a transaction value of US$ 10.37 per case. The Respondent rejected this declared value and applied an uplift, assessing the value at US$ 14.77 per case (para 3).
On 4th July 2025, the Appellant filed a Letter of Objection challenging the uplift (para 4). On 26th September 2025, the Respondent issued a decision rejecting the objection and maintaining the uplift (para 5). On 23rd October 2025, the Appellant filed an Application for Review, followed by a letter on 30th October 2025 (para 6).
On 3rd November 2025, the Respondent wrote to the Appellant upholding its decision on the ground that the Application for Review was made out of time. After further correspondence, the Respondent deemed the application timely and issued a fresh decision on 19th November 2025, sustaining its previous decision on the ground that the Appellant had not supported the Transaction Value Method with relevant documents (para 7).
Aggrieved, the Appellant lodged the appeal by Notice of Appeal dated 2nd December 2025 (para 8).
Core dispute
The Tribunal identified two issues for determination: whether the Appeal was valid, and whether the Respondent erred in rejecting the Transaction Value Method (Method 1) and applying an alternative valuation method (para 46).
The Appellant argued that it had declared the transaction value of USD 10.37 per case in accordance with Section 122(1) of the EACCMA and Paragraph 2 of the Fourth Schedule, supported by payment remittance evidence, supplier confirmation, price negotiation correspondence and market evidence of a retail price reduction from Kshs. 430 to Kshs. 320 per bottle.
The Appellant contended that the Respondent's comparison with previous imports by Viva Global Limited was flawed because those imports involved a different SKU size (355ml versus 330ml) and did not reflect the brand owner's revised pricing strategy for the Kenyan market. The Appellant also argued that documents demanded by the Respondent, such as a distributorship agreement, official price list, volume commitment agreement and proof of a lower trade level, were not legal requirements under Section 122 or the Fourth Schedule.
The Respondent maintained that it had properly rejected the declared transaction value under Paragraph 2 of the Fourth Schedule due to reasonable doubt arising from a significant variance with values declared by other importers of identical goods from the same manufacturer, and had correctly applied Method 2 (Transaction Value of Identical Goods) under Paragraph 3 of the Fourth Schedule, relying on a previous importation by Viva Global Limited described as identical Corona Extra Beer 330ml 4x60 WBT from the same manufacturer.
Court findings
On the validity of the appeal, the Tribunal found that the Respondent's letter of 3rd November 2025 deeming the Review Application out of time was an administrative error, later conceded by the Respondent. The Tribunal held that the operative decision was the Review Decision of 19th November 2025, issued after the Respondent received further clarifying information, and that this decision was issued on time under Section 229(4) of the EACCMA (paras 47 to 52).
On the substantive issue, the Tribunal referred to Section 122(1) of the EACCMA and Paragraph 2(1) of the Fourth Schedule, which provide that the customs value shall be the transaction value, being the price actually paid or payable, and noted that alternative methods may only be applied sequentially where the Transaction Value Method fails (paras 54 to 59).
The Tribunal considered the burden of proof under Section 223 of the EACCMA and Section 30 of the Tax Appeals Tribunal Act, and observed that the burden is not stationary but can shift between the taxpayer and the Respondent, particularly once the taxpayer has produced prima facie evidence supporting its position (paras 62 to 66).
The Tribunal found that the Appellant had produced payment evidence, supplier verification, price negotiation evidence and market evidence supporting the declared value of USD 10.37 per case (paras 67 to 69). The Tribunal held that the Respondent's demand for further documents, such as a distributorship agreement, official price list, volume commitment agreement and proof of a lower trade level, did not by itself undermine the reliability of the documents already provided (paras 70 to 76).
The Tribunal concluded that the Respondent had failed to discharge its evidentiary burden to demonstrate, with cogent evidence, that the Appellant's declared transaction value was inaccurate or unreliable, and that the rejection of the Transaction Value Method was unlawful and unsupported (para 77).
Outcome
The Tribunal held that the appeal was meritorious and allowed it. The Review Decision dated 19th November 2025 was set aside. Each party was ordered to bear its own costs (paras 78 to 79).
Tp method highlighted
The judgment concerns customs valuation methods under the Fourth Schedule to the EACCMA, applied sequentially: Method 1 (Transaction Value), Method 2 (Transaction Value of Identical Goods), Method 3 (Transaction Value of Similar Goods), Method 4 (Deductive Value), Method 5 (Computed Value), and Method 6 (Fall-back Value) (para 55).
The Appellant declared its imports using Method 1, the Transaction Value Method, based on the price actually paid or payable of USD 10.37 per case. The Respondent rejected this and applied Method 2, Transaction Value of Identical Goods, arriving at USD 14.77 per case based on a prior importation by Viva Global Limited of Coro Extra 11.3P, 330ml 4x60 WBT from the same manufacturer (paras 37 to 42).
The Tribunal held that the primary and mandatory method of valuation is the transaction value, and that alternative methods can only be applied where the conditions for the preceding method have not been fulfilled or where the transaction value is unreliable, citing Testimony Motors Limited v The Commissioner of Customs and Commissioner of Customs & Border Control v Bidco Oil Refineries Limited (paras 57 to 59).
Major issues / areas of contention
- Whether the appeal was validly before the Tribunal given disputes over the timeliness of the Respondent's Review Decision.
- Whether the Respondent's Review Decision of 19th November 2025 was issued within the timelines prescribed under Section 229(4) of the EACCMA.
- Whether the Respondent was entitled to reject the Appellant's declared transaction value of USD 10.37 per case under Section 122(1) of the EACCMA and Paragraph 2 of the Fourth Schedule.
- Whether the Respondent correctly applied Method 2 (Transaction Value of Identical Goods) by comparing the Appellant's imports with prior imports by Viva Global Limited.
- Whether the Respondent's demand for a distributorship agreement, official price list, volume commitment agreement and proof of a lower trade level was a legal requirement for accepting the transaction value.
- Where the evidentiary burden lay as between the taxpayer and the Respondent once the Appellant produced supporting documentation.