https://new.kenyalaw.org/akn/ke/judgment/ketat/2026/253

 REPUBLIC OF KENYA IN THE TRIBUNAL OF KENYA AT NAIROBI COUNTY COURT NAME: TAX APPEALS TRIBUNAL CASE NUMBER: TATC/E1002/2025 ASHUT PLASTICS LIMITED VS KENYA REVENUE AUTHORITY JUDGMENT # BACKGROUND 1. The Appellant is a private limited liability company duly incorporated in Kenya whose principal activity is the manufacture of plastic packaging products for diverse industries. 2. The Respondent is a principal officer appointed under Section 13 of the Kenya Revenue Authority Act, CAP 469 of Kenya’s Laws. Under Section 5 (1) of the Act, the Kenya Revenue Authority is an agency of the Government for the collection and receipt of all tax revenue. Further, under Section 5(2) of the Act with respect to the performance of its functions under subsection (1), the Authority is mandated to administer and enforce all provisions of the written laws as set out in Part 1 and 2 of the First Schedule to the Act for the purposes of assessing, collecting and accounting for all revenues in accordance with those laws. 3. The Appellant on 2nd July 2025 imported a consignment of in-mould printed plastic labels for three dairy products which it classified under HS Code 3921.90.90 attracting 25% import duty but the Respondent reclassified the same under HS Code 4911.10.00 attracting 35% import duty. 4. On 3rd July 2025, the Appellant disputed the reclassification and requested for release of the goods under the declared tariff or a draw of sample for further analysis and tariff ruling. 5. Thereafter, the Appellant was able to secure the release of its consignment under bank guarantee pending the completion of review and verification process by the Respondent vide email dated 11th July 2025. 6. The Respondent upheld its earlier tariff classification vide a letter dated 18th July 2025. 7. In a letter dated 28th July 2025, the Appellant applied for tariff ruling. 8. Similarly, 27th August 2025 and in response to the Respondent’s letter of 18th July 2025, the Appellant wrote to the Respondent seeking a review of the tariff classification asserting that the correct classification was 3921.90.90. 9. The Respondent upheld its review classification under HS Code 4911.10.00 in its letter dated 5th September 2025. 10. Dissatisfied by the Respondent’s Review Decision, the Appellant lodged its Notice of Appeal dated and filed on 11th September 2025. # THE APPEAL 1. The Appellant’s case was founded upon its Memorandum of Appeal dated and filed on 24th September 2025 wherein the Appellant raised the following grounds: 1. That the Respondent erred in fact and in law and misdirected itself in misinterpreting the provisions of the East African Community Common External Tariff (EAC CET) as to the nature of the Appellant's imports, which are illustrated and printed labels of plastic, specifically designed for in-mould labelling, and not trade advertising materials. 2. That the Respondent erred in fact and in law by concluding without basis that the imported labels were meant for distribution, promotion, and marketing of products, instead of product identification and labelling, thereby wrongly classifying them under HS Code 4911.10.00. * 1. That the Respondent erred in fact and in law in failing to hold that the Appellant's imports which are illustrated and printed labels of plastic are integral to the primary use of the plastic packaging material manufactured by the Appellant and should not be classified under chapter 49 under Legal Note 2 to Section VII of the Explanatory Notes of the HS Code. 2. That the Respondent erred in law and in fact in failing to find that the Appellant's products were correctly classified under HS Code 3921.90.90 as *Other plates. sheets. film, foil and strip, of plastics-other* 3. That *in the alternative and without prejudice to (4) above*, the Respondent's erred in law and in fact in failing to find that the Appellant's products were correctly classified under HS Code 4911.99.90 as *other printed matter including printed pictures-other* 4. That the Respondent's Review Decision is unreasonable and unjust as the Respondent disregarded the Appellant's explanations and documentation provided in its appeal against the Review Decision. # THE APPELLANT’S CASE 1. The Appellant’s case was anchored upon; 2. Its Statement of Facts dated and filed on 24 th September 2025 together with documents attached thereto; 3. Written submissions dated 20th May 2026 and filed on even date 4. Witness Statement of Mr. Josephat Kituku Kithama dated 24th April 2026 adopted as evidence-in-chief by the Tribunal on 5th May 2026. 5. The Appellant asserted that as a leading packaging manufacturer in Kenya, it operates a fully equipped facility that integrates modern technology with high production capacity to ensure consistent quality with emphasis on efficiency and reliability, and that it supplies durable and cost-effective packaging solutions tailored to the specific needs of businesses across East Africa. 6. The Appellant asserted that its product is In-mould labelling (IML) which is a process where a pre-printed label is placed into a plastic mould before the plastic is injected resulting in the label being permanently fused with the plastic product during the moulding process thus, creating a single, durable piece with a high- quality finish. The label is then positioned within the mould cavity, often using static electricity to hold it in place. 7. Additionally, the Appellant held that the product is high-quality rigid and flexible plastic labels for its clients' plastic packaging such as Yoghurt Cups. The product is productilen polypropylene (PP) film which is a versatile thermoplastic film used widely in packaging and labels and that the Appellant uses it to label its customers plastic packaging material through in-mould labelling process to infuse it to packaging material. 8. The Appellant stated that its supplier listed the process stages of the plastic articles as follows; ⮚ Raw material input - plastic sheets or films are brought in as the base material. ⮚ Cutting to size - the sheets are cut into the right sizes for further processing. ⮚ Printing - designs, product details, and branding are printed on the sheets using offset printing, and a protective lacquer is applied. ⮚ Drying - the printed sheets are dried to fix the ink and lacquer properly. ⮚ Tamping - the sheets are stamped into the required shapes. ⮚ UV cutting - the stamped pieces are further cut with precision using UV technology. ⮚ Extraction - extra or unwanted material is removed, leaving only the finished pieces. ⮚ Packaging - the finished labels or articles are packed safely. ⮚ Shipping - the packaged goods are dispatched to customers. 1. The Appellant fashioned its case on the following grounds; 2. *The Respondent erred by concluding without basis that the imported labels were meant for distribution, promotion, and marketing of products instead of product identification and labelling, thereby wrongly classifying them under HS Code 4911.10.00.* 3. According to the Appellant, Heading 4911 covers classification of other printed matter, including printed pictures and photographs. Specifically, HS Code 4911.10.00 covers trade advertising material, commercial catalogues attracting an import duty of 35%; whereas on the other hand, HS Code 4911.99.90 covers other printed matter including pictures and photographs and attracting an import duty of 25%. That based on the information provided herein the Respondent’s description of the Appellant’s products is not true as they are not promotional materials as purported but a statutory requirement for clear and concise labelling of the plastics, before distribution into the market meant to identify the products not to market them. 4. As per the Appellant, the products are a statutory requirement under the Kenyan laws regulating the sale of products which establish that such labels form an integral part of the packaging materials as provided under Rule 7 of the Weights and Measures (Sale and Labelling of Goods) Rules which makes it mandatory for persons selling pre-packaged goods to securely label the package with details of the name of the goods, manufacturer details, weight, manufacture and expiry date. 5. Thus, the Appellant's labels constitute an essential component of its plastic packaging materials, given that its clients are under a legal obligation to display the prescribed identifying particulars on their packaging. Therefore, the Appellant is correspondingly precluded from supplying packaging materials without such labels which are a mandatory product information not for promotion or distribution as alleged by the Respondent. 6. *The Respondent erred in fact and in failing to hold that the Appellant’s imports are integral to the primary use of plastic packaging material and therefore properly classifiable under Chapter 39, specifically HS Code 3921.90.90, as polypropylene film, and in the alternative under HS Code 4911.99.90 as other printed matter.* 7. It was the Appellant’s case that Legal Note 2 to Section VII of the Harmonized System provides that plastics printed with motifs, characters, or pictorial representations which are incidental to the primary use of the goods are excluded from Chapter 49. The import of this exclusion is that plastics and articles thereof remain classified under Chapter 39, even when printed, unless the printing itself gives the product the essential character of printed matter. Thus, the Appellant’s in-mould labels manufactured from PP film which is a thermostatic plastic film squarely fall within HS Code 3921.90.90. 8. That the pre-printing for the in-mould labels does not alter the essential character since the plastic film is designed for integration into packaging and is incidental to the labels’ primary function which is forming part of the plastic packaging which is a statutory labelling requirement. That this was a position backed by reasoning of the United States Court of International Trade in **Amcor Flexibles Kreuzlingen AG v United States (Slip Op. 22-15, 2022)** where the court emphasized that although printing was necessary to convey information, this did not override the product’s essential identity as packaging. Therefore, the correct classification is under HS Code 3921.90.90. 1. That in the alternative and without prejudice to the forgoing, should the Tribunal find that the labels are not properly classifiable under Chapter 39, then the appropriate classification would be under HS Code 4911. 99. 90 as *"ther printed matter"* as the labels are used for product identification within the packaging process not for advertising or trade promotion but not under HS Code 4911.10.00. 2. That the subject labels affixed to the packaging containers provide statutory information relating to the identity, composition, and particulars of the packaged product but not designed or intended for promotion, marketing, or distribution of products to consumers in the manner contemplated under HS Code 4911.10.00. The Appellant supported this position relying on classification opinion adopted by the World Customs Organization at its 42nd Session of the HS Committee (Doc 42.024, Annex H/22) and the **US Customs Ruling HQ 956733.** 1. The Appellant asserted that despite having adduced documents to support its position, the Respondent erroneously classified the labels under HS Code 4911.10.00 as advertising or promotional materials thereby ignoring their functional and statutory role as an inseparable component of plastic packaging and failed to correctly apply GIR 1 and GIR 3(a) which require that classification be determined according to the terms of the headings and legal notes, and, where two or more headings are possible, by reference to the most specific description applicable to the goods. 2. *The Respondent’s Review Decision is unreasonable and unjust as the Respondent disregarded the Appellant's explanations and documentation provided in its appeal against the Review Decision.* 3. According to the Appellant, the Review Decision was unreasonable and unjust as it failed to consider detailed explanations of the labelling process and supporting documentation submitted vide the latter of 3rd July 2025 which was contrary to the principles of fair administrative action and administrative practice. The Appellant support its position regarding administrative authority by citing the # holding in the case of Equip Agencies Limited v Commissioner for Legal Services & Board Coordination (Tax Appeal 1341 of 2022)[2024] KETAT 426(KLR). 1. Further, the Appellant held that having demonstrated that the labels serve a statutory function thus falling under HS Code 4911.99.90, the Respondent erred by disregarding this explanation and supporting documentation rendering its reclassification both unjust and unreasonable. 2. In conclusion, the Appellant was adamant that the Review Decision lacked merit and had no basis in law and was manifestly unjust and that unless the prayers sought were granted, the Appellant risked having its imports wrongly classified. 3. In its submissions, the Appellant identified the following issues for determination; 4. Whether the Respondent fundamentally mischaracterised the nature of the imported goods by incorrectly classifying tariff heading 4911.10 as advertising material. 5. Whether the correct classification under Chapter 49 is HS Code 4911.99.90, not 4911.10.00 6. Whether in the alternative, the goods were correctly classified under Chapter 39 as plastic film articles under HS Code 3921.90.90 7. Whether the Respondent’s Review Decision is unreasonable and procedurally inconsistent. 8. According to the Appellant, the Respondent’s classification was erroneous in fact and in law and the Respondent misapprehended and misunderstood the nature and character of the Appellant’s products and was not guided by the EAC CET, GIRs and Explanatory Notes to the Harmonised system. 9. That the classification was premised on fundamental mischaracterization of goods as trade advertising material which was wrong as the labels are not standalone articles, distributed independently to consumers but raw materials supplied to the Appellant for incorporation into finished plastic packaging containers as specified in the supplier’s product specification and as described by the Appellant’s witness explanation of the manufacturing process. 10. The Appellant reiterated that Rule 7 of the Weights and Measures (Sale and labelling of Goods) Rules mandates persons selling pre-packaged goods to securely label the package with details of the name of goods, manufacture details, weight, manufacture and expiry date which is contrary to Respondent’s treatment of the labels as brochures or advertising flyers. 11. That the pre-printed plastic label is fused to the container during manufacture thus the printed information becomes permanent and inseparable part of the final packaging product, a fact the Respondent failed to appreciate noting that it merely uses the imported labels as specified by its clients in the IML process to manufacture the final product. That the pre-printed information is not for advertisement but serves as the main purpose of consumer identification of 12. The Appellant asserted that in the alternative, the correct classification should be tariff code 4911.99.90 not 4911.10.00 which is specifically directed at goods whose function is to advertise, promote, or market products or services. That the WCO ENs to Heading 4911 describe such goods as including posters, catalogues, prospectuses, and other articles of commercial advertisement as proved by the attached pictorial representations on the labels serve an important consumer identification function. 13. That by application of GIR(3)(a) goods are prima facie classifiable under two sub- headings within Chapter 49, the heading which provides the most specific description shall be preferred. 14. As per the Appellant, in the alternative the goods were correctly classified under Chapter 39 as plastic film articles under HS Code 3921.90.90. That Legal Note 2 to Section VII of the HS provides that plastics printed with motifs, characters, or pictorial representations which are incidental to the primary use of the goods are excluded from Chapter 49 thus, the Appellant’s classification was based on pre-printed plastics essential character, physical constitution and primary function as a raw material for use in production of the final product which in turn is sold to Appellant’s clients. The Appellant backed this position by relying on Note 10 to Chapter 39 which expressly provides that plates, sheets, film, foil and strip of plastics (other than those of Chapter 54) may be classified under Chapter 39 whether or not printed or otherwise surface worked. 15. The Appellant insisted that the Review Decision was unreasonable and procedurally inconsistent as it failed to meaningfully engage with provided detailed explanations noting that its plastic film substrate is the essential article in the manufacturing process. 16. That the Respondent dismissed Appellant’s submissions without providing substantive analysis or engaging with the specific legal arguments raised whereas the law and administrative fairness requires the Respondent as a decision-maker to give adequate reasons for its decision particularly where the affected party has made detailed and reasoned explanations of the characterization. # The Appellant’s Prayers 1. That the Appeal be and is hereby allowed. 2. That the Respondent's Review Decision dated 5 th September 2025 upholding its tariff reclassifications dated 18th July 2025 be and is hereby set aside. 3. That an order be and is hereby issued that the Appellant's products are correctly classified under HS Code 3921.90.90 4. *In the alternative, without prejudice to (3) above* That an order be and is hereby issued that the Appellant’s products are correctly classified under HS Code 4911.99.90. 5. That the costs of the Appeal be and are hereby awarded to the Appellant. 6. Any other or further remedies which the Tribunal deems just and reasonable. # THE RESPONDENT’S CASE 1. The Respondent replied to the Appeal through its Statement of Facts dated 25th September 2025 and filed on 24th October 2025. The Respondent did not file written submissions as directed by the Tribunal on 5th May 2025. 1. According to the Respondent, on 18th July 2025 it reclassified the Appellant’s products declared under HS Code 3921.90.90 to HS Code 4911.10.00 based on samples drawn from the consignment of imported in-mould printed plastic labels for three dairy products. 2. The Respondent identified the following issues as falling for determination; 1. What is the correct tariff classification of in-mould plastic labels under the Harmonized System? 2. Whether they fall under HS Code 3921.90.90 (plastic sheets) as claimed by the Appellant, or Under HS Code 4911.10.00 (printed labels) as classified by the Respondent. 3. The Respondent asserted that it did not err in fact or in law nor did it misdirect itself in interpreting the provisions of the EAC CET regarding the nature of the Appellant’s imports, which are illustrated and printed labels of plastic, specifically designed for in-mould labelling meant for distribution, promotion, and marketing of products, rather than for product identification and labelling which are classified them under HS Code 4911.10.00. 4. The Respondent asserted that while it correctly considered that the labels are affixed to the packaging, they serve a distinct function separate from the packaging itself meaning that classification under Legal Note 2 to Section VII of the Explanatory Notes of the HS Code was appropriate and aligned with the established principles of tariff classification, which require items be classified according to their essential character and actual use, and not merely their physical attachment to other goods. 5. That this classification under HS Code 4911.99.90 reflects a proper understanding of classification criteria considering the specific nature, composition, and intended use of the Appellant’s imports and was consistent with the applicable legal and tariff provisions. The Respondent held that it considered all explanations and documentation submitted in arriving at the Review Decision which was reasonable and was done pursuant to the Harmonized Commodity Description and Coding system and in line with the General Interpretative Rules (GIRs) and the Explanatory Notes (EN) to the (HS) and relied on the following documentary evidence; * Tariff Ruling. * Entry Correspondence; KRA/CBC/V&T/THQ/0088/07/2025-2026, KRA/CBC/V&T/THQ/0094/07/2025-2026, KRA/CBC/V&T/THQ/0095/07/2025-2026 dated 18th July 2025 * Appeal response references; KRA/CBC/V&T/THQ/APPEAL/040/09/2025-2026, KRA/CBC/V&T/THQ/APPEAL/039/09/2025-2026; and KRA/CBC/V&T/THQ/APPEAL/041/09/2025-2026 dated 5th September 2025. 1. The Respondent stated that all actions were taken in accordance with the provisions of the Constitution, EACCMA and related regulations and the Appellant was granted an opportunity to respond to the tariff findings. # The Respondent’s Prayers 1. The Respondent prayed that the Tribunal finds; 2. The Appeal herein lacks merit and be dismissed with costs. 3. The Tariff Classification Decision dated 5th September 2025 be upheld. # ISSUE FOR DETERMINATION 1. The Tribunal having carefully considered the parties’ pleadings, documentation and Appellant’s submissions adduced before it notes that the single issue that calls for its determination; **Whether the Respondent erred in reclassifying the Appellant’s imports under the HS Code 4911.10.00.** # ANALYSIS AND FINDINGS 1. The Tribunal having established the issue for determination the Tribunal proceeds to analyse the same as hereunder; # Whether Respondent erred in reclassifying the Appellant’s imports under the HS Code 4911.10.00 1. The dispute herein emanated from Respondent’s reclassification of Appellant’s products from HS Code 3921.90.90 attracting 25% import duty to HS Code 4911.10.00 attracting import duty at 35%. The Appellant’s products were released under a bank guarantee pending completion of review and verification of samples collected by the Respondent. After several correspondences, the Respondent upheld the reclassification in its Review Decision dated 5th September 2025. 2. The Tribunal notes that it was not in dispute that the Appellant’s imported products were in-mould labelling printed labels of plastics which are infused using static electricity and become part of the packaging material. The point of departure between the parties was in regards to their functionality with Appellant holding that they are a statutory requirement providing product description, identification and labelling whereas the Respondent held that they are for trade advertising. 3. The Tribunal notes that classification is governed by the Harmonized Coding system where the General Interpretative Rules (GIRs) though not legally binding are universally persuasive and consistent across global jurisdictions. It should be noted that classification of goods in the Nomenclature is governed by six (6) General Interpretative Rules (GIRs) which are applied sequentially and rely on the World Customs Organization (WCO) and the Harmonized System Explanatory Notes (ENs) which constitute the official interpretation of the Nomenclature at the International level. Thus, indispensable complements to the Harmonized System of which Kenya is a signatory. 4. The HS Code has found precedence in the Kenyan Courts as well as was held in the case of **BETA Healthcare International Ltd v Commissioner of Customs Services [2010] eKLR** that; *“Kenya is a signatory to the International Convention on the Harmonized Commodity Description and Coding System. Kenya became a contracting party to the convention on 29th January 1988. The entry into force of the convention came into Kenya on 1st January 1989.”* 1. In this regard GIR1 provides that; *“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…”* 1. The Tribunal notes that the two competing HS Codes provides as follows; *“3921.90.90 – Other kg 25%* *4911.10.00 - Trade advertising material, commercial catalogues and the like kg 35%”* 1. The Appellant equally stated that its products could be classified under an additional tariff Code 4911.99.90 which reads; *“4911.99.90 - Other kg 25%”* 1. The Tribunal notes that the two competing Headings cited by the parties provide as follows; *“3921 Other plates, sheets, film, foil and strip, of plastics.* *4911 Other printed matter, including printed pictures and photographs.”* 1. The Tribunal observes that Chapter 39 cited by the Appellant covers *plastic and articles thereof* while Chapter 49 cited by the Respondent covers *printed books, newspapers, pictures and other products of printing industry; manuscripts, typescripts and plans.* 2. The Tribunal further notes that GIR 6 provides as follows; *“For legal purposes, the classification of goods in the subheadings of a heading shall be determined according to the terms of those subheadings and any related Subheading Notes and, mutatis mutandis, to the above Rules, on the understanding that only subheadings at the same level are comparable. For the purposes of this Rule the relative Section and Chapter Notes also apply, unless the context otherwise requires.”* 1. In this regard, Note 2 of Section VII of the EAC/CET provides as follows: *“Except for the goods of heading 39.18 or 39.19, plastics, rubber, and articles thereof, printed with motifs, characters or pictorial representations, which are not merely subsidiary to the primary use of the goods, fall in* *Chapter 49.”* 1. The Appellant produced product samples and photographs which the Tribunal has carefully considered. The labels bear product names, trademarks, logos, ingredients, nutritional information, manufacturer details, volume declarations and other product-specific information. 2. The Tribunal is satisfied that the printing appearing on the labels is not merely decorative or incidental. Rather, the printing is central to the purpose for which the labels are designed and used, namely the identification of finished products and communication of product information to consumers. Although the labels are manufactured from plastic film and are ultimately fused into plastic containers during the in-mould labelling process, the mere fact that the substrate is plastic does not determine classification. 3. Pursuant to Note 2 to Section VII of the EAC/CET, where printing is not merely subsidiary to the primary use of the goods, such goods are excluded from Chapter 39 and fall for classification under Chapter 49. In the present case, the Tribunal finds that the printed content imparts the essential character of the imported goods because it is the reason the labels are produced and incorporated into the packaging. 4. Having found that the goods are properly classifiable within Chapter 49, the Tribunal must determine the appropriate subheading. 5. The Explanatory Notes to Heading 4911 indicate that trade advertising material generally consists of printed matter whose principal purpose is to promote, market or advertise goods or services which is ordinarily intended to influence purchasing decisions or attract customers through promotional content. The evidence before the Tribunal does not demonstrate that the imported labels perform such a function. 6. While branding elements may incidentally contribute to product recognition, that fact alone does not transform the labels into trade advertising material within the meaning of HS Code 4911.10.00. 7. By virtue of Note 2 to Section VII, the Tribunal equally disagrees with the Appellant’s classification under HS Code 3921.90.90. The Judiciary of 15/16 1. The Tribunal having found that the goods are properly classifiable under Chapter 49 and are not trade advertising material, the Tribunal concludes that Respondent erred in reclassifying the Appellant’s imports under the HS Code 4911.10.00 and finds that the appropriate classification is HS Code 4911.99.90 – *Other printed matter*. 2. Consequently, the Appeal herein is merited. # FINAL DECISION 1. The upshot of the foregoing is that the Appeal is merited and the Tribunal accordingly proceeds to make the following Orders: 1. This Appeal be and is hereby allowed. 2. The Review Decision dated 5th September 2025 be and is hereby set aside. 3. Each party to bear its own costs. 2. It is so ordered. # DATED AND DELIVERED AT NAIROBI ON THIS 17TH DAY OF JULY, 2026 SIGNED BY/FOR: **★ TH E JUDICIAR Y O F KENY A ★** **HON. EUNICE NJERI NGANGA HON. SANKALE SPENCER OLOLCHIKE HON. BERNADETTE MUTHIRA GITARI HON. BILLY GRAHAM OKUMU MIJUNGU** Tax Appeals Tribunal Tribunal Date: 2026-07-17 14:17:52 The Judiciary of 16/16