[2024] KETAT 1297 (KLR)

Alliance in Motion Global Limited v Commissioner of Customs and Boarder Control (Tax Appeal 345 of 2023) [2024] KETAT 1297 (KLR) (6 September 2024) (Judgment)

Neutral citation: [2024] KETAT 1297 (KLR)

Republic of Kenya

In the Tax Appeal Tribunal

Tax Appeal 345 of 2023

E.N Wafula, Chair, Cynthia B. Mayaka, RO Oluoch, AK Kiprotich & G Ogaga, Members

September 6, 2024

Between

Alliance in Motion Global Limited

Appellant

and

Commissioner of Customs and Boarder Control

Respondent

Judgment

Background 1. The Appellant is a registered taxpayer whose principal business is the manufacture and sale of animal feed products in a bid to support the agricultural industry in the Republic of Kenya.

2. The Respondent is a principal officer appointed under Section 13 of the Kenya Revenue Authority Act, and the Authority is charged with the responsibility of among others, assessment, collection, receipting and accounting for all tax revenues as an agency of the Government of Kenya, and the administration and enforcement of the statutes set out under the schedule to the Act.

3. On 7th February, 2023, the Respondent issued a demand letter to the Appellant demanding taxes of Kshs. 10,289,556. 00.

4. On 7th March, 2023, the Appellant responded to the Respondent's demand indicating that the additional tax assessment was erroneously raised.

5. The Respondent issued a review decision to the Appellant on 27th March, 2023 confirming taxes due of Kshs. 10,289,556. 00.

6. The Appellant aggrieved by the Respondent ‘s review decision lodged a Notice of Appeal at the Tribunal dated 10th May, 2023 and filed on 16th May, 2023.

The Appeal 7. The Appellant filed its Memorandum of Appeal dated 10th May, 2023 and filed on 15th May, 2023 setting out the following grounds of Appeal;i.That the Respondent erred in law and fact in failing to disclose and avail the result of the tests carried on the products which forms the basis of the short levied duty.ii.The Respondent erred in law and fact in arriving at various assessments under different HS Codes contrary to the provisions of the law.iii.The Respondent erred in law and fact in re-assessing or claiming short levied amounts payable under different HS Codes from the HS Codes that the Government agent provided as suitable codes.iv.The Respondent erred in law and fact when it presupposes to recover past alleged short levied amounts that accrued by change in HS Code and not undervalue payment or use of wrong HS Code.v.The Respondent erred in law and fact when it derogated from the provision of Customs tax nomenclature classification and GIR provided under the law for classification of products.vi.The Respondent erred in law and fact in failing to disclose the omission and commission on the part of the Appellant by which the amounts became owing or short levied.vii.The Respondent erred in law and fact when it purported to have tested the products without the Appellant’s knowledge and disclosure as to where the specimen products were obtained from.viii.The Respondent’s action flaunted and violated the Appellant’s right to access to information and protection of privacy and the same is void.ix.The Respondent erred in law and fact in demanding short levied amounts in respect to Entry No. 22MBAIM405277729 whereas it did not provide changes in the subject shipment.x.The Respondent erred in law and fact in making changes without notification to apply the alleged changes in the declarations and subsequent shipments.xi.The Respondent erred in law and fact in changing the description of all the products classified as food supplements by both SGS and PVOC and applying different HS Codes contrary to the law.

Appellant’s Case 8. The Appellant set out its case based on the its Statement of Facts dated 10th May, 2023 and filed on 15th May, 2023.

9. That Alliance in Motion Global (K) Ltd is a multilevel company based in Philippines and registered in Kenya.

10. That the company began operations in the year 2016 and as at then formalized its operations including tax remittances as provided by the Government in its tax guidelines.

11. That the Respondent purported that there was a request made in respect to entry 22MBA/M40527729 on tariffs, whereas the company did not get any changes in the subject shipments which were then processed and released.

12. That no single notification to apply on the changes above was availed and no acknowledgement of the changes in the declaration and subsequent shipments that were to follow.

13. That on the registry, all products have been given a description as "food supplement" by Kenya Pharmacy and Poisons Board and also PVOC application by SGS.

14. That contrary to the foregoing the Respondent has taken a unilateral decision to change the position without following the laid down procedure and then purports to levy such duty upon the company.

15. The Appellant stated that the applicable HS Codes for the products have ever been 2106. 90. 91 and 2101. 11. 00.

16. That the Respondent purported to have taken samples of the complained products for testing without notification knowledge and/or consent of the Appellant contrary to the law pertaining to privacy.

17. The Appellant’s position is that any testing that was conducted secretly behind the Appellant in which case the Appellant does not know which products, from where, were tested stands contested because the exercise was in violation of the law.

18. The Appellant submitted that it is aggrieved that such parts of the components allegedly associated with the Appellant were sourced and tested without prior knowledge and concurrence of the Appellant contrary to the Constitution.

19. That the net effect of the process of testing and reissuing new HS Codes for the products is ineffective, flawed and irregular.

20. The Appellant pleaded that therefore any change in HS Codes cannot apply retroactively and the claim should be dropped forthwith.

Appellant’s Prayers 21. The Appellant prayed as follows:i.The Appeal be allowed and demand/assessment be set aside.ii.For any other order the Tribunal deems expedient.

Respondent’s Case 22. The Respondent’s case is premised on:i.The Respondent’s Statement of Facts dated 16th June, 2023 and filed on 25th July, 2023. ii.The Respondent’s Supplementary Statement of Facts dated 16th May, 2023 and filed on 17th May, 2023.

23. That the Appellant imported and declared various products as tabulated below:-Product Decsription Declared Hs Code

Complete phyto energizer 2106. 90. 91

Restorlyf longevity 2106. 90. 91

C24/7 2106. 90. 91

Choleduz 2106. 90. 91

Kiddi 24/7 nutragummies 2106. 90. 91

Burn slim 2106. 90. 91

Liven Coffee-Original 2101. 11. 00

Liven Coffee-Burn Sugar Free 2101. 11. 00

Liven Coffee-Latte/Cappuccino 2101. 11. 00

24. The Respondent pleaded that it carried out a post clearance audit of the Appellant's transactions for periods between January, 2018 to December, 2022. That the Respondent's audit established that there was a misclassification of the products on some of the entries declared.

25. The Respondent pleaded that it had established that the applicable HS Codes are as follows contrary to the declared HS Code tariff classification by the Appellant:-ProductDescription Declared HsCode Byh The Appellant Applicable HsCode Per The Respondent

Complete phyto energizer 2106. 90. 91 2106. 90. 99

Restorlyf longevity 2106. 90. 91 2106. 90. 99

C24/7 2106. 90. 91 2106. 90. 99

Choleduz 2106. 90. 91 2106. 90. 99

Kiddi 24/7 nutragummies 2106. 90. 91 2106. 90. 99

Burn slim 2106. 90. 91 2106. 90. 99

26. The Respondent submitted that the products listed in the aforementioned paragraph are not to be considered as food supplements as provided under the Explanatory Notes to the Harmonized System.

27. That according to the Explanatory Notes, preparations often referred to as food supplements or dietary supplements, consisting of, or based on, one or more vitamins, minerals, amino acids, concentrates, extracts, isolates or the like of substances found within foods, or synthetic versions of such substances, put up as a supplement to the normal diet. That it includes such products whether or not also containing sweeteners, colours, flavours, odoriferous substances, carriers, fillers, stabilisers or other technical aids. That such products are often put up in packaging with indications that they maintain general health or well-being, improve athletic performance, prevent possible nutritional deficiencies or correct sub-optimal levels of nutrients.

28. The Respondent stated that in order for the products to be considered as food supplements that must be put up to supplement the normal diet and that in the cases of the products under contention there is no indication of supplementation of normal diet.

29. That based on the following specified indications of usage of the products, the products do not comply with the provisions on description of food supplements:ProductDecsription DeclaredHs Code Indication of contents and usage

1 Complete phytoenergizer 2106. 90. 91 Energy enhancer based on plant extracts

2 Restorlyflongevity 2106. 90. 91 Enzyme activator to reverse aging.

3 C24/7 2106. 90. 91 Energy enhancer (however it is based on both vitamins & herbal extracts)

4 Choleduz 2106. 90. 91 Fish Oil plus Vitamin E that are essential in reducing the body's bad cholesterol.

5 Burn slim 2106. 90. 91 Metabolism booster to aid in weight loss

30. The Respondent further pleaded that in one of the consignments imported vide Entry Number 22MBAIM405277729, the Appellant's own declaration correctly classified the products under HS Code 2106. 90. 99. That samples of the products obtained from the referenced consignment were examined by the Tariff Unit and were confirmed to be classifiable under HS Code 2106. 90. 99 being the HS declared by the Appellant.

31. The Respondent noted that the Appellant in the consignment had correctly declared the applicable tariff to be 2106. 90. 99 under consignment Entry No. 22MBAIM405277729. That the consignment contained the following products: complete phyto energizer, Restorlyf longevity, Natura-ceutical tablets, Burn Slim and Angel E powder C Supreme.

32. The Respondent further noted that the most applicable tariff is 2106. 90. 99 in concurrence with the declaration. That the Respondent issued tariff rulings on 6th January, 2023.

33. The Respondent stated that it had also established that the Appellant had misclassified the following listed products under HS Code 2101. 11. 10 instead of HS Code 2101. 12. 00:-ProductDecsription DeclaredHs Code Applicable Hs Code

Liven Coffee-Original 2101. 11. 00 2101. 12. 00

Liven Coffee-Burn SugarFree 2101. 11. 00 2101. 20. 00

Liven Coffee - LatteCappuccino 2101. 11. 00 2101. 30. 00

34. The Respondent stated that the products listed in the foregoing paragraph are preparations based on extracts of coffee and matte classifiable under HS Codes 2101. 30. 00, 2101. 20. 00 & 2101. 12. 00 and not HS Code 2101. 11. 00 as per the Appellant.

35. That according to the Explanatory Notes to Heading 2101, the preparations with a basis of coffee, tea and matte are described as follows:-“The heading covers:a)Coffee extracts, essences and concentrates. These may be made from real coffee (whether or not caffeine has been removed) or from a mixture of real coffee and coffee substitutes in any proportion. They may be in liquid or powder form, usually highly concentrated. This group includes products known as instant coffee. This is coffee which has been brewed and dehydrated or brewed and then frozen and dried by vacuum.b)Tea or maté extracts, essences and concentrates. These products correspond, mutatis mutandis, to those referred to in paragraph (1).c)Preparations with a basis of the coffee, tea or maté extracts, essences or concentrates of paragraphs (1) and (2) above. These are preparations based on extracts, essences or concentrates of coffee, tea or maté (and not on coffee, tea or maté themselves), and include extracts, etc., with added starches or other carbohydrates.d)Preparations with a basis of coffee, tea or maté. These preparations include, inter alia:(a)“coffee pastes ”consisting of mixtures of ground, roasted coffee with vegetable fats and sometimes other ingredients, and (b) tea preparations consisting of a mixture of tea, milk powder and sugar.e)Roasted chicory and other roasted coffee substitutes and extracts, essences and concentrates thereof. These are all kinds of roasted products intended to replace or imitate coffee when infused with hot water, or to be added to coffee. These products are sometimes described as "coffee", prefixed by the name of the basic substance (e.g., barley “coffee”, malt “coffee", acorn “coffee”).”

36. The Respondent submitted that based on the compositions of the products listed in the foregoing paragraph, the products are considered to be preparations with a basis of coffee and mate and not extracts, essences and concentrates as classified by the Appellant. It classified the products as follows:ProductDescription DeclaredHs Code Composition/ingredients

1 Liven Coffee-Original 2101. 11. 00 Premium Arabica beans, fortified with phytonutrients from Complete Phyto-Energizer plus phytoalkaline powder

2 Liven Coffee-Burn Sugar Free 2101. 11. 00 Premium Arabica beans, fortified with Complete Phyto Energizer, Satiereal, Carnipure, Green Tea Extract EFLA 942,Garcinia Cambogia and Anhydrous Caffeine

3 Liven Coffee -Latte/Cappuccino 2101. 11. 00 100% Coffee Arabica with Minerals, and Trace Minerals, Amino Acids, Green Foods / Spirulina Blend, 12 Whole Fruit Juice Blend, Whole Vegetable Juice Blend, Mushrooms / Myco Defense, Digestive Enzymes, Digestive Enzymes, and, 10 Essential Fatty Acids.

37. The Respondent also confirmed that according to the above composition the products contain other ingredients, other extracts, essences and concentrates and therefore qualify to be considered as preparations classified under HS Codes 2101. 30. 00, 2101. 20. 00 and 2101. 12. 00.

38. That the Respondent took into account the provisions of the Harmonised System classification and the General Interpretation Rules and applied them correctly when classifying the Appellant's goods.

39. That Heading 2106 provides for classification of preparations not elsewhere specified or included. That Explanatory Note A to the Heading provides for classification of preparations for use; either directly or after processing (such as cooking, dissolving or boiling in water, milk, etc) for human consumption.

40. The Respondent submitted that Explanatory Notes to Heading 2106 describe food supplements as preparations, often referred to as food supplements or dietary supplements, consisting of, or based on, one or more vitamins, minerals, amino acids, concentrates, extracts, isolates or the like of substances found within foods, or synthetic versions of such substances, put up as a supplement to the normal diet. That it includes such products whether or not also containing sweeteners, colours, flavours, odoriferous substances, carriers, fillers, stabilisers or other technical aids. That such products are often put up in packaging with indications that they maintain general health or well-being, improve athletic performance, prevent possible nutritional deficiencies or correct sub-optimal levels of nutrients.

41. That the Appellant declared the goods Liven Coffee-Original, Liven Coffee-Burn Sugar Free and Liven Coffee-Latte/ Cappuccino under HS Codes 2101. 11. 00.

42. That the Respondent applied the following Codes for the products Liven Coffee-Original under HS code 2101. 12. 00, Liven Coffee-Burn Sugar Free under HS code 2101. 20. 00 and Liven Coffee- Latte/ Cappuccino under HS Code 2101. 30. 00.

43. That Sections 235 and 236 of the East African Community Customs Management Act (EACCMA), 2004 give the Respondent powers to call for documents and conduct a Post Clearance Audit (PCA) on the import and export operations of a taxpayer within a period of five years from the date of importation or exportation.

44. That Sections 135 and 249(1) of the East African Community Customs Management Act (EACCMA), 2004 empowers the Respondent to recover any such amount short levied or erroneously refunded with interest at a rate of two percent per month for the period the taxes remain unpaid.

45. That Section 229 of the East African Community Customs Management Act (EACCMA), 2004 provides for application for review by any person affected by the decision or omission of the Respondent on matters relating to Customs and provides the legal timelines to be observed.

Respondent’s Prayers 46. The Respondent prayed that the Appellant's Appeal be dismissed with costs and the Tribunal find that the Commissioner's review decision dated 27th March, 2023 be upheld.

Issues For Determination 47. The Tribunal, having considered the pleadings and evidence adduced by the parties is of the considered view that the issues that crystalizes for its determination are:-i.Whether the Respondent was justified in reclassifying the Appellant’s products of Heading 2106ii.Whether the Respondent was justified in reclassifying the Appellant’s products of Heading 2106

Analysis And Determination 48. The Tribunal, having identified the issue falling for its determination, proceeds to analyse the same as hereunder.

i. Whether the Respondent was justified in reclassifying the Appellant’s products of Heading 2106 49. The dispute herein arose out of the parties’ disagreement as to the classification of the Appellant’s imported products.

50. The Appellant submitted that its products were classifiable under HS Code 2106. 90. 91.

51. The Respondent argued that the Appellant’s products should be classified under HS Code 2106. 90. 99 instead of 2106. 90. 91.

52. The Tribunal has read through the parties’ pleadings and notes that the disputed products, the disputed codes and the undisputed product descriptions were as follows:ProductDescription Declared HsCodes Per Appellant Applicable HsCode Per Respondent Indication of contents and/ or usage

Complete phyto energizer 2106. 90. 91 2106. 90. 99 Energy enhancer based on plant extracts

Restorlyf longevity 2106. 90. 91 2106. 90. 99 Enzyme activator to reverse aging.

C24/7 2106. 90. 91 2106. 90. 99 Energy enhancer (however it is based on both vitamins & herbal extracts)

Choleduz 2106. 90. 91 2106. 90. 99 Fish Oil plus Vitamin E that are essential in reducing the body's bad cholesterol.

Kiddi 24/7 nutragummies 2106. 90. 91 2106. 90. 99 Metabolism booster to aid in weight loss

Burn slim 2106. 90. 91 2106. 90. 99

53. The Tribunal in analysing the disputed products and their Codes relies on the General Rules of Interpretation (GIRs) of the Harmonised System (HS) for classification of products, the East African Community Common External Tariff (EACCET) Handbook as well as the HS Explanatory Notes.

54. GIRs 1 to 3 provide as follows:“Classification of goods in the Nomenclature shall be governed by the following principles : 1. The titles of Sections, Chapters and sub-Chapters are provided for ease of reference only; for legal purposes, classification shall be determined according to the terms of the headings and any relative Section or Chapter Notes and, provided such headings or Notes do not otherwise require, according to the following provisions :

2. (a)Any reference in a heading to an article shall be taken to include a reference to that article incomplete or unfinished, provided that, as presented, the incomplete or unfinished article has the essential character of the complete or finished article. It shall also be taken to include a reference to that article complete or finished (or falling to be classified as complete or finished by virtue of this Rule), presented unassembled or disassembled.(b)Any reference in a heading to a material or substance shall be taken to include a reference to mixtures or combinations of that material or substance with other materials or substances. Any reference to goods of a given material or substance shall be taken to include a reference to goods consisting wholly or partly of such material or substance. The classification of goods consisting of more than one material or substance shall be according to the principles of Rule 3.

3. When by application of Rule 2 (b) or for any other reason, goods are, prima facie, classifiable under two or more headings, classification shall be effected as follows :(a)The heading which provides the most specific description shall be preferred to headings providing a more general description. However, when two or more headings each refer to part only of the materials or substances contained in mixed or composite goods or to part only of the items in a set put up for retail sale, those headings are to be regarded as equally specific in relation to those goods, even if one of them gives a more complete or precise description of the goods.(b)Mixtures, composite goods consisting of different materials or made up of different components, and goods put up in sets for retail sale, which cannot be classified by reference to 3 (a), shall be classified as if they consisted of the material or component which gives them their essential character, insofar as this criterion is applicable.(c)When goods cannot be classified by reference to 3 (a) or 3 (b), they shall be classified under the heading which occurs last in numerical order among those which equally merit consideration.”

55. The EACCET provides for the following tariff codes under Heading 2106:“2106. 10. 00 - Protein concentrates and textured protein substances- Other:2106. 90. 10 --- Specially prepared for infants2106. 90. 20 --- Preparations of a kind used in manufacturing of beveragesand food--- Other:2106. 90. 91 ---- Food supplements2106. 90. 92 ---- Mineral premix used in fortification2106. 90. 99 ---- Other”

56. From the Explanatory Notes (ENs) the Tribunal notes that EN 2106 provides for “Food preparations not elsewhere specified or included” as follows with only two main categories of products:“2106. 10 - Protein concentrates and textured protein substances2106. 90 – Other”

57. Specifically, EN 2106 provides as follows in its text:“Provided that they are not covered by any other heading of the Nomenclature, this heading covers: (A)Preparations for use, either directly or after processing (such as cooking, dissolving or boiling in water, milk, etc.), for human consumption.

(B)Preparations consisting wholly or partly of foodstuffs, used in the making of beverages or food preparations for human consumption. The heading includes preparations consisting of mixtures of chemicals (organic acids, calcium salts, etc.) with foodstuffs (flour, sugar, milk powder, etc.), for incorporation in food preparations either as ingredients or to improve some of their characteristics (appearance, keeping qualities, etc.) (see the General Explanatory Note to Chapter 38).

However, the heading does not cover enzymatic preparations containing foodstuffs (e.g., meat tenderisers consisting of a proteolytic enzyme with added dextrose or other foodstuffs). Such preparations fall in heading 35. 07 provided that they are not covered by a more specific heading in the Nomenclature.The heading includes, inter alia :…(16)Preparations, often referred to as food supplements, based on extracts from plants, fruit concentrates, honey, fructose, etc. and containing added vitamins and sometimes minute quantities of iron compounds. These preparations are often put up in packagings with indications that they maintain general health or well-being. Similar preparations, however, intended for the prevention or treatment of diseases or ailments are excluded (heading 30. 03 or 30. 04).” (Emphasis added)

58. The Tribunal notes that Tariff Code 2106. 90. 99 depicting “other” is a Tariff Code under Heading 2106 that represents a residual code that would encompass or be used to classify products that define as “Food preparations not elsewhere specified or included” but do not qualify in the preceding tariff codes, or are not specifically described in the other tariff codes, under Heading 2106.

59. A review, by the Tribunal, of the products in dispute under Heading 2106 reveals that the products are all used in the maintenance of and/ or the general wellbeing of the human body. As per the product descriptions, the products are used for the following reasons:i.Energy enhancer based on plant extracts.ii.Enzyme activator to reverse aging.iii.Energy enhancer (however it is based on both vitamins & herbal extracts).iv.Fish Oil plus Vitamin E that are essential in reducing the body's bad cholesterol.v.Metabolism booster to aid in weight loss

60. It is worth noting that these products, based on their undisputed descriptions and usage, are aptly described under the reference to food supplements as per the EN 2106 and therefore cannot be deemed as undescribed or falling under the residual code that is reserved for any other product that is a food preparation but otherwise not described under the Explanatory Notes.

61. Further, in applying Rules 1, 2(b) and 3(a) of the GIRs as outlined above, read together with the text of EN 2106, the Tribunal confirms that the Appellant’s products are classifiable under HS Code 2106. 90. 91.

62. In this regard the Tribunal finds that the Respondent was not justified in re-classifying the products disputed under Heading 2106 from HS Code 2106. 90. 91 to HS Code 2106. 90. 99.

ii. Whether the Respondent was justified in reclassifying the Appellant’s products of Heading 2106 63. The dispute herein arose out of the parties’ disagreement as to the classification of the Appellant’s imported products.

64. The Appellant submitted that its products were classifiable under HS code 2101. 11. 00.

65. The Respondent argued that the Appellant’s products should be classified under HS Codes 2101. 30. 00, 2101. 20. 00 and 2101. 12. 00 instead of 2101. 11. 00.

66. The Tribunal has gleaned through the parties’ pleadings and notes that the disputed products, the disputed codes and the undisputed product descriptions were as follows:Liven Coffee-Original 2101. 11. 00 2101. 12. 00 Premium Arabica beans, fortified with phytonutrients from Complete Phyto-Energizer plus phytoalkaline powder

Liven Coffee-Burn SugarFree 2101. 11. 00 2101. 20. 00 Premium Arabica beans, fortified with Complete Phyto Energizer, Satiereal, Carnipure, Green Tea Extract EFLA 942, Garcinia Cambogia and Anhydrous Caffeine

Liven Coffee - LatteCappuccino 2101. 11. 00 2101. 30. 00 100% Coffee Arabica with Minerals, and Trace Minerals, Amino Acids, Green Foods / Spirulina Blend, 12 Whole Fruit Juice Blend, Whole Vegetable Juice Blend, Mushrooms / Myco Defense, Digestive Enzymes, Digestive Enzymes, and, 10 Essential Fatty Acids.

67. The Tribunal in analysing the disputed products and their codes relies on the General Rules of Interpretation (GIRs) of the Harmonised System (HS) for classification of products, the East African Community Common External Tariff (EACCET) Handbook as well as the HS Explanatory Notes.

68. GIRs 1 to 3 provide as follows:“Classification of goods in the Nomenclature shall be governed by the following principles : 1. The titles of Sections, Chapters and sub-Chapters are provided for ease of reference only; for legal purposes, classification shall be determined according to the terms of the headings and any relative Section or Chapter Notes and, provided such headings or Notes do not otherwise require, according to the following provisions :

2. (a)Any reference in a heading to an article shall be taken to include a reference to that article incomplete or unfinished, provided that, as presented, the incomplete or unfinished article has the essential character of the complete or finished article. It shall also be taken to include a reference to that article complete or finished (or falling to be classified as complete or finished by virtue of this Rule), presented unassembled or disassembled.(b)Any reference in a heading to a material or substance shall be taken to include a reference to mixtures or combinations of that material or substance with other materials or substances. Any reference to goods of a given material or substance shall be taken to include a reference to goods consisting wholly or partly of such material or substance. The classification of goods consisting of more than one material or substance shall be according to the principles of Rule 3.

3. When by application of Rule 2 (b) or for any other reason, goods are, prima facie, classifiable under two or more headings, classification shall be effected as follows :(a)The heading which provides the most specific description shall be preferred to headings providing a more general description. However, when two or more headings each refer to part only of the materials or substances contained in mixed or composite goods or to part only of the items in a set put up for retail sale, those headings are to be regarded as equally specific in relation to those goods, even if one of them gives a more complete or precise description of the goods.(b)Mixtures, composite goods consisting of different materials or made up of different components, and goods put up in sets for retail sale, which cannot be classified by reference to 3 (a), shall be classified as if they consisted of the material or component which gives them their essential character, insofar as this criterion is applicable.(c)When goods cannot be classified by reference to 3 (a) or 3 (b), they shall be classified under the heading which occurs last in numerical order among those which equally merit consideration.”

69. Heading 2101 of the EACCET provides for the following products:“Extracts, essences and concentrates, of coffee, Tea or mate and preparations with a basis of these products or with a basis of coffee, tea or mate; roasted chicory and other roasted coffee substitutes, and extracts essences and concentrates thereof.- Extracts, essences and concentrates, of coffee, and preparations with a basis of these extracts, essences or concentrates or with a basis of coffee:2101. 11. 00 -- Extracts, essences and concentrates2101. 12. 00 -- Preparations with a basis of extracts, essences or concentrates or with a basis of coffee2101. 20. 00 - Extracts, essences and concentrates, of tea or maté, and preparations with a basis of these extracts, essences or concentrates or with a basis of tea or maté2101. 30. 00 - Roasted chicory and other roasted coffee substitutes, and extracts, essences and concentrates thereof.”

70. Explanatory Note 2101 provides as follows:“The heading covers :(1)Coffee extracts, essences and concentrates. These may be made from real coffee (whether or not caffeine has been removed) or from a mixture of real coffee and coffee substitutes in any proportion. They may be in liquid or powder form, usually highly concentrated. This group includes products known as instant coffee. This is coffee which has been brewed and dehydrated or brewed and then frozen and dried by vacuum.(2)Tea or maté extracts, essences and concentrates. These products correspond, mutatis mutandis, to those referred to in paragraph (1).(3)Preparations with a basis of the coffee, tea or maté extracts, essences or concentrates of paragraphs (1) and (2) above. These are preparations based on extracts, essences or concentrates of coffee, tea or maté (and not on coffee, tea or maté themselves), and include extracts, etc., with added starches or other carbohydrates.(4)Preparations with a basis of coffee, tea or maté. These preparations include, inter alia :(a)“coffee pastes” consisting of mixtures of ground, roasted coffee with vegetable fats and sometimes other ingredients, and(b)tea preparations consisting of a mixture of tea, milk powder and sugar.(5)Roasted chicory and other roasted coffee substitutes and extracts, essences and concentrates thereof. These are all kinds of roasted products intended to replace or imitate coffee when infused with hot water, or to be added to coffee. These products are sometimes described as “coffee”, prefixed by the name of the basic substance (e.g., barley “ coffee ”, malt “ coffee ”, acorn “ coffee ”).Roasted chicory is obtained by roasting the chicory root (Cichorium intybus var. sativum) of heading 12. 12. It is blackish-brown in colour and has a bitter flavour.Other roasted coffee substitutes include those derived from sugar beet, carrots, figs, cereals (especially barley, wheat and rye), split peas, lupine seeds, edible acorns, soya beans, date stones, almonds, dandelion roots or chestnuts. The heading also includes roasted malt so put up that it is clearly intended for use as a coffee substitute.These products may be presented in lump, granular or powder form, or as liquid or solid extracts. They may also be mixed either with one another or with other ingredients (e.g., salt or alkaline carbonates), and may be put up in various types of containers.The heading does not cover :(a)Roasted coffee substitutes containing coffee in any proportion (heading 09. 01).(b)Flavoured tea (heading 09. 02).(c)Caramel (caramelised molasses and caramelised sugars) (heading 17. 02).(d)Products of Chapter 22. ”

71. The Tribunal notes the specific details of each tariff code under Heading 2101 as follows:i.Tariff code 2101. 11. 00 classifies extracts, essences and concentrates of coffee.ii.Tariff code 2101. 12. 00 classifies preparations with a basis of extracts, essences or concentrates or with a basis of coffee.iii.Tariff code 2101. 20. 00 classifies extracts, essences and concentrates, of tea or maté, and preparations with a basis of these extracts, essences or concentrates or with a basis of tea or mate.iv.Tariff code 2101. 30. 00 classifies roasted chicory and other roasted coffee substitutes, and extracts, essences and concentrates thereof.

72. The Tribunal further notes that while it may seem that the products had other non-coffee nutrients or products added to them, it is appropriate to analyse the added product descriptions to understand what they consists of. The Tribunal finds as follows:i.Phyto energizer is a phytonutrient supplement that mainly focuses on providing the consumers with vital and essential nutrients required by the body to maintain a general well-being.ii.Phytoalkaline powder, otherwise known as Liven Coffee, neutralizes the acids in the body and promotes faster absorption of food nutrients. Liven Alkaline Coffee also helps to balance your body's natural pH level.iii.Satiereal is a clinically proven ingredient extracted from the flowers of (crocus) saffron (specific selection of saffron, from the Mediterranean region that decreases feelings of hunger (satiety), promotes weight loss, decreases snacking and sugar cravings and promotes a positive mood (working on the serotonin levels).iv.Carnipure is the nutrient needed to help support conversion of fat into metabolic energy.v.Green Tea Extract EFLA 942 is an extract of green tea that is rich in antioxidants called catechins, which have been shown to increase antioxidant capacity and protect against oxidative stress.vi.Garcinia Cambogia is a tropical fruit that is a popular weight-loss supplement, especially with people who have diabetes.vii.Anhydrous Caffeine is a processed, dehydrated form of caffeine used as a supplement for weight loss and improved athletic performance.

73. The Tribunal notes as follows from the descriptions of the products in dispute;i.The first product, Liven Coffee-Original, contains premium Arabica coffee beans, phyto energizer and liven coffee.ii.Liven Coffee-Burn Sugar contains Premium Arabica beans, fortified with Complete Phyto Energizer, Satiereal, Carnipure, Green Tea Extract EFLA 942, Garcinia Cambogia and Anhydrous Caffeineiii.Liven Coffee – Latte Cappuccino contains 100% Coffee Arabica with Minerals, and Trace Minerals, Amino Acids, Green Foods / Spirulina Blend, 12 Whole Fruit Juice Blend, Whole Vegetable Juice Blend, Mushrooms / Myco Defense, Digestive Enzymes and 10 Essential Fatty Acids.

74. It is apparent to the Tribunal that the products imported by the Appellant contain other ingredients that are not coffee-based and therefore would not qualify to be classifiable under Tariff Code 2101. 11. 00. The products are therefore more specifically described as per GIR 1, 2(b) and 3(a), the ENs and the EACCET as “Preparations with a basis of extracts, essences or concentrates or with a basis of coffee”.

75. As a result of the foregoing, the Tribunal has established that the products imported by the Appellant under Heading 2101 fall to be classified under Tariff Code 2101. 12. 00.

76. The Tribunal therefore finds that the Appellant’s tariff classification of these specific products was erroneous. It further finds that while the Respondent was justified in re-classifying these products, it did not apply the correct tariff to all the products under this category as they are all classifiable under Tariff Code 2101. 12. 00.

Final Decision 77. The upshot of the foregoing analysis is that the Appeal is partially merited and the Tribunal accordingly proceeds to make the following Orders: -a.The Appeal be and is hereby partially allowed.b.The Respondent’s review decision dated 27th March, 2023 be and is hereby varied in the following terms:i.The Appellant’s classification of the disputed products under Heading 2106 as classifiable under Tariff Code 2106. 90. 91 be and is hereby upheld.ii.The Respondent’s classification of the disputed products under Heading 2101 as classifiable under Tariff Codes 2101. 30. 00 and 2101. 20. 00 be and is hereby set aside.iii.The Respondent is hereby directed to re-classify the disputed products under Heading 2101 to Tariff Code 2101. 12. 00. iv.The Respondent is hereby directed to recompute the tax assessment based on the Tribunal’s findings under (i), (ii) and (iii) above within Thirty (30) days of the date of delivery of this Judgment.c.Each Party to bear its own costs.

78. It is so ordered.

DATED AND DELIVERED AT NAIROBI THIS 6TH DAY OF SEPTEMBER, 2024ERIC NYONGESA WAFULA - CHAIRMANCYNTHIA B. MAYAKA - MEMBERDR. RODNEY O. OLUOCH - MEMBERABRAHAM K. KIPROTICH - MEMBERGLORIA A. OGAGA- MEMBER