[2025] KETAT 56 (KLR)

Chrystal Africa Limited v Commissioner of Customs and Border Control (Tax Appeal E352 of 2024) [2025] KETAT 56 (KLR) (31 January 2025) (Judgment)

Neutral citation: [2025] KETAT 56 (KLR)

Republic of Kenya

In the Tax Appeal Tribunal

Tax Appeal E352 of 2024

RM Mutuma, Chair, M Makau, Jephthah Njagi, D.K Ngala & T Vikiru, Members

January 31, 2025

Between

Chrystal Africa Limited

Appellant

and

Commissioner of Customs and Border Control

Respondent

Judgment

Background 1. The Appellant is a limited liability company duly incorporated under the Companies Act of the Laws of Kenya and engaged in the business of distribution of plant care products in the horticulture industry.

2. The Respondent is the principal officer appointed under the Kenya Revenue Authority Act and mandated with the Responsibility for the assessment, collection, receipt and accounting for all tax revenue as an agent of the Government of Kenya. The Respondent is also mandated with the responsibility for the administration and enforcement of the statues set out under the schedule to the said Act

3. The Appellant is involved in the importation of a product known as Chrystal VIVA 20 SL which is a plant regulator, and registered by the PCPB NO. PCRB(CR)1698.

4. The Appellant lodged entries for the imports on 31st January 2024 and declared the product under 2022 EAC/CET HS Code 3824. 99. 90 which provided for plant growth regulators.

5. The Respondent however reviewed the classification and determined the product to be an immersion treatment by products in post-harvest period to enhance the ornamental value of flowers and buds which is classified in the 2022 EAC/CET HS Code 3824. 99. 90 based on the verification report and technical information availed vide Tariff Ruling dated 8th February 2024.

6. The Appellant dissatisfied with the Tariff Ruling filed a review application with the Respondent vide a letter dated 25th February 2024.

7. The Respondent considered and rendered its Review Decision on 26th February 2024 upholding the Tariff Ruling.

8. Aggrieved by the Respondent’s Review Decision the Appellant lodge its Appeal vide the Notice of Appeal dated and filed on 27th March 2024.

The Appeal 9. The Appellant filed its Memorandum of Appeal dated and filed on the 11th April 2024 and set out the following grounds of appeal;a.That the Respondent erred in fact and in law by classifying the Appellant’s Chrystal VIVA 20 SL product under EAC/CET HS Code 3824. 99. 90;b.That the Respondent erred in fact and law by failing to appreciate that Chrystal VIVA 20 SL is a product growth regulator which is properly classified under EAC/CET HS Code 3808. 93. 90;c.That the Respondent erred in law and fact seeking to impose import duty on Chrysal BVB without any justification when the same was properly classified under EAC/CET HS Code 3808. 93. 90 and zero rated for import duty;d.That the Respondent erred in law and fact in ignoring the registration of Chrysal BVB by the Pest Control Products Board (PCPB) which is the Government body and which registration was done pursuant to the Pest Control Act;

The Appellant’s Case 10. The Appellant’s case is premised on;a.Statement of Facts dated 9th April 2024 and filed on 11th April 2024 together with the documents attached thereto;b.Appellant’s witness statement by Jan Jansen signed and dated on 22nd October 2024 and filed on 24th October 2024, which was adopted as evidence in chief on 12th November 2024; and,c.Written submissions dated 2nd December 2024 and filed on 3rd December 2024.

11. The Appellant stated that it imports a product known as Chrystal VIVA 20 SL which is a plant growth regulator duly registered by the Pest Control Products Board under registration No. PCPB (CR) 1698.

12. It averred that the active ingredient in Chrystal VIVA 20 SL is 6-benzyladenine, also called 6-benzylaminopurine, which it described as a cytokinin which is a group of plant hormones that are known to influence physiology of plants and encourage plant growth. It stated that products containing 6-benzyladenine are classified as plant growth regulators in Europe and the USA and can only be marketed after obtaining a pesticide registration to ensure proper and safe handling of the product and good efficacy.

13. The Appellant stated that on 2nd August 2020 it received a tariff classification ruling from the Respondent where the Respondent categorically stated that Chrystal Viva 20 SL is a plant growth regulator based on 6-benzyladenine, a synthetic cytokinin that stimulates cell division in plants and spurs plant growth.

14. It averred that the Respondent further stated that Heading 38. 08 covers the classification of plant growth regulators intended to inhibit or promote physiological processes in plants. The Respondent then proceeded to classify Chrystal VIVA 20 SL under EAC/CET HS Code 3808. 93. 90.

15. The Appellant further averred that ever since receiving the Tariff classification Ruling dated 2nd August 2020 from the Respondent, the Appellant has been importing Chrystal VIVA 20 SL under HS Code 3808. 93. 90.

16. It was stated that on 8th February 2024, the Appellant received a tariff classification from the Respondent which was at complete variance with the Respondent’s tariff classification ruling issued on 2nd August 2020. In its classification dated 8th February 2024, the Respondent while expressly agreeing that Chrystal VIVA 20 SL contains 6-benzylaminopurine in high concentration which promotes plant growth, arbitrarily ignored its previous classification ruling and proceeded to classify Chrystal VIVA 20 SL under HS Code 3824. 99. 90.

17. It was further stated that there was no inquiry made by the Appellant with regards to a classification as insinuated in the letter dated 8th February 2024 and the said classification was carried arbitrarily by the Respondent.

18. The Appellant also contended that Heading 38. 24 as expressly admitted by the Respondent, makes no reference at all to plant growth regulators. Instead it covers prepared binders for foundry molds or cores, chemical products and preparations of the chemical or allied industries not elsewhere specified or included.

19. The Appellant also stated that as the Respondent’s classification dated 8th February 2024 was erroneous and completely contradictory to its Tariff Ruling dated 2nd August 2020, which it had never revoked, and which the Appellant had been applying for over three years, it requested the Respondent to review its decision vide a letter dated 16th February 2024 and revert to its earlier ruling dated 2nd August 2020 emphasizing that its product was a plant growth regulator.

20. It further stated that in its tariff classification decision rendered on 26th February 2024, the Respondent persisted in maintaining that Chrystal VIVA 20 SL is classifiable under HS Code 3824. 99. 90. However, it noted that the Respondent did not explain why it was departing from its earlier tariff classification dated 2nd August 2020 which classified the product under HS Code 3808. 93. 90 which deals with plant growth regulators.

21. The Appellant contended that in various other countries around the world, the product Chrystal VIVA 20 SL under HS Code is imported under HS Code 3808. 93. 90 including EU Countries and USA.

22. It was also averred that the PCPB also confirmed to the Respondent that Chrystal VIVA 20 SL is a plant growth regulator and is registered as by the PCPB, which is a Government regulatory body, and confirmed that the product was properly classified under HS Code 3808. 93. 90.

23. The Appellant contended that the Respondent’s classification of Chrystal VIVA 20 SL under HS Code 3824. 99. 90 is not correct because 6-banzylaminopurine is a plant growth regulator which is specifically provided for under HS Code 3808. 93. The Respondent erroneously ignored the fact that 6-benzylaminopurine which is the active ingredient in Chrystal VIVA 20 SL is a plant growth regulator which appears in high concentration in Chrystal VIVA 20 SL and the other ingredients are merely solvents. It stated that as plant growth regulators are specifically provided for under heading HS Code 3808. 93, the Respondent’s classification of Chrystal VIVA 20 is completely erroneous, and is also a departure from its previous classification dated 2nd August 2020, where it had correctly classified the product under HS Code 3808. 93. 90.

24. The Appellant also asserted that the Respondent made no attempt whatsoever in its decision dated 26th February 2024 to explain why it departed from its previous classification dated 2ndFebruary 2020.

25. It was also stated that the Appellant has been applying the Respondent’s tariff classification dated 2nd August 2020 and the Respondent has breached the Appellant’s legitimate expectation by departing from its previous clear and express tariff classification, which under HS Code 3808. 93. 90 Chrystal VIVA 20 SL was properly zero rated for import duty.

26. The Appellant therefore contended that the Respondent has no basis in law and fact to classify Chrystal VIVA 20 SL under HS Code 3824 .99. 90.

27. The Appellant’s witness one JAN NANSEN filed a witness statement which was admitted in evidence during the hearing on 12th November 2024. The witness testified and was cross-examined by the Respondent’s representative.

28. The witness testified that, he was the Global Regulatory and External Research and Development Manager for Chrystal International BV.

29. The witness testified that the Respondent’s position that a plant growth regulator falls within the purview of Chapter 38. 24 is inconsistent with the doctrine of strict interpretation of taxation statues, and the Tariff Ruling is flawed as it is improper to categorize plant growth hormones under this heading both in Kenya and internationally.

30. He also testified that a plant growth regulator is a natural or synthetic chemical compound that influences or regulates specific physiological functions in plants such, such as auxins, gibberellins, cytokines, ethylene and abscisic acid. He stated that some plant growth regulators are naturally occurring substances found in plants, like auxins, and are predominantly categorized by their role in regulating plant development, and many plant growth regulators are synthesized for agriculture use.

31. He stated that accordingly, a plant growth regulator is not considered a plant or a plant derivative; rather, it is a chemical agent, whether naturally derived or artificially created, that influences or controls particular physiological processes within the plant.

32. The witness further testified that Chrystal VIVA 20 SL contains 6-benzyladenine, also known as 6-benzylaminopurine, which belongs to the cytokinin class of plant hormones, which are recognized for their role in influencing plant physiology and promoting growth.

33. The witness further confirmed that Chrystal VIVA 20 SL performs the following functions; Enhances the overall quality of both flowers and foliage;

Promotes the complete opening of flower buds;

Delaying aging of leaves;

Maintains the leave’s firmness and greenness, while preventing yellowing; and,

Prolongs the vase life of flowers considerably.

34. It was testified that the application of the product is ideally suited for growers immediately after harvest, as it functions to replicate the effects of naturally occurring plant growth regulators, which are typically deficient in flowers once they have been cut.

35. The witness further testified that the Respondent is fully aware of the constituents of Chrystal VIVA 20 SL, as in its Tariff Ruling of 2nd August 2020, it clearly stated that Chrystal VIVA 20 SL is classified under EAC/CET HS Code 3808. 93. 90 as it is a plant growth regulator.

36. The witness testified that Chrystal VIVA 20 SL falls within the classification Heading 38. 08 for the following reasons;i.Harvested flowers remain classified as plants, as their physiological processes persist post-harvest;ii.The inclusion of plant growth regulators is expressly referenced under Heading 38. 08 of the CET;iii.Chrystal VIVA 20 SL Contains 6-bebzyladenine also known as 6-benzylaminopurine, as its active ingredient, a recognized plant growth regulator, thereby falling within the purview of the explanatory notes for Heading 38. 08;iv.The Respondent in its tariff determination issued in August 2020 and June 2021, expressly acknowledged that Chrystal VIVA 20 SL constitutes a plant growth regulator, thereby appropriately classifiable under Heading 38. 08, with other items classified in 38. 08 which can be used in plants and plant products pre-harvest and post-harvest being herbicides, and plant growth regulators; and,v.The product is duly registered with the PCPB as a plant growth regulator, and the PCPB issued a formal letter to that effect to the Respondent.

37. He stated that the Respondent’s preferred HS Code 2022 EAC/CET 3824. 99. 90 covers chemical products and preparations of the chemical or allied industries (including those consisting of natural products not elsewhere specified), or included in the nomenclature while HS Code 3808. 93. 90 specifically provides for plant regulators.

38. The witness also stated that to demonstrate the Respondent’s departure from established international Customs practices, it is to be noted that in the year 2010 the world Tarde Organization (WTO) Committee on Rules of Origin classified plant growth regulators under HS Code 38. 08.

39. The witness concluded his testimony by stating that the it is only logical that the Respondent would have classified the Chrystal VIVA 20 SL product as per the intended use and worldwide acknowledgement of the same as a plant regulator under HS Code 3808. 93. 90 rather than the HS Code 3824. 99. 90 and that the Respondent’s classification is erroneous and lacks merit.

40. In its submissions, the Appellant contended that the Respondent’s misclassification is based on the lack of understanding of the composition and use of Chrystal VIVA 20 SL. It submitted that the Respondent fundamentally misrepresented the composition of the product by submitting a sworn statement to this Tribunal from Mr. Ogoti, in which at paragraph 20 thereof he asserted that Chrystal VIVA contains Gibberellic acid, a claim that is unequivocally refuted by the safety data sheet, which provides clear evidence to the contrary.

41. The foregoing notwithstanding, as the Respondent asserted that Gibberellic acid is the key active ingredient in Chrystal VIVA, it should logically still classify the product under HS Code 3808. 93. 90, as the classification still recognizes Gibberellic as a plant growth regulator.

42. The Appellant further submitted that the Respondent admitted that it did not conduct any laboratory analysis of the product and has failed to present any credible alternative evidence to support its claim regarding the product’s composition, which omission undermined the Respondent’s position, particularly given that the product’s composition and usage remained unchanged from their earlier tariff classification ruling.

43. It was further submitted that the lack of evidence renders the Respondent’s reclassification baseless and unsubstantiated highlighting a fundamental failure to meet the requisite evidentiary burden.

44. The Appellant submitted that the Respondent’s failure to arrive at the correct conclusion that plant growth regulators can only be classified under HS Code 38. 08 demonstrates a clear misapplication of the Harmonized System and a fundamental flaw in its classification approach.

45. The Appellant submitted that the classification of goods is regulated by the General Interpretative Rules (GIRs). Under GIR 1, the classification process is primarily determined by the specific terms and headings and any applicable section or chapter notes. Where headings or notes do not mandate otherwise, classification is to be guided by the subsequent provisions of GIR Rule 2 through 6.

46. It was submitted 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 provisions expounded.

47. The Appellant submitted that the EAC/CET HS Code Explanatory Notes of Chapter 38 reads;“This chapter does not cover;a.Separate chemically defined elements or compounds with the exception of the following;i.Artificial graphite (heading 38. 01);ii.Insecticides, rodenticides, herbicidess, anti-sprouting products and plant-growth regulators, disinfectants and similar products, put up as described in heading 38. 08…”Therefore, the heading of Chapter 38. 08 describes the products in its classification as above, which includes, plant growth regulators.

48. It was submitted that, on the other hand, the heading to Chapter 38. 24, describes the products in its classification as those;“prepared binders for foundry moulds or cores, chemical products and preparations of the chemical or allied industries (including those consisting of mixtures of natural products), not elsewhere specified or included.”

49. The Appellant submitted that the Respondent failed to adhere to the General Interpretative Rules, as the purported reclassification was not aligned with the terms of the relevant heading or the applicable section and chapter notes. It was submitted that the oversight rendered the reclassification fundamentally flawed, particularly given that there were clearly applicable headings and chapter notes that precisely defined and characterized Chrystal VIVA, and the disregard for established classification principles underscored the erroneous nature of the Respondent’s determination.

50. The Appellant cited the case of Commissioner of Customs and Border Control vs. Adula [2022] KEHC 248 KLR, where the High court stated;“…The parties agree that to ascertain what Code is applicable to particular goods, one has to look at the General Rules for the Interpretation of the Harmonized System Rules (GIR) which are rules that govern the classification of goods under the Harmonized System.”

51. In Kenya Breweries Ltd vs. Commissioner of Customs & Border Control [2020] eKLR, it was held that the GIR 1 is the foremost rule of classification. In the case, the Tribunal agreed with the holding in the Canadian case of Puratos Canada Inc vs. Canada (Customs and Revenue) [2004] CA CITT.

52. It was submitted that the Respondent failed to properly consider GIR rules, and the intended use of Chrystal VIVA as a plant growth regulator. By disregarding its prior classification decisions, the product’s established composition, and corroborating input from the PCPB, the Respondent’s reclassification of Chrystal VIVA under HS Code 38. 24 is fundamentally flawed and erroneous.

53. The Appellant also submitted that the Respondent failed to provide evidence any laboratory test results or any credible evidence to support its classification of the product and its reclassification lacked proper substantiation and is inconsistent with established evidence, including its own past tariff decisions and inter-agency correspondence. Further, the Respondent’s misstatement of the Appellant products ingredients, such as wrongly identifying Gibberellic acid as a key ingredient, only exacerbated its failure to meet its basic evidentiary burden and understanding of the issues herein.

54. The Appellant also submitted that the Respondent’s imposition of duty on Chrystal VIVA was conducted in a manner that violated the principle of legitimate expectation, which requires that public authorities act consistently, transparently, and fairly based on established representations or practices. It stated that fairness in classifying any product should be of paramount importance to ensure that public powers are not abused, and taxpayers are not adversely affected.

55. In addition, it was submitted that the Respondent failed to adequately understand the nature, classification, and intended use of the product before imposing the duty. It was submitted that a proper assessment would require laboratory analysis of the product, research, and a consideration of global classification of plant growth regulators.

56. In buttressing the aforesaid submissions, the Appellant cited the case of Keroche Industries Ltd vs. Kenya Revenue Authority & 5 others (supra), where the court emphasized the need for public bodies to ensure decisions are well informed and justified, especially when they affect the business environment.

57. The Appellant submitted that the Respondent had previously indicated that such products would fall under the classification of Heading 38. 08, and a sudden change in classification without a justifiable explanation or the reason for such change constitutes a breach of legitimate expectation.

58. The Appellant therefore submitted that the Honourable Tribunal ought to find that the Respondent’s actions were devoid of the essential procedural and substantive fairness required under the doctrine of legitimate expectation. Accordingly, the imposition of duty should be reviewed and nullified, ensuring that future decisions are grounded in a well thought out and comprehensive understanding of the products in question.

The Appellant’s Prayers 59. By reason of the foregoing, the Appellant prays the Honourable Tribunal for orders, that;a.The Decision dated 1st March 2024 be annulled and set aside in its entirety;b.The Appeal be allowed; andc.Any other remedies that the Honourable Tribunal deems just and reasonable.

The Respondent’s Case 60. The Respondent’s case is premised on its;a.Statement of Facts dated and filed on the 9th May 2024;b.Respondent’s witness Statement dated, signed by Thaddeus Ogoti and filed on 16th October 2024, which was adopted as evidence in chief on the 12th November 2025.

61. The Respondent stated that the Appellant lodged entries for the imports vide Entry No. 24EMKIM400108100 on 31st January 2024 and declared the products in 2022 EAC/CET HS Code 3808. 93. 90 which provides for plant growth regulators.

62. The Respondent stated that it however determined the product as an immersion treatment by-product in post-harvest period to enhance the ornamental value of flowers and buds which is classified in the 2022 EAC/CET HS Code 3808. 99. 90 based on the verification report and technical information availed vide a Tariff Ruling dated 8th February 2024.

63. It was stated that following application for review, the Respondent upheld the Tariff Ruling fully on 26th February 2024.

64. The Respondent in response to the Appellant’s grounds of appeal stated that Heading 38. 24 states;“prepared binders for foundry moulds or cores; chemical products and preparations of the chemical or allied industries (including those consisting of mixtures of natural products), not elsewhere specified or included.”Heading 38. 08 states;“Insecticides, rodenticides, fungicides, herbicides, anti-sprouting products and plant growth regulators, disinfectants and similar products, put up in forms or packings for retail sale or as preparations or articles (for example, Sulphur treated bands, wicks and candles, and fly-papers).”

65. The Respondent further stated that Section 4 (1) (a) of the East African Community Customs Management Act (EACCMA, 2004) mandates it to coordinate and monitor the administration of the EAC/CET.

66. It stated that it was guided by the provisions of the General Interpretative Rules 1 (GIR 1), which states that classification shall be determined in accordance with the headings and any other relative section or chapter notes.

67. The Respondent averred that during its verification of the imports, it determined that the products were majorly used in post -harvest period to enhance the ornamental value of the flowers and buds hence it did not act as a plant growth regulator to the crops.

68. It was averred that as a result of this new information, the Respondent classified the product under Heading 38. 24 instead of Heading 38. 08 as a result of this new material information, its previous ruling was abandoned and cannot be used against the Respondent.

69. The Respondent further stated that it consequently classified the products under Heading 38. 24 which deals with chemicals that aid in the general enhancement of production of plants such as pesticides, fungicides and herbicides.

70. It stated that upon testing the Appellant’s product, it determined that it contains citric acid, N-( Phenylmethyl)-H- Purine 6- Amine, Gibberellins and other ingredients which are beneficial in post -harvest treatment of horticultural plants.

71. The Appellant also stated that a look at the Appellant’s website chrysal.com, Chrystal VIVA is described as;“Chrystal VIVA is a grower’s products for cut flowers and potted plants. Chrystal VIVA is easy to use and stimulates branch induction, resulting in beautiful plants with plenty of room for flowers. Not only is Chrystal VIVA a cultivation application for phalaenopsis, it is also ensuring a better ornamental value of leaves and flowers as a post-harvest application for Rosa, Anthuriums and Chrysanthemum.”

72. It was stated that it was not in dispute that Chrystal VIVA contains Gibberellic Acid, but the Respondent’s position was that Gibberellic Acid is only an effective plant growth regulator if used in small quantities.

73. It further stated that the high quantities of Gibberellic Acid in Chrystal VIVA do the opposite of its intended purpose and as such it fails to act as a plant growth regulator. It averred that even the Respondent themselves are alive to the fact that the product in question is purely used in the preservation of the flower’s vase life by improving bud opening.

74. The Respondent also stated that it is the body tasked with the mandate of verifying and coordination of imports and exports in Kenya as per the provisions of Section 4 of the EACCMA.

75. The Respondent further stated that its ruling was guided by the verification findings and it solely relied on the basic principles of customs classifications under Harmonized System.

76. The Respondent availed a witness one Thadeus Ogoti, whose witness statement was adopted in evidence during the hearing on 12th November 2024.

77. The witness testified that the Appellant’s product was identified as an immersion treatment by-product in post-harvest period to enhance the ornamental value of flowers, buds and extend the vase life post purchase by the final consumer which is classified in the 2022 EAC/CET HS Code 3824. 99. 90 based on the verification report and technical information availed vide a Tariff Ruling dated 8th February 2024.

78. During cross-examination, the Respondent’s witness stated that the alleged laboratory test results were not shared with the Appellant, nor submitted to the Tribunal.

79. The Witness also stated in cross-examination that no reasons were given to the Appellant for the Respondent changing the Tariff Ruling issued three years earlier and which the Appellant had been declaring its imports of the product in question.

80. The witness stated that the ruling was guided by the verification findings and the Respondent solely relied on the basic principles of customs under the Harmonized System.

The Respondent’s Prayers 81. By reason of the foregoing the Respondent prayed the Honourable Tribunal for orders, that;a.This Honourable Tribunal upholds the Respondent’s Tariff Ruling dated 1st March 2023 and the subsequent Review Decision as proper in law;b.A declaration that the correct classification for the imports is HS Code 3824. 99. 90 rather than HS Code 3808. 93. 90 that was declared by the Appellant; and,c.Cost of the Appeal.

Issues For DeterminationPARA 82. The Tribunal having carefully considered the pleadings filed, evidence adduced and submissions made is of the considered view that the appeal distils into two issues for determination as follows;SUBPARA i.Whether the Respondent’s decision to reclassify the Appellant’s imported product Chrystal VIVA 20 SL from the declared HS Code 3808. 93. 90 to HS Code 3824. 99. 90 breached the Appellant’s right to legitimate expectation; and,SUBPARA ii.Whether the Respondent erred in its decision to reclassify the Appellant’s imported product from HS Code 3808. 93. 90 to HS Code 3824. 99. 90.

Analysis And Determination 83. Having narrowed down the Appeal to the two issues for determination, the Tribunal proceeds to analyze and determine the same as hereunder;

i. Whether the Respondent’s decision to reclassify the Appellant’s product Chrystal VIVA 20 SL from the declared HS Code 3808. 93. 90 to HS Code 3824. 99. 90 breached the Appellant’s right to legitimate expectation. 84. The substrata of the disputed issue herein arises from the Tariff Classification Ruling issued by the Respondent to the Appellant on 2nd August 2020 in which the Respondent classified the Appellant’s imported product Chrystal VIVA 20 SL under HS Code EAC/CET 3808. 93. 90 as a plant growth regulator.

85. In the said tariff classification dated 2nd August 2020, the Respondent wrote:“The sample was found to be a chemical preparation containing organic compounds characterized by alkyl, ethyl, and amide functional groups.Chrystal VIVA 20 SL is specified to be a plant growth regulator based on 6-Benzylaminopurine) a synthetic cytokinin that stimulates cell division in plants, spurs plant growth, sets blossoms and improves fruit quality.Heading 38. 08 covers the classification of anti sprouting products and plant growth regulators …The heading includes plant growth regulators intended to inhibit or promote physiological processes in plants. Synthetic organic chemicals are also used as plant regulators.Based on the above information, the sample examined is therefore considered to be a synthetic plant growth regulator, based on a cytokinin, classified in EAC/CET HS Code 3808. 93. 90. ”

86. Based on the foregoing Tariff Ruling from the Respondent, the Appellant’s product Chrystal VIVA 20 SL was reclassified from the then HS Code 3808. 92. 90 to HS Code 3808. 93. 90, which the Appellant has continually applied and declared its product under since the Tariff Ruling issued on 2nd August 2020.

87. On 8th February 2024, the Appellant received a Tariff classification from the Respondent which was at complete variance with the Tariff classification issued on 2nd August 2020 without any enquiry being made by the Respondent.

88. The Respondent’s witness at the hearing confirmed that the Appellant was not given the reasons for the change of tariff classification. It was also not clear whether the Laboratory analysis alluded to was the initial one in 2020, as the Appellant was not requested for a sample, any inquiries, or the lab results shared with them.

89. It is trite that the doctrine of legitimate expectation requires public authorities to act consistently, transparently and fairly based on established representations or practices, and further ensure decisions are well informed and justified, especially when they affect the business environment.

90. The Respondent in its Tariff Classification Ruling dated 2nd August 2020 had classified the Appellant’s product under HS Code 3808. 93. 90, moving the same from then declared HS Code 3808. 92. 90. The Appellant accordingly complied and has been declaring its imports under this tariff classification for four years or so, in line with the Respondent’s classification.

91. The abrupt change without notice, and without giving any justifiable explanation to the affected party on the reasons for such changes, and the unexpected imposition of duty would occasion financial and operational hardship, and disrupt the Appellant’s business planning and day to day operations, considering it was not even a participatory process.

92. The Respondent’s failure to apply consistent standards, noting this is an attempt to reclassify the product into a different tariff classification for a third time, but this round without participation of the affected party, undermines the process giving rise to arbitrariness which constitutes a breach of legitimate expectation.

93. The Tribunal upon consideration of the material adduced is satisfied that there was legitimate expectation in favour of the Appellant based on the written promise constituted in the Tariff Ruling dated 2nd August 2020, and the conduct of the two parties over the number of years the classification in question has been consistently been declared.

94. In light of the foregoing, the Tribunal finds and holds that the Respondent’s reclassification of the Appellant’s product was devoid of the essential procedural and substantive fairness required under the doctrine of legitimate expectation, and accordingly its reclassification of tariff and imposition of duty is found to be without merit.

ii. Whether the Respondent erred in its decision to reclassify the Appellant’s imported product Chrystal VIVA 20 SL from the declared HS Code 3808. 93. 90 to HS Code 3824. 99. 90. 95. The Appellant has submitted that the Respondent erred in fact and law in reclassifying the product Chrystal VIVA through inaccurate description of the product, and incorrect HS Code.

96. The Appellant has averred that the evidence adduced demonstrates that its product is made up of 6- benzyladenine, which is a plant growth regulator specifically provide for under HS Code 3808. 93.

97. It was averred that the Respondent’s witness misrepresented the composition of the product when he asserted that Chrystal VIVA contains Gibberellic acid, which evidence is rebutted by the data sheet adduced by the Appellant’s witness. Thus, a submission was made that the Respondent’s misclassification was founded on the lack of understanding of the composition and use of the product Chrystal VIVA 20 SL.

98. The Appellant’s witness in his testimony stated that the application of the Appellant’s product is principally on flowers pre and post-harvest. He explained that flowers continue to grow and blossom even after being cut and they retain their plant growth characteristics, and this product keeps the same blossoming, hence a plant growth regulator.

99. Admittedly, the Respondent did not conduct any laboratory tests and analysis on the product and therefore did not adduce any evidence of the product’s composition and usage to justify the change from the prevailing, which had been informed by sampling, lab tests, and analysis.

100. The Tribunal takes note of the Explanatory Note (iii) to Heading 38. 08, which outlines the classification of plant growth regulators as hereunder;“Plant growth regulators are applied to alter the life processes of a plant so as to accelerate or retard growth, enhance yield, improve quality or facilitate harvesting, etc. Plant hormones (phytohormones) are one type of plant growth regulator (e.g. Gibberellic acid) Synthetic organic chemicals are also used as plant growth regulators.”

101. The Tribunal has also not lost sight of the Respondent’s testimony that it determined that the Appellant’s product was majorly used in post-harvest period to enhance the ornamental value of the flowers, buds, to extend their vase life, and hence did not act as a plant growth regulator, thus informing its decision to reclassify to Heading 38. 24 which deals with chemicals that aid in general enhancement of production of plants such as pesticides, fungicides and herbicides.

102. However, the foregoing notwithstanding, from the material adduced before this the Tribunal, the Tribunal is satisfied that cut or harvested flowers continue blossoming post-harvest, such as buds opening, flower buds, foliage quality enhanced, leaves greenness maintained without turning yellow, leaves maintaining their supple freshness. The product therefore modifies and changes the physiological process within a plant whether pre- or post – harvest, which promotes growth. The article adduced by the Appellant, i.e. “Growth and Physiological responses of lycopersicum to atonik and benzyl adenine under vernalized conditions” by Samia Ali Haroun (Department of Botany).

103. The Tribunal agrees with the view that harvested or cut flowers remain classified as plants, as their physiological processes persist post-harvest.

104. In view of the foregoing, the Tribunal is satisfied that from the facts adduced, the Appellant’s product retained its characteristics and functions as a plant growth regulator and the Respondent ought to have maintained its description for classification purposes as such.

105. It was also submitted that the process of classification of goods as guided by EAC/CET provides the respective tariff rates, guided by the WCO GIRs, and the Explanatory Notes.

106. It was also submitted that the classification of goods is regulated the GIRs, and under GIR 1, the classification process is primarily determined by the specific terms of the headings and any applicable section, or chapter notes. Where headings or notes do not mandate otherwise, classification is to be guided by the subsequent provisions of GIR Rules 2 to 6.

107. 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 provisions expounded.

108. The Explanatory Notes to EAC/CET to Chapter 38 reads;“This chapter does not cover:a.Separate chemically defined elements or compounds with the exception of the following; 1. Artificial graphite (heading 38. 01).

2. Insecticides, rodenticides, fungicides, anti-sprouting products and plant growth regulators, disinfectants and similar products, put up in forms or packings for retail sale or as preparations or articles (for example, Sulphur treated bands, wicks and candles, and flypapers).”

109. The Heading to Chapter 38. 08 describes the products in its description as;“Insecticides, rodenticides, fungicides, herbicides, anti-sprouting products and plant growth regulators, disinfectants and similar products, put up in forms and packings for retail sale or as preparations or articles (for example, Sulphur -treated bands, wicks and candles, and flypapers).”While the Heading of Chapter 38. 24, describes the products in its classification as those;“prepared binders for foundry moulds or cores, chemical products and preparations of the chemical or allied industries (including those consisting of mixtures of natural products), not elsewhere specified or included.”

110. It was submitted that the Respondent failed to adhere to the GIRs as the purported reclassification was not aligned with the terms of the relevant heading or the applicable section or chapter notes, thus rendering the reclassification fundamentally flawed, particularly given that there were clearly applicable headings and chapter notes that precisely defined and characterized plant growth regulars such as Chrystal VIVA.

111. The Plant growth regulators are explicitly referenced under Heading 38. 08 of the EAC/CET, and it would not make sense to reference the same elsewhere without a rational evidence-based explanation being adduced by the Respondent to justify the shift in classification, particularly as the product’s composition and intended use remain unchanged.

112. Flowing from the foregoing, the Tribunal determines and holds that the Respondent erred in its decision to reclassify the Respondent’s imported product Chrystal VIVA 20 SL from the declared tariff HS Code 3808. 93. 90 to HS Code 3824. 99. 90, and the reclassification was not justified.

113. The upshot of the foregoing is that the Appellant’s Appeal is merited and hereby succeeds.

Final Determination 114. The Appellant’s Appeal having succeeded, the Tribunal makes the following orders;a.The Appellant’s Appeal be and is hereby allowed;b.The Respondent’s Review Decision dated 26th February 2024 be and is hereby set aside; and,c.Each party to bear their own costs.

115. It is so ordered.

DATED AND DELIVERED AT NAIROBI THIS 31ST DAY OF JANUARY 2025ROBERT M. MUTUMA.......................CHAIRPERSONMUTISO MAKAU ...........................MEMBERJEPHTHAH NJAGI...........................MEMBERDELILAH K. NGALA ...........................MEMBERDR TIMOTHY B. VIKIRU...........................MEMBER