https://new.kenyalaw.org/akn/ke/judgment/ketat/2026/294

REPUBLIC OF KENYA IN THE TAX APPEALS TRIBUNAL AT NAIROBI TAT APPEAL NO E044 OF 2026 AL-KHAIR FOUNDATION.............................................................. …....……APPELLANT -VS- COMMISSIONER FOR CUSTOMS & BORDER CONTROL.........................RESPONDENT JUDGMENT BACKGROUND 1. The Appellant is a limited liability company incorporated in Kenya. 2. The Respondent is the principal officer appointed under Section 13 of the Kenya Revenue Authority Act. The Kenya Revenue Authority is an agency of the Government of Kenya mandated with the duty of collection and receipting of all tax revenue, and the administration and enforcement of all tax laws set out in parts 1 & 2 of the First Schedule to the Act, including assessing, collecting, and accounting for all tax revenues in accordance with those laws. 3. The Respondent issued the Appellant with a Notice of Demand dated 27th October, 2025, to which the Appellant filed its Application for Review on 4th November, 2025. Judgment TAT No. E044 of 2026 – Al Khair Foundation -vs- Commissioner for Customs & Border Control Page 1 of 19 4. The Respondent then issued its Review Decision on 24 th November, 2025, upholding its demand for additional taxes. Aggrieved, the Appellant lodged this Appeal vide Notice of Appeal dated 31st December, 2025. THE APPEAL 5. In its Memorandum of Appeal dated 13th January, 2026, the Appellant raised the following grounds of appeal: - a. The Respondent erred in law and fact by issuing and upholding a demand for import taxes in respect of consignments that were lawfully exempted from duty and cleared pursuant to an express fiscal exemption directive issued by the Cabinet Secretary, National Treasury and Economic Planning, and implemented by the Respondent itself. b. The Respondent erred in law and fact by misapplying and relying on the decision in Cale Infrastructure Company Ltd -vs- Commissioner of Customs & Border Control & Another, notwithstanding that the said decision concerned a private, project-specific contractual undertaking, and is factually and legally distinguishable from the present case, which concerns a nationwide policy-based fiscal exemption. c. The Respondent erred in law and in fact by failing to appreciate that the exemption applicable to the Appellant’s importations was a binding public law fiscal directive issued under lawful authority and implemented through the Respondent’s own statutory machinery, and not a mere private undertaking capable of leaving liability subsisting. Judgment TAT No. E044 of 2026 – Al Khair Foundation -vs- Commissioner for Customs & Border Control Page 2 of 19 d. The Respondent erred in law and in fact by misapplying Section 133 of the East African Community Customs Management Act, 2004, to circumstances where no duty liability had arisen, and by purporting to invoke that provision to retrospectively impose liability where duty had been lawfully exempted at the time of entry. e. The Respondent erred in law and in fact by failing to appreciate that Section 133 presupposes the existence of a lawful duty obligation and does not create, revive, or authorize the retrospective imposition of tax liability contrary to the legal regime prevailing at the time of importation. f. The Respondent erred in law and in fact by purporting to retrospectively impose taxes on entries that were lawfully entered, assessed, and cleared duty-free, contrary to Section 120(1) of the East African Community Customs Management Act and the principle of non-retroactivity in taxation. g. The Respondent erred in law and in fact by failing to appreciate that no legal duty existed at the time of entry of the Appellant’s goods, the goods having been exempt at the material time, and that no civil debt could therefore arise under Section 130 of the Act. h. The Respondent erred in law and in fact by shifting the burden of inter-governmental fiscal performance onto the Appellant and by requiring the Appellant to “ensure” that the National Treasury honours an exemption. Judgment TAT No. E044 of 2026 – Al Khair Foundation -vs- Commissioner for Customs & Border Control Page 3 of 19 i. The Respondent erred in law and in fact by issuing the impugned demand in breach of the Appellant’s legitimate expectation arising from the Respondent’s own representations, conduct, and consistent practice of clearing the goods duty-free under the exemption regime. j. The Respondent erred in law and in fact by acting inconsistently with the presumption of regularity applicable to administrative acts and by impugning and contracting its own prior lawful administrative approvals and clearances. k. The Respondent erred in law and in fact by acting unreasonably, unfairly, and contrary to Article 47 of the Constitution of Keny and Section 4 of the Fair Administrative Action Act, 2015, by retrospectively reversing a lawful exemption without notice, justification, or statutory authority. l. The Respondent erred in law and in fact by issuing and maintaining a demand that is irrational, ultra vires, procedurally unfair, and unsupported by law or evidence. APPELLANT’S CASE 6. The Appellant’s case is based on its Statement of Facts dated 13th January 2026, in which it averred that the crux of the dispute is the exemption from taxes granted by the Cabinet Secretary, National Treasury and Economic Planning, who has allegedly not honored its exemption. 7. The Appellant further averred that it lawfully imported consignments of dates, fresh or dried, classified under HS Code 0804.10.00, during the Ramadhan period in 2023 and 2024. Each of the entries was duly Judgment TAT No. E044 of 2026 – Al Khair Foundation -vs- Commissioner for Customs & Border Control Page 4 of 19 processed and cleared through the iCMS platform by officers of the Respondent, and the consignments were released duty-free, in full conformity with the government directive authorizing duty-free importation of dates during the Holy month of Ramadhan. 8. The Appellant stated that the exemption was granted under the express authority of the Cabinet Secretary, National Treasury and Economic Planning, vide letter(s) referenced ZZ 40/06/E dated 13th March 2023 and ZZ 40/06/E dated 26th January 2024, addressed to the Commissioner General of the Kenya Revenue Authority. 9. The Appellant further stated that in the said letters, the Cabinet Secretary expressly authorized the duty-free importation and clearance of dates imported during the periods 13th March to 30th April 2023 and 1st March 2024 to 20th April 2024, and directed that all import duties, Value Added Tax (VAT), Import Declaration Fees (IDF), and Railway Development Levy (RDL) in respect thereof be borne by the Government of Kenya, as part of a national policy to support Muslim communities during the Holy Month. 10. The Appellant asserted that, in compliance with this directive, the Respondent issued an internal circular to all Customs Stations and Port Offices authorizing the clearance of dates under HS Code 0804.10.00 on a duty-free basis, provided that importers presented the requisite commercial documentation. The Appellant duly complied with all the requirements, and all declarations were verified, processed, and released by KRA officers, resulting in lawful duty-free clearance of the goods. Judgment TAT No. E044 of 2026 – Al Khair Foundation -vs- Commissioner for Customs & Border Control Page 5 of 19 11. It is the Appellant’s case that, pursuant to the said directive, the Respondent issued an internal circular to all Customs Stations and Port Officers authorizing the clearance of dates under HS Code 0804.10.00 on a duty-free basis, subject to the presentation of the requisite commercial documentation by importers. The Appellant duly complied with all applicable requirements, and all declarations were verified, processed, and released by officers to the Kenya Revenue Authority, resulting in the lawful, duty-free clearance of the subject goods. 12. The Appellant stated that more than two years after the lawful clearance of the consignment under the exemption regime, the Respondent, through its Post Clearance Audit Division, issued a Notice of Demand dated 27th October 2025, demanding payment of alleged unpaid import taxes in the sum of Kshs. 1,478,355,00 in respect of the same transactions. 13. It is the Appellant’s assertion that the basis of the demand is that, although the National Treasury had undertaken to bear the applicable taxes pursuant to the exemption, the exemption had allegedly not been honoured, and that the Appellant therefore remained liable for the taxes under Section 133 of the EACCMA, 2004. The Respondent further relied on the decision in Cale Infrastructure Construction Company Ltd v Commissioner of Customs & Border Control & Another (TAT Appeal No. E234 of 2024) in support of that position. Accordingly, the Demand sought to retrospectively impose taxes on consignments that had previously been entered, assessed, and cleared duty-free under an express government exemption program, without alleging any misrepresentation, concealment, or procedural irregularity on the part of the Appellant. Judgment TAT No. E044 of 2026 – Al Khair Foundation -vs- Commissioner for Customs & Border Control Page 6 of 19 14. On the Respondent’s reliance on the decision in Cale Infrastructure Construction Company Ltd v Commissioner of Customs & Border Control & Another (TAT Appeal No. E234 of 2024), wherein the Tribunal and subsequently the High Court held that an undertaking by the National Treasury to settle taxes on behalf of a taxpayer does not, by itself, extinguish the taxpayer’s primary liability under the EACCMA, 2004, the Appellant posited that it is misconceived. 15. The Appellant stated that the facts, legal framework, and nature of the Treasury’s involvement in Cale Infrastructure are wholly distinct from the present matter. The judgment in Cale Infrastructure turned on a private, project-specific contractual undertaking, whereas the exemption applicable to the Appellant was a formal, nationwide fiscal directive issued by the Cabinet Secretary, National Treasury, and implemented by the Respondent itself. 16. The Appellant stated that in Cale Infrastructure, the High Court upheld the Commissioner’s demand for taxes amounting to approximately Kshs. 5.6 billion on materials used in the Nairobi Expressway Project. Crucially, the court’s reasoning was anchored on the fact that the National Treasury’s “undertaking” to pay those taxes arose from a contractual arrangement between the Government and the project company, not from a policy-based or statutory exemption directive. The Court held that, because the undertaking was part of a private agreement linked to the implementation of a specific infrastructure project, it did not, by itself, extinguish the statutory liability of the importer to pay tax. 17. The Appellant further stated that Justice Mugambi emphasized that the Kenya Revenue Authority was not a party to that undertaking, Judgment TAT No. E044 of 2026 – Al Khair Foundation -vs- Commissioner for Customs & Border Control Page 7 of 19 which existed as an internal arrangement between the National Treasury and the contractor. Accordingly, in the event of Treasury default, KRA could lawfully pursue the taxpayer for recovery, as no statutory exemption had been granted under customs law. 18. The Appellant asserted that the holding cannot be transposed to the present case. The facts and legal context are materially different. In Cale Infrastructure, the tax arrangement was conditional, project- specific, and implemented through a contractual mater list and security bonds for a single infrastructure project. In contrast, the importations by Al-Khair Foundation were conducted pursuant to an official nationwide fiscal policy formally authorized by the Cabinet Secretary, National Treasury, through letter reference ZZ40/06/E, which expressly declared dates imported during the Ramadhan period were duty-free. 19. The Appellant started that the directive was not a private undertaking between two entities. It was a binding executive instrument issued under the Cabinet Secretary’s constitutional and statutory mandate to formulate and implement fiscal policy. Unlike the contractual promise in Cale Infrastructure, the Treasury’s directive in the present case was implemented by the Respondent itself through circulars instructing all customs officers to release qualifying consignments duty-free. The Respondent cannot now repudiate the exemption it executed under the direct ministerial authority. 20. The Appellant argued that in Cale Infrastructure, the High Court’s ration centered on the absence of a statutory exemption and the purely contractual nature of the Treasury’s undertaking. In this case, the position is precisely the opposite: the exemption originated from a Judgment TAT No. E044 of 2026 – Al Khair Foundation -vs- Commissioner for Customs & Border Control Page 8 of 19 lawful exercise of public authority by the Cabinet Secretary and was enforced through the Respondent’s statutory machinery. It therefore carried full legal effect and extinguished the importer’s liability at the time of entry. 21. The Appellant further argued that the court in Cale Infrastructure did not hold that the Treasury undertakings are per se unenforceable. It held that where no statutory or policy-based exemption exists, a contractual undertaking cannot transfer the importer’s liability. Thus, here the exemption was policy-based, nationwide, formally communicated, and uniformly implemented across all customs stations. 22. Thus, the Appellant asserted that to apply Cale Infrastructure in this context would be to collapse the distinction between a private contractual promise and a public law fiscal exemption, and to ignore the constitutional hierarchy between a Cabinet Secretary’s directive and an administrative enforcement act of the Kenya Revenue Authority. 23. On Respondent’s reliance on Section 133(1) of EACCMA, the Appellant stated that it merely codifies the legal consequence of a duty obligation once such an obligation has been lawfully incurred. It presupposes the existence of a valid and enforceable duty liability under the Act. It does not create a new obligation where none existed, nor does it authorize the Commissioner to retrospectively impose liability contrary to the legal regime prevailing at the time of entry. 24. The Appellant posited that in the present case, no obligation was ever incurred by the Appellant. The goods in question were entered, Judgment TAT No. E044 of 2026 – Al Khair Foundation -vs- Commissioner for Customs & Border Control Page 9 of 19 assessed, and cleared pursuant to a valid exemption directive issued by the Cabinet Secretary for the National Treasury and Economic Planning, and implemented by the Respondent itself. The statutory condition precedent to the application of Section 133, namely the existence of duty payable under the Act, was therefore never satisfied. 25. The Appellant contended that Section 133(2) of EACCMA provides that where recovery of duty is rendered impossible or unduly difficult, the Commissioner may recommend remissions or write-off, with approval of the East Africa Legislative Assembly. This provision contemplates circumstances where a lawful duty exists but is impractical or inequitable to recover, not circumstances where the duty was lawfully exempt ab initio. 26. The Appellant further stated that, under Section 120(1) of the EACCMA, 2004, import duty becomes payable only at the rate in force at the time the goods are entered for home consumption. Further, Section 2(2)(a) of the Act provides that goods are deemed to be “entered” once the entry has been accepted, signed, and all duties payable at the time have been duly paid. The legal implication is that the tax status and applicable duty rate are fixed at the time of entry and cannot be retroactively altered. 27. In conclusion, the Appellant stated that the Respondent’s actions, in issuing the impugned demand, constitute a fundamental breach of its legitimate expectation and offend the presumption of regularity applicable to administrative acts. 28. In support of its case, the Appellant sought to rely on various case law, including Chief Land Registrar & 4 others vs Nathan Tirop Koech & 4 others (2018) eKLR; Kibos Distillers Ltd & 4 others vs Judgment TAT No. E044 of 2026 – Al Khair Foundation -vs- Commissioner for Customs & Border Control Page 10 of 19 Benson Ambuti Adega & 3 others (2020) eKLR; Judicial Service Commission vs Mbalu Mutava & another (2015) eKLR; and Keroche Industries Limited vs Kenya Revenue Authority & 5 others (2007) KLR 240. Appellant’s Prayers 29. The Appellant prayed to the Tribunal for the following orders: - a) The Appeal be allowed. b) The Respondent’s Review Decision dated 24th November 2025 and demand of Kshs. 1,478,355.00 be set aside in its entirety. RESPONDENT’S CASE 30. The Respondent filed its Statement of Facts dated 13th February 2026 and Written Submissions dated 25th May 2026 in opposition to the Appeal. 31. The Respondent averred that its assessment is firmly founded on Section 130 and 133 of the EACCMA, which unequivocally impose the primary obligation to pay customs duty on the owner of the imported goods, and empower the Commissioner to recover any duty that has been short-levied or not collected. 32. The Respondent further averred that the issues raised in the appeal are neither novel nor unsettled. They have emphatically been determined not only by this Tribunal, but more authoritatively by the High Court in E234 of 2024 – Cale Infrastructure Construction Co. -vs- Commissioner of Customs & Boarder Control. Thus, according to the Respondent, the Appellant is merely regurgitating issues that have Judgment TAT No. E044 of 2026 – Al Khair Foundation -vs- Commissioner for Customs & Border Control Page 11 of 19 been pronounced by both the Tribunal and the superior court, contrary to the principles of legal certainty and finality. 33. The Respondent stated that it is not disputed that the importation of dates does not fall within the exemptions set out under the Fifth Schedule to the EACCMA, and is therefore, by operation of law, subject to customs duty. 34. The Respondent averred that the National Treasury letter was a promissory note to settle the tax due on behalf of the Appellant after importation of dates. Since the National Treasury did not honour the promissory note, the importer’s primary tax liability is not transferred or nullified in such circumstances. Accordingly, this case and the issues raised fall squarely within the ambit of the decision in E234 of 2024 – Cale Infrastructure Construction Co. -vs- Commissioner of Customs & Boarder Control. 35. The Respondent posited that it matters not that the exemption was granted during the Ramadhan period. This itself does not distinguish this case from Cale Infrastructure decision in any manner in what the Appellant describes as “formal, nationwide fiscal directive.” That alone does amount to a legally operative exemption capable of extinguishing the Appellant’s statutory duty obligation. What is material is that the taxes in question were not exempted by law and that the National Treasury merely made a promissory note to settle the same on behalf of the Appellant, which undertaking/promissory note the National Treasury neither honoured nor did the Appellant adduce any evidence that it followed up with the National Treasury to make good its promise. Judgment TAT No. E044 of 2026 – Al Khair Foundation -vs- Commissioner for Customs & Border Control Page 12 of 19 36. The Respondent contended that the Appellant’s remedy, therefore, lies in a cause of action being brought against the National Treasury, if it so desires. In the absence of such action, the Respondent is empowered to demand the taxes from the Appellant. 37. In its Written Submissions dated 25th May, 2026, the Respondent reiterated the above assertions and relied on the decision in Cale Infrastructure Construction Co. Ltd -vs- Commissioner of Customs & Border Control & Another. Respondent’s Prayers 38. The Respondent prayed to the Tribunal for the following orders: - a) The Appeal be dismissed with costs. b) The Respondent’s Review Decision dated 24th November 2025 be upheld and deemed proper in law. ISSUES FOR DETERMINATION 39. The Tribunal having considered the parties' pleadings, submissions and documents filed before it is of the view that the issue that falls for its determination is whether the Respondent’s Review Decision dated 24th November 2025 is proper and justified. ANALYSIS AND DETERMINATION 40. The instant Appeal is premised on the Respondent’s Review Decision dated 24th November, 2025 which confirmed its demand for Judgment TAT No. E044 of 2026 – Al Khair Foundation -vs- Commissioner for Customs & Border Control Page 13 of 19 duties of Kshs. 1,478,355.00 from the Appellant. The Respondent grounded its decision on Sections 130, 133(1) and 253 of the EACCMA 2004. 41. In its pleadings and objection to the duties, the Appellant submitted that the imported dates were lawfully exempted from taxes by the directive from the National Treasury dated 13th March, 2023 and 26th January, 2024, and the KRA internal memo dated 29 th January 2024, which was allegedly granted after a request by SUPKEM. The letter by SUPKEM dated 25th January 2024 to the Cabinet Secretary, National Treasury is on record. Equally on record are the referenced letters by the Cabinet Secretary dated 26th January 2024 and the Respondent’s Internal Memo dated 29th January 2024 that allegedly exempted importation of dates to be used during the month of Ramadhan from duties. 42. The Appellant further submitted that the impugned correspondences created a legitimate expectation that the duties would be paid by the National Treasury, and therefore the Respondent is estopped from demanding the said duties on the ground that the National Treasury has not made good its promise to pay the duties. 43. The Tribunal notes that the underlying question in this Appeal is whether the letters by the Cabinet Secretary, National Treasury, dated 13th March, 2023 and 26th January, 2024, indeed exempted the Appellant from payment of duties on its impugned importation, and that is the subject of the duties demanded in the Respondent’s Review Decision of 24th November, 2025. Judgment TAT No. E044 of 2026 – Al Khair Foundation -vs- Commissioner for Customs & Border Control Page 14 of 19 44. The law governing importation of goods into the country is the East Africa Community Customs Management Act, 2004 (as revised). Sections 130, 131 and 253 of EACCMA provide as follows regarding the obligations of importers and Respondent: - S. 130 “...where any goods are liable to duty, then such duty shall constitute a civil debt due to a Partner State and be charged on the goods in respect of which the duty is payable; and such duty shall be payable by the owner of the goods and may, without prejudice to any other means of recovery be recovered summarily by legal proceedings brought by the Partner state.” (emphasis added) S. 133(1) “...where any obligation has been incurred, whether by bond or otherwise, for the payment of any duty, then such obligation shall be deemed to be an obligation to pay all duties which are or may become payable or recoverable under the provisions of this Act.” S. 253 “This Act shall take precedence over the Partner States laws with respect to any matter to which its provisions relate.” (emphasis added) 45. Besides, Section 114 of the Act provides as follows regarding exempted goods: - (1)Duty shall not be charged on the goods listed in Part A of the Fifth Schedule to this Act, when imported, or purchased before clearance through the Customs, for use by the person named in that Part in accordance with any condition attached thereto as set out in that Part; Judgment TAT No. E044 of 2026 – Al Khair Foundation -vs- Commissioner for Customs & Border Control Page 15 of 19 (2)Duty shall not be charged on the goods listed in Part B of the Fifth Schedule to this Act when imported in accordance with any condition attached thereto as set out in that Part. (3)The Council may by notice in the Gazette amend the Fifth Schedule. 46. The Tribunal notes, from the governing law above, that the statutory obligation to pay duties rests with the Appellant as the uncontested owner of the impugned consignment. It is equally apparent, as expressly provided for under Section 253 of EACCMA, that the provisions of the EAC statute take precedence over any administrative measures taken at the national level by Partner States. This inevitably extends to administrative decisions by the Cabinet Secretary, including those communicated in the referenced letters. The Cabinet Secretary does not, therefore, have powers to grant exemptions on account of customs duty. 47. The Tribunal further notes that the EACCMA 2004 details a specific list of exempted items in its Fifth Schedule. A perusal of the Fifth Schedule shows that the Appellant, which was the importing entity therein of the impugned consignment, is not listed therein. 48. Be that as it may, the Tribunal is cognisant of the fact that the letter by the Cabinet Secretary itself does not speak to exemption from payment of duties. Instead, the Cabinet Secretary undertook to pay the duties on behalf of the importers of dates during the period outlined therein for the month of Ramadhan. This amounts to a promise, and not a waiver within the meaning of tax statutes. Judgment TAT No. E044 of 2026 – Al Khair Foundation -vs- Commissioner for Customs & Border Control Page 16 of 19 49. With regard to the Import Declaration Fee (IDF) and the Railway Development Levy (RDL), the Tribunal notes that the Miscellaneous Fees and Levies Act, Cap. 469C donates to the Cabinet Secretary for the time being responsible for Finance the power to grant tax exemptions. In particular, Part A and B of the Second Schedule to the said Act provide for goods exempt from the import declaration fee when imported or purchased before clearance through customs, and goods exempt from the railway development levy when imported or purchased before clearance through customs. 50. Specifically, Paragraphs (xxvi) and (x) Part A and B of the Second Schedule to the Miscellaneous Fees and Levies Act Cap. 469C empower the Cabinet Secretary for the time being responsible for Finance to grant exemptions to goods in the public interest. Having perused the letters that the Appellant provided, it is the Tribunal’s view that the Cabinet Secretary lawfully issued tax exemptions in relation to the imported dates. 51. Considering the foregoing, the Respondent had no business assessing import declaration fee and Railway Development Levy on dates that the Appellant imported. 52. The Respondent cited the case of Cale Infrastructure Construction Co. Limited -vs- Commissioner of Customs & Border Control Tax Appeal No. E234 of 2024 to support its case. The Tribunal examined the said case law and noted that the only common factor in the said case law and this appeal is that the taxpayer was granted tax exemptions on imports used to construct the Nairobi express way on condition that the imports must be used on the said project. All other facts were not similar. Judgment TAT No. E044 of 2026 – Al Khair Foundation -vs- Commissioner for Customs & Border Control Page 17 of 19 53. Consequently, the Tribunal finds and holds that the Respondent was justified in confirming assessments in relation to import duty, but erred in confirming the Import Declaration Fee and Railway Development Levy. FINAL DETERMINATION 54. The upshot of the foregoing is that the Tribunal finds and holds that the Appeal is partially meritorious and consequently makes the following orders: - a) The appeal be and is hereby partially allowed; b) The Review Decision dated 24th November 2025 be and is hereby varied as follows: i. Assessments in relation to import duty are hereby upheld; and ii. Assessment in relation to the Import Declaration Fee and the Railway Development Levy are hereby set aside; and c) Each party shall bear its own costs. 55. It is so ordered. DATED and DELIVERED at NAIROBI this ………31st ..……. Day of …… July...…… 2026 Judgment TAT No. E044 of 2026 – Al Khair Foundation -vs- Commissioner for Customs & Border Control Page 18 of 19 ..........................………………………. DR. RODNEY ODHIAMBO OLUOCH CHAIRPERSON .…..….……………………. ..…. ………………………. ABDULLAHI M. DIRIYE DR. ERICK MEMBER MEMBER KOMOLO Judgment TAT No. E044 of 2026 – Al Khair Foundation -vs- Commissioner for Customs & Border Control Page 19 of 19