Judgment summary
Premier Foods Limited appealed a Review Decision of the Kenya Revenue Authority dated 21st April 2026, which upheld a Notice of Demand for Short Levied Duties dated 25th February 2026 totalling Kshs. 180,880,976.00, comprising import duty of Kshs. 135,210,032.00 and Value Added Tax of Kshs. 45,670,944.00 (paras 8, 10).
The demand related to three consignments of white refined industrial sugar imported between August and December 2022 and declared in the Appellant's name, but gazetted under a Duty Remission Scheme allocation granted to its parent, Premier Food Industries Limited (PFIL), under Gazette Notice No. EAC/324/2022 of 6th July 2022 (paras 4, 5, 31).
The Tribunal found that the consignments did not qualify for remission because the Gazette Notice named PFIL, a legal person distinct from the Appellant, as the approved manufacturer, and the restructuring between the two companies did not transfer that entitlement (paras 48-51, 62).
The Tribunal further held that the Respondent properly invoked Section 135 of the EACCMA in raising the assessment, and that a penalty under Section 209(1) of the EACCMA could not be substituted for the duty lawfully assessed (paras 70, 75).
The Appeal was dismissed and the Review Decision upheld, with each party bearing its own costs (para 76).
Background
The Appellant, Premier Foods Limited, is a Kenyan company processing and manufacturing branded sauces, squashes, syrups, jams, juices and canned products, and is a wholly owned subsidiary of Premier Food Industries Limited (PFIL) (para 1).
By a Business Transfer Agreement dated 31st December 2020, PFIL transferred its food processing and manufacturing business, trademarks, goodwill and equipment to the Appellant, with PFIL remaining the holding company (para 3).
By Gazette Notice No. EAC/324/2022 of 6th July 2022, the East African Community Council of Ministers approved a remission of import duty for 4,000 metric tonnes of white refined sugar for industrial use, HS Code 1701.99.10, allocated to PFIL for manufacture of the specified products (para 4).
Between August and December 2022, three consignments of industrial sugar were imported and declared in the Appellant's name under Customs Entry Numbers 22EMKIM401290484, 22EMKIM401507810 and 22EMKIM401641388, entered for home consumption on 19th August 2022, 19th November 2022 and 18th December 2022 respectively (para 5).
A post clearance audit for the period May 2020 to April 2025 led to preliminary findings dated 7th October 2025 proposing full import duty and VAT of Kshs. 180,880,976.00 on the three consignments (para 6). The Appellant responded on 21st October 2025, and the Respondent issued a Notice of Demand on 25th February 2026 for the same aggregate sum, upheld on review on 21st April 2026 (paras 7, 8, 10).
Core dispute
The dispute centred on whether the three sugar consignments, imported and declared in the Appellant's name, qualified for remission of import duty under Gazette Notice No. EAC/324/2022, which had been issued in the name of PFIL, the Appellant's parent company (paras 44A, 48-50).
The Appellant argued that the restructuring did not alter beneficial ownership, the qualifying manufacturing activity or the use of the sugar, that the mismatch of names arose from an overlap between the East African Community fiscal cycle and its own financial year, and that the non-compliance was a procedural technicality that should be treated as a special circumstance under Section 140 of the EACCMA, with a proportionate response under Article 47 of the Constitution, and that economic substance should prevail over form (paras 14-28).
In the alternative, the Appellant contended that Section 135 of the EACCMA did not apply because no duty liability had arisen, and in the further alternative, that any non-compliance should attract only a penalty under Section 209(1) of the EACCMA rather than full import duty (paras 24, 25).
The Respondent maintained that the remission under Gazette Notice No. EAC/324/2022 was specific to PFIL as the named manufacturer, that the Appellant was a separate legal entity which had failed to secure its own approval, that no legitimate expectation could arise against clear statutory provisions, and that Section 135 was properly invoked to recover the short levied duty (paras 34-37).
Court findings
The Tribunal held that Section 140(3) of the EACCMA and Regulation 6 of the East African Community Customs Management (Duty Remission) Regulations, 2008 fix two conditions for every grant under the Scheme: the identity of the approved manufacturer and the approved quantity, both determined by publication (para 48).
The Gazette Notice named PFIL as the approved manufacturer, and the Appellant's name appeared nowhere within it. Applying the principle in Salomon v Salomon & Co Ltd [1897] AC 22, the Tribunal found that common ownership does not fuse a holding company and its subsidiary into a single legal person, and entitlement to remission must exist in favour of the person entering the goods at the time of entry under Section 120(1) of the EACCMA (paras 50, 51).
The Tribunal rejected the Appellant's timing mismatch argument, finding that all three procurement and entry dates fell within the twelve-month validity of the Gazette Notice under Regulation 6(1), and that the restructuring in December 2020 preceded the gazettement by some eighteen months, giving the Appellant ample opportunity to secure its own name in the Notice (paras 52, 53).
The Tribunal noted that the Appellant later regularised its position under subsequent Legal Notices and was listed in its own name in the Gazette of 27th July 2024, undermining its claim that regularisation was unnecessary (paras 53, 54).
Following Highlands Drinks Limited v Commissioner of Customs & Border Control [2023] KETAT 935 (KLR) and Commissioner of Domestic Taxes v Unga Limited [2021] KEHC 9557 (KLR), the Tribunal held there was no room for a purposive construction where the statutory words were clear, and that the substance-over-form argument was inapposite because the form and substance coincided: the Appellant truly was not the gazetted manufacturer (paras 55, 56, 58).
On Section 135 of the EACCMA, the Tribunal found the Appellant's objection circular, held that duty at the full rate fell due at entry once remission was found inapplicable, and found the demand was issued within the five-year limitation period under Section 135(3), distinguishing Kenya Revenue Authority v Export Trading Company Limited [2022] KESC 31 (KLR) (paras 64-68).
On Section 209(1) of the EACCMA, the Tribunal held that a penalty for an offence could not be substituted for a duty liability properly established under Section 135, and that no offence had been charged against the Appellant (paras 72, 73). The ground relating to Regulation 107(4) of the East African Community Customs Management Regulations, 2010 was treated as abandoned for want of development (para 74).
Outcome
The Tribunal found that the consignments did not qualify for remission of import duty under Gazette Notice No. EAC/324/2022, that the Respondent had properly invoked Section 135 of the EACCMA, and that a penalty under Section 209(1) of the EACCMA was not an available substitute for the duty assessed (paras 62, 70, 75).
The Appeal was dismissed, the Respondent's Review Decision dated 21st April 2026 was upheld, and each party was ordered to bear its own costs (para 76).
Major issues / areas of contention
- Whether the consignments declared under Customs Entry Numbers 22EMKIM401290484, 22EMKIM401507810 and 22EMKIM401641388 qualified for remission of import duty under Gazette Notice No. EAC/324/2022.
- Whether the Respondent properly invoked Section 135 of the East African Community Customs Management Act, 2004 in raising the assessment.
- Whether the appropriate consequence of the non-compliance was a penalty under Section 209(1) of the East African Community Customs Management Act, 2004.