Judgment summary
The Tribunal heard an appeal by Sanpac Africa Limited against Kenya Revenue Authority's review decision reclassifying imported in-mould printed plastic labels from HS Code 3920.20.90 to HS Code 4911.10.00 (paragraph 5, 7). The Appellant had paid Kshs 1,356,272 under protest to secure release of the goods pending determination of the correct classification (paragraph 15).
The Tribunal found that the Respondent erred in classifying the goods under HS Code 4911.10.00, as that heading is reserved for trade advertising material and commercial catalogues, and the evidence did not show the labels were principally designed for advertising or promotion (paragraph 86). The Tribunal instead held that the correct classification was HS Code 4911.99.90, covering other printed matter not elsewhere specified (paragraph 89).
Having found the reclassification erroneous, the Tribunal also held that the Respondent was not justified in demanding short levied taxes based on the impugned classification (paragraph 93). The appeal was allowed, the review decision set aside, and a refund of Kshs 1,356,272 ordered within 90 days (paragraph 94).
Background
Sanpac Africa Limited is a private limited liability company incorporated in Kenya, described as a regional supplier of packaging solutions, geo-textiles and synthetics, nets and floriculture products (paragraph 1). It imported assorted in-mould printed plastic labels for Dairyland ice cream products and Onja Margarine under Import Entry Number 25EMKIM400877147 (paragraph 3, 11).
The Appellant declared the goods under 2022 EAC/CET HS Code 3920.20.90, but processing was halted pending verification (paragraph 4). Samples were sent to the Valuation and Tariff Section, and on 8 September 2025 the Respondent issued tariff rulings classifying the articles under HS Code 4911.10.00 (paragraph 5).
The Appellant applied for review on 1 October 2025, contending the labels should remain classified under HS Code 3920.20.90 (paragraph 6). The Respondent issued review decisions on 30 October 2025 affirming the reclassification (paragraph 7), prompting the Notice of Appeal dated 28 November 2025 (paragraph 8).
The Appellant had earlier obtained an advance ruling on 9 October 2023 classifying the labels under HS Code 4911.10.00, which was subsequently reviewed on 3 January 2024 in favour of HS Code 3920.20.90, before the Respondent again reclassified the goods under HS Code 4911.10.00 in the 2025 rulings (paragraphs 41 to 47).
Core dispute
The dispute centred on the correct tariff classification of the Appellant's imported in-mould printed plastic labels under the 2022 EAC/CET. The Appellant contended the labels were correctly classified under HS Code 3920.20.90, as plastic sheets, film, foil or strip of polymers of propylene, since the printing was merely incidental to their primary use as packaging labels required by law (paragraphs 26 to 36).
The Respondent maintained that the labels were correctly classified under HS Code 4911.10.00, as trade advertising material, commercial catalogues and the like, because the printed content conveyed information and promoted the branded products, taking them outside Chapter 39 by operation of Note 2 to Section VII of the EAC/CET (paragraphs 57 to 63).
The Appellant also argued, in the alternative, that if not classifiable under Chapter 39, the labels should fall under HS Code 4911.99.90 as other printed matter rather than under 4911.10.00 (paragraph 37). It further alleged breach of legitimate expectation, given the Respondent's earlier 3 January 2024 ruling confirming HS Code 3920.20.90 for the same type of goods (paragraphs 40 to 49). The Appellant also challenged the requirement to pay Kshs 1,356,272 to secure release of the goods pending the classification dispute (paragraph 9(f)).
Court findings
The Tribunal applied General Interpretation Rules 1 and 6 and Note 2 to Section VII of the EAC/CET, which excludes plastics printed with motifs, characters or pictorial representations that are not merely subsidiary to the primary use of the goods from Chapter 39, placing them in Chapter 49 (paragraphs 76 to 83).
The Tribunal found that the printed content on the labels, including product names, ingredients, nutritional information, volume declarations, manufacturer details and pictorial representations, was not merely incidental, and that the printing constituted the very reason the labels were manufactured and used (paragraph 84). It held that the labels derive their commercial identity from the printed information rather than the plastic substrate, and are properly classified within Chapter 49 (paragraph 85).
However, the Tribunal found that the Respondent erred in classifying the goods under HS Code 4911.10.00, as this subheading is reserved for trade advertising material and commercial catalogues, and the evidence did not show the labels were designed principally to advertise or promote products (paragraph 86). The Tribunal held that the information on the labels served product identification and statutory consumer information compliance purposes, referencing Rule 7 of the Weights and Measures (Sale and Labelling of Goods) Rules, Legal Notice 24 of 1999 (paragraphs 87 to 89).
The Tribunal concluded that the more appropriate classification was HS Code 4911.99.90, covering other printed matter not elsewhere specified (paragraph 89). It found that the Respondent erred in reclassifying the goods under HS Code 4911.10.00 (paragraph 90).
On the short levy issue, the Tribunal noted that HS Code 4911.10.00 attracts a rate of 35% while HS Code 4911.99.90 attracts 25%, and held that the demand for short levied taxes founded on the Respondent's classification could not stand, and that the Respondent was not justified in demanding the short levy (paragraphs 91 to 93).
Outcome
The Tribunal allowed the appeal (paragraph 94(a)). The Review Decision dated 30th October 2025 was set aside (paragraph 94(b)). The Respondent was ordered to refund the Appellant Kshs 1,356,272 paid pursuant to the impugned classification, within 90 days of the judgment (paragraph 94(c)). No order was made as to costs (paragraph 94(d)).
Major issues / areas of contention
- Whether the Respondent erred in reclassifying the Appellant's imports under HS Code 4911.10.00
- Whether the Respondent was justified in demanding short levied taxes