[2023] KETAT 898 (KLR)

Highlands Drinks Limited v Commissioner of Customs & Border Control (Appeal 1392 of 2022) [2023] KETAT 898 (KLR) (Commercial and Tax) (20 December 2023) (Judgment)

Neutral citation: [2023] KETAT 898 (KLR)

Republic of Kenya

In the Tax Appeal Tribunal

Commercial and Tax

Appeal 1392 of 2022

E.N Wafula, Chair, D.K Ngala, CA Muga, GA Kashindi, AM Diriye & SS Ololchike, Members

December 20, 2023

Between

Highlands Drinks Limited

Appellant

and

Commissioner Of Customs & Border Control

Respondent

Judgment

Background. 1. The Appellant is a private limited liability company incorporated and domiciled in Kenya whose principal business is the manufacture and sale of bottled drinking water, cordials and carbonated soft drinks which are excisable goods.

2. The Respondent is a principal officer appointed under Section 13 of the Kenya Revenue Authority Act, CAP 469 of the laws of Kenya. 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 & 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 made an application to the Respondent for excise registration on 16th June 2022 expressing interest to manufacture and sell a new product namely, Highlands cordials pineapple juice with coconut flavor (herein referred to as the “product”). The application was accompanied by a sample of the product duly classified under Chapter 22 of the HS Code 2002. 99. 00 of East Africa Community Customs Union, Common External Tariff (hereinafter ‘EACCET’).

4. In a letter dated 22nd June 2022, the Respondent opposed the Appellant’s classification and instead classified the product under Chapter 20 of the HS Code 2009. 49. 00 as a fruit juice based on the Respondent’s laboratory analysis of the product which found concentration of fructose at 11%.

5. On 27th June 2022, the Appellant contested the classification by the Respondent on the basis that the product did not have any fruit content since it was a water-based flavored drink.

6. On 29th June 2022, the Appellant requested the Respondent to furnish the laboratory results and analysis that justified the classification of the product under HS Code 2009. 49. 00.

7. On 4th July 2022, a consultative meeting was held where the Respondent clarified its laboratory results that found the Appellant’s product to be unfermented fruit cordial with brix value of 27. 08 which necessitated the classification under Chapter 20 of HS Code 2009. 49. 00 as communicated by the Respondent.

8. On 8th July 2022, the Appellant vide a letter objected to the Respondent’s tariff ruling stating that its product was made from flavoring concentrates/ emulsion not from fruit. The Appellant suggested the only other alternative classification of its product was under Chapter 21 since the Chapter classified beverages made of sugar syrup or concentrated fruit juices.

9. On 9th September 2022, vide a letter dated 26th July 2022, the Respondent requested for a stakeholder’s engagement to deliberate on matters raised which culminated in meeting on 20th September 2022. Consequently, the Respondent’s agents visited the Appellant’s manufacturing plant to witness production and collect samples of the product.

10. On 4th October 2022, the Appellant and the Respondent met again to deliberate on manufacturing verification and sample testing.

11. On 7th October 2022, the Respondent confirmed its tariff classification of the Appellant’s product under HS Code 2009. 49. 00. In rebuttal, the Appellant informed the Respondent of its intention to appeal against the Respondent’s classification review decision vide a later dated 27th October 2022. In the same letter, the Appellant requested a copy of the laboratory results of samples tested.

12. Aggrieved by the Respondent’s re-classification review decision, the Appellant filed its Notice of Appeal dated 4th November 2022 on the same date.

The Appeal 13. The Appeal was premised on the following grounds as enumerated in the Memorandum of Appeal dated 18th November 2022 and filed on even date;a.That the Respondent erred in fact and in law in classifying the Appellant’s product, Cordial Pineapple Juice with Coconut Flavor, as fruit juice under Chapter 20 of the HS Code, 2009. 49. 00, claiming that the cordials contain real fruit and seeking to register the product for Excise duty at Ksh 10 per litre.b.That the Respondent erred in fact and in law in classifying the Appellant’s product, Cordial Pineapple Juice with Coconut Flavor, as fruit juice under Chapter 20 of the HS Code, 2009. 49. 00, as against the Excise Duty Act, No. 23 of 2015 (hereinafter ‘EDA’) and the EACCET and notes to the HS Code.c.That the Respondent erred in fact and in law in failing to consider the results of the Respondent’s verification of the Appellant’s manufacturing process and testing of the Appellant’s product’s ingredients of; sugar, syrup, sweeteners, juice concentrate and the finished product showing that the product does not contain real fruit and does not contain high levels of fructose and proceeded to confirm its tariff classification of HS Code, 2009. 49. 00. d.That the Respondent erred in fact and in law in failing to classify the Appellant’s products, Cordial Pineapple Juice with Coconut Flavor, as “miscellaneous edible preparations” under Chapter 22 of the HS Code which are not chargeable to Excise duty under the EDA.e.That in the alternative, the Respondent erred in fact and in law in failing to classify the Appellant’s products, Cordial Pineapple Juice with Coconut Flavor, as “other non-alcoholic beverages, not including fruit, nut or vegetable juices of sub-heading 20. 09” under Chapter 22. 02, tariff 2202. 99. 00 of the HS Code which is chargeable to Excise duty under the EDA at Ksh 5 per litre.f.That the Respondent erred in fact and in law in using the irrelevant consideration of brix value of the Appellant’s products as a basis for classifying the product under Chapter 20(fruit juice) or Chapter 22 (other non-alcoholic beverages, not including fruit, nut or vegetable juices of sub-heading 22. 09) for the purpose of Excise registration.g.That the Respondent erred in fact and in law in using irrelevant consideration of fructose content of the Appellant’s products as a basis for classifying the product under Chapter 20 as fruit juice and falling to consider that fructose is a constituent element of sugar and fructose content is not an indication of whether the product has real fruit.h.That the Respondent erred in fact and in law in failing to provide the Appellant the sample laboratory test results which formed the basis of the tariff classification and objection decision therefore infringing the Appellant’s right to fair administrative action under Article 47 of the Constitution of Kenya, 2010 (hereinafter ‘the Constitution’).

Appellant’s Case 14. The Appeal was anchored on the Appellant’s Statement of Facts dated 18th November 2022 and filed on even date.

15. That the Appellant intended to manufacture and sell a new excisable product namely, Cordial Pineapple Juice with Coconut Flavor classified under the First Schedule of the EDA at Ksh 5 per liter as a “Bottled or similarly packaged waters and other non-alcoholic beverages, not including fruit or vegetable juices’ under Chapter 22 sub heading 22. 02 HS Code.

16. That the product is made by mixing water, sugar and flavoring concentrates/ emulsions and preservatives to prevent fermentation. That the flavoring concentrates/ emulsions chemical name is Cocopine Emulsion AFP2305 and is prepared from flavoring preparations and flavoring substances not from fruit.

17. That Cocopine Emulsion AFP2305 contains; water, purity gum ultra E1450, sucrose acetate Isobutylate E444, Mygliol, Citric acid E330, flavorings, alpha tocopherol E307, yellow tartrazine E102, quinoline yellow E104, caramel color E150B, potassium sorbate E202 and sodium benzoate E211.

18. The Appellant averred that the product is a concentrated juice that is dilute to taste pineapple cordial whose recommended serve is a mixture of one part of the product to four parts of water. That arising from its laboratory analysis, the Appellant classified the product as excisable under subheading 22. 02 HS Code of EACCET pursuant to the 1st Schedule of the EDA at Ksh 5 per liter which reads as follows;“…bottled or similarly packaged waters and or other non-alcoholic beverages not including fruit vegetable juices…”

19. The Appellant claimed that its product was neither made from fruit nor contained any fruit and disputed the Respondent’s classification of the product under the HS Code 2009. 49. 00 whose requirement for the classification as alleged by the Respondent was fruit content i.e. Chapter 20 of the HS Code 2009. 49. 00 covers;“…fruit juices obtained by pressing fresh, healthy and ripe fruits or vegetables that preserve the original character of the fruit or vegetable...”

20. It was the Appellant’s declaration that the only other close classification alternative for the product was Chapter 21 of the HS Code as it classifies beverages that are made of sugar syrup or concentrated fruit juices which have been modified by addition of constituents for example citric acid and sweeteners such that the balance of fruit juice constituents as found in natural juice is distorted.

21. The Appellant asserted that brix value of the product was immaterial in classifying the product under either Chapter 20 or Chapter 21 as both Chapters contain concentrated or ready to drink juices with higher or lower brix value. The only distinguishing factor in classifying the product under Chapter 20 was whether the product was prepared from fresh juice or vegetables.

22. That at the Meeting of 20th September 2022, there was agreement that contention was on whether to classify the product under Chapter 22 or Chapter 20. The Appellant contested the Respondent’s assertion that the product’s high fructose content of 11% was because it was made from fruit by clarifying that the product did not contain any fruit. The Appellant averred that the difference in fructose content between the earlier sample and the latter sample could be due to inversion of sugar to fructose and glucose.

23. The Appellant avowed that this was primarily the reason the Respondent was invited to its manufacturing plant to witness the process and obtain samples from site on 20th September 2022. That in the presence of the Appellant’s officer, the Respondent conducted sample testing that confirmed low levels of fructose than earlier claimed by the Respondent.

24. The Appellant averred that consequent to lodging notice of objection, a request was placed to the Respondent to grant conditional registration of the product under the HS Code 2202. 99. 00 chargeable at Ksh 5 per litre pending determination of the instant Appeal with commitment to pay the shortfall of Ksh 5 if the Tribunal finds in favor of the Respondent because the current impasse meant that both parties were losing on revenue.

25. The Appellant cited KEBS Standard, KS 1485:2020 which reads in part as follows:“(a)Identifies a fruit(water-based) flavored drink to be either concentrated or ready to drink product of water, sweetening agents, natural, nature identical or permitted artificial fruit flavorings(b)Clearly states that the fruit (water-based) flavored drinks should be distinguished from among other things, fruit juices and fruit squash;(c)Under the standard, the only difference between concentrated fruit (water-based) flavored drinks and ready to drink products is that the degree brix value of concentrated products is required to be at 30 while that for ready to drink is at 10. ”

26. According to the Appellant, cordials are concentrated fruit (water-based) flavored drinks that require addition of four parts of water to make them ready to drink and of brix value 10 as such the proper classification for the product was HS Code 20. 02. 99. 00.

Appellant’s Prayers 27. The Appellant’s prayers to the Tribunal were that;a.The Respondent’s tariff classification and review decision be struck out with costs.b.The product be classified under Chapter 21 of the HS Codes with no Excise duty payable.c.In the alternate, the Tribunal compels the Respondent to register and classify the Appellant’s product under Chapter 22. d.That the Respondent or its employees, agents or other person purporting to act on its behalf be barred and/or estopped from demanding or taking any further steps towards enforcement or recovery of Excise principal tax, penalties and interest of the Appellant’s product.

The Respondent’s Case 28. The Respondent replied to the Appeal through its Statement of Facts dated 16th November 2022 and filed on 19th December 2022.

29. The Respondent averred that subsequent to Appellant’s application for registration for Excise duty, the Appellant was requested to avail samples of the product to be registered and licensed. That the Appellant availed a sample of packaged product for testing by the Respondent. It was the Respondent’s assertion that the information as presented in the package automatically classified the product under HS Code 2009. 49. 00

30. The Respondent averred that the product was subjected to laboratory tests which confirmed fructose content of 11% which according to Collins dictionary is a sweet substance occurring naturally in fruit and vegetables sometimes used to make food sweeter. It was the Respondent’s assertion that the fructose content confirmed the presence of fruit juice concentrate which is made from whole fruits that have been thoroughly washed, scrubbed and crashed or blended to produce pulp whose water content is extracted to reduce bacterial growth through filtration, evaporation and pasteurization.

31. Further, the Respondent stated that companies use flavor packs which are artificial compounds made from fruit by-products to restore original flavor which may have been diluted by the above process.

32. That contrary to Appellant’s allegations, there was mismatch in chemical composition of the product presented during;i.application for excise registration andii.the product availed during review application as confirmed by the attached data sheet as follows respectively;a.Water, Sugar, Citric Acid, Flavoring, Juice concentrate, Stabilizer (Gum Arabic), Artificial colorings, Vitamins; Vitamin C (Ascorbic Acid), Niacin, Vitamin E, Pantothenic Acid, Vitamins B6, Folic Acid Preservatives (Sodium Benzoate, Potassium sorbate).b.Water, purity gum ultra E1450, Sucrose Acetate isobutylate E444, Mygliol, citric acid E330, Flavorings, Alpha tocopherol E307, yellow tartrazine E102, Quinoline yellow E104, Caramel color E150B, potassium sorbate, E202 & sodium benzoate E211.

33. The Respondent avowed that the product being pineapple juice with coconut flavor, it was properly classified under the subheading “other” of the HS Code 2009. 49. 00 as follows;“20. 09 Fruit or nut juices (including grape must and coconut water) and vegetable juices, unfermented and not containing added spirit, whether or not containing added sugar or other sweetening matter- Other kg 25%- Pineapple juice:2009. 41. 00 - Of a brix value not exceeding 20kg 25%2009. 49. 00 – Other”

34. It was the Respondent’s assertion that the Appellant gave contradicting information regarding its product in the Statement of Facts by stating that the product contained juice concentrate while at the same time stating that it was made from flavoring concentrates with emulsion. The Respondent stated that it only registers a clearly defined product yet the Appellant presented for registration two different product as one. That this assertion by the Respondent was confirmed by the Appellant in its Statement of Facts at paragraphs 5 and 6 which inveterated the Respondent’s assertion that the product presented was not classifiable under HS Code 2202. 99. 00.

35. That contrary to Appellant’s allegations that brix value was irrelevant, the Respondent averred that brix value was a key determinant as it indicates the specific composition of fructose contained in a product.

36. It was the Respondent’s assertion that allegations by the Appellant as laid out in the Memorandum of Appeal and Statement of Facts unless in agreement by the Respondent were unfounded in law and not supported by evidence. Additionally, that contrary to Appellant’s allegations, the Respondent furnished the laboratory results via electronic mail.

Respondent’s Prayers 37. The Respondent prayers to the Tribunal were;a.That the Appeal be dismissed with costs.b.That the Respondent’s ruling and review decision be upheld.

Parties Submissions 38. The Appellant’s written submissions dated 19th September 2023 were filed on 20th September 2023. The Appellant submitted on a single issue as follows;Whether the Respondent erred in classifying the Appellant’s product under Chapter 20 of the HS Code.

39. The Appellant averred that there was misclassification of its product by the Respondent under Chapter 20 of the 2009. 49. 00 of the HS Code instead of Chapter 22 of HS Code 2202. 99. 00. That the Appellant’s product was prepared by flavoring concentrates contrary to Respondent’s classification under the impugned Chapter 20 that categorizes fruit juices obtained by pressing fresh, healthy and ripe fruit or vegetable while preserving their original character.

40. That it was erroneous for the Respondent to claim that the Appellant’s product was made from fruit owing to high fructose content of 11% yet fructose content arose from inversion of sugar due to long shelf life owing to heat, acidity and moisture as clarified by the Appellant’s witness during hearing of the instant Appeal. That the reason why the application sample had high fructose of 11% than the 1. 54% of the site sample was because of the 3-month shelf life difference between the two samples. That this lapse in period had necessitated the inversion of sugar to fructose in the earlier sample than the later sample.

41. The Appellant averred that the purpose of the Respondent’s verification of the manufacturing process and sample testing was to establish whether the product manufacturing process involved any fruit; yet despite the visit, the Respondent ignored the entire verification and sample testing in its tariff classification of the product while delivering the impugned review decision.

42. It was the Appellant’s assertion that contrary to Respondent’s allegations, ingredients in the two samples availed were the same the only difference being the display requirements by Kenya Bureau of Standards, a fact that had not been controverted by the Respondent. Similarly, the Appellant claimed that the Respondent had not contradicted that flavoring concentrate/ emulsion were prepared from flavoring preparation and substances not real fruit.

43. The Appellant was adamant that its product was made from flavoring concentrate/ emulsion not fruit. In disputing the Respondent’s classification under subheading 20. 09, the Appellant stated that the said subheading covers pressed fresh, healthy and real fruits not its product that was made from flavoring substances. To prop up this position, the Appellant cited Article 3 of Regulation (EC) No. 1334/2008 that define flavoring substances and preparations as follows:-“Flavoring substance means a defined chemical substance with flavoring properties;Natural flavoring substance shall mean a flavoring substance obtained by appropriate physical, enzymatic or microbiological processes from material of vegetable, animal or microbiological origin either in the raw state or after processing for human consumption by one or more of the traditional food preparation processes…Flavoring preparation means a product, other than a flavoring substance, obtained from… material of vegetable, animal or microbiological origin, other than food, by appropriate physical, enzymatic or microbiological processes, the material being taken as such or prepared by one or more of the traditional food preparation processes…”

44. In reiterating the above established position, the Appellant relied on two cases namely:a.Commissioner of Customs and Border Control v Kenya Breweries Limited (Tax Appeal E157 of 2021)[2022] KEHC 14570 (KLR)b.Puratos Canada Incl vs Canada (Customs and Revenue)

45. The Appellant further submitted that the additives contained in the product were not inherently present in pineapple fruit and can only be consumed upon addition of water in the recommended mixture of one (1) part of the product to four (4) parts of water resulting in diluted product whose character of beverages falls under subheading 22. 02.

46. The Respondent’s written submissions dated 20th September 2022 were filed on the same day whereby the Respondent submitted on three issues i.e.;

(i) Whether the Tribunal has jurisdiction to entertain the instant Appeal. 47. The Respondent submitted that its Tariff Ruling dated 22nd June 2022 and confirmed by its review decision of 7th October 2022 was not a decision of the Commissioner for purposes of either Sections 51 and 52 of the TPA or Section 13 of the Tax Appeals Tribunal Act No. 40 of 2013(hereinafter ‘TAT’). Thus, pursuant to Section 67(5) of the TPA, there was no proper Appeal before the Tribunal.

48. To buttress this position, the Appellant cited the Supreme Court ruling in the case of Yusuf Gitau Abdalla v Building Centre (K) Limited & 4 Others [2014]eKLR where the Court held that;“(15)A litigant who approaches the Court must be clear which jurisdiction, he/she intends to invoke. In Samuel Kamau Macharia & Another v. Kenya commercial Bank & 2 Others, Application No. 2 of 2011 [2012] eKLR, this court pronounced itself on jurisdiction thus [paragraph 68]:“(68) A Court’s jurisdiction flows from either the Constitution or legislation or both. Thus, a Court of law can only exercise jurisdiction as conferred by the constitution or other written law. It cannot arrogate to itself jurisdiction exceeding that which is conferred upon it by law. We agree with counsel for the first and second respondents in his submission that the issue as to whether a Court of law has jurisdiction to entertain a matter before it, is not one of mere procedural technicality; it goes to the very heart of the matter, for without jurisdiction, the Court cannot entertain any proceedings. This Court dealt with the question of jurisdiction extensively in, In the Matter of the Interim Independent Electoral Commission (Applicant), Constitutional Application Number 2 of 2011. Where the Constitution exhaustively provides for the jurisdiction of a Court of law, the Court must operate within the constitutional limits. It cannot expand its jurisdiction through judicial craft or innovation. Nor can Parliament confer jurisdiction upon a Court of law beyond the scope defined by the Constitution. Where the Constitution confers power upon Parliament to set the jurisdiction of a Court of law or tribunal, the legislature would be within its authority to prescribe the jurisdiction of such a court or tribunal by statute law.” (Emphasis provided).(16)This Court can only assume jurisdiction bestowed to it by the Constitution and/or Statute. Just as in the S. K. Macharia case, the Court said that it cannot assume jurisdiction by way of judicial craft; this Court will not assume jurisdiction by way of a litigant’s pestering. The Court’s mandate is to do justice, however that justice can only be dispensed through the laid down legal framework.”

49. It was the Respondent’s assertion that the Tribunal should down its tools for want of jurisdiction and strike out the Appeal as the same was frivolous and devoid of merit.

ii.Whether the product sought to be registered by the Appellant is certain or known 50. The Respondent claimed that the Appellant provided different formulation of products at the application stage and during the review of the objection. That this contradiction was replicated in the Appellant’s Statement of Facts and even the witness statement. To firm up its position, the Respondent cited the ingredients cited by the Appellant on its Statement of Facts that contradicted each other at paragraphs 5, 7 and 8 as read together with paragraph 6 of witness statement of Mr. Stephen Maleche.

51. It was the Respondent’s assertion that the Appellant stated on one hand that the product was made from flavoring concentrates and emulsion while still claiming that the product contained juice concentrate. That it was impossible to ascertain the composition of the product the Appellant sought to register.

52. The Respondent claimed that the Appellant failed to discharge the burden of proof showing that the Respondent erred in issuing the review decision of 7th October 2022.

ii.Whether the Respondent was justified in registering product under the EACCET HS Code 2009. 49. 00. 53. It was the Respondent’s assertion that classification should be determined according to the terms of the Headings and any relative Section of Chapter Notes as stipulate in Rule 1 of the General Interpretive Rules (GIR).

54. The Respondent averred that the ingredients information appended on the product package automatically classified the product under HS Code 2009. 49. 00 which was apparent that the Appellant manufactured a product containing juice concentrate as the main ingredient whose source was fresh fruits. That this was confirmed by the Respondent’s laboratory test which showed the product had a fructose content of 11%. The Respondent relied on the case of Proctor & Allan (E.A) Limited v Commissioner of Income Tax [2014]eKLR where the High Court pronounced itself as follows in paragraph 48:-“It is the conclusion of this court that in light of the Certificate of Analyses that were submitted by both the Appellant and the Respondent, the court had little choice but to look at the intended purpose of the vitamin premix with a view to establishing whether it had been classified under the correct Heading.”

55. It was the Respondent’s assertion that from the foregoing, the product could not be classified under HS Code 2202. 99. 00 since it contained juice concentrate. Furthermore, the brix value was relevant contrary to Appellant’s allegations as it was a key determinant as it indicated the specific composition of fructose contained in the product. The Respondent stated that the Appellant failed to demonstrate that the Tariff Ruling under EACCET HS Code 2009. 49. 00 was incorrect.

Issues For Determination 56. The Tribunal having considered the parties’ pleadings, documentation and Submissions notes that a singular issue distills for the Tribunal’s determination as follows:-Whether the Respondent was justified in re-classifying the product under Chapter 20 of the HS Code 2009. 49. 00

Analysis And Findings 57. The Tribunal notes that while applying for Excise duty registration, the Appellant classified its proposed product [Highland cordial pineapple juice with coconut flavor] under Chapter 22 of HS Code 2202. 99. 00. A position that was contested by the Respondent who instead confirmed classification under Chapter 20 of HS Code 2009. 49. 00 vide a tariff ruling and subsequent review objection decision and provides as follows;“20. 09Fruit or nut juices (including grape must and coconut water) and vegetable juices, unfermented and not containing added spirit, whether or not containing added sugar or other sweetening matter- Other kg 25%- Pineapple juice:2009. 41. 00- Of a brix value not exceeding 20kg 25%2009. 49. 00 –Other.”

58. The Tribunal has also noted the Respondent’s assertion that the Appellant’s product was made from fruit since it contained “juice concentrate.” On the other hand, the Appellant contested this assertion by stating that its proposed product was made from flavoring concentrate/emulsion and did not contain real fruit thus was properly classified under Chapter 22 of the HS Code 2202. 99. 00 which stipulates as follows;“Bottled or similarly packaged waters and other non-alcoholic beverages, not including fruit or vegetable juices...”

59. The Tribunal notes that whereas the Appellant asserted that brix value was irrelevant, the Respondent stated that brix value was a key determinant as it indicates the specific composition of fructose contained in a product which in this particular Appeal was at 11% indicating presence of fruit in the product. The Tribunal notes that the Appellant’s assertion that laboratory test carried out on 20th September 2022 where fructose level content was at 1. 54% has not been contested by the Respondent.

60. The Tribunal sighted Respondent’s assertion that the Appellant gave contradicting information/formulation regarding its product at the Application stage and during the review of the objection. The Appellant contested this by stating that at the Application stage the packaging was aligned to Kenya Bureau of Standards packaging guidelines and that there was only one product under consideration for registration.

61. The Tribunal observes that whereas the Appellant proposed classification based on sample test data obtained, the Respondent proposed classification based on the terms of the headings and any relative Section of Chapter notes as stipulated in Rule 1 of the GIR.

62. Although the Respondent was categorical that sample test results were shared with the Appellant on electronic mail, the Appellant was obstinate that the results were never shared and thus did not understand how the Respondent arrived at their review objection. The Tribunal relies on Section 30 (b) of the TAT which provides that the Appellant has to prove that a Respondent’s decision should have been different as follows;a.“…b.in any other case, that the tax decision should not have been made or should have been made differently...”

63. The Tribunal notes that the Appellant interchangeably used the term “juice concentrate” and “flavoring concentrate/emulsion” at paragraphs 5, 7 and 8 of its Statement of Facts. The Appellant ought to have been clear as to what the ingredients were for the proposed product. The Tribunal notes that in tax matters taxation must not confer intendment but must be definite as was held in the locus classicus case of Cape Brandy Syndicate vs. Inland Revenue Commissioner [1921], where it was held that:“In a taxing Act one has to look merely at what is clearly stated. There is no room for any intendment. There is no equity about tax. There is no presumption as to tax. Nothing is to be read in, nothing is to be implied. One can only look fairly at the language used.”

64. The Tribunal takes cognizance of the contents of Section 17(1) and (2) of the EDA which detail the process of obtaining an excise license. In the same breath, the Tribunal notes that whereas the Respondent was categorical regarding the HS Code assigned to the Appellant’s product, the Tribunal did not sight the laboratory results relied upon by the Respondent in arriving at its decision pursuant to Section 17(4) of the EDA which states as follows;“The Commissioner shall give an applicant for a license under section 16 written notice of the decision on the application and if the application is refused, the notice shall include reasons for the refusal.”

65. The import of the foregoing is that the Tribunal is convinced that the Respondent’s tariff re-classification of the product under Chapter 20 of the HS Code 2009. 49. 00 was not justified.

Final Decision 66. The upshot of the foregoing is that the Appeal is partially allowed 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 October 2022 be and is hereby set aside.c.The Respondent and Appellant to conduct joint manufacture verification and sample test for the product within Sixty (60) days of the date of delivery of this Judgment.d.The product to be classified based on the laboratory joint results.e.Each party to bear its own costs.

67. It is so ordered.

DATED AND DELIVERED AT NAIROBI ON THIS 20TH DAY OF DECEMBER, 2023ERIC NYONGESA WAFULA........CHAIRMANDELILAH K. NGALA...........MEMBERCHRISTINE A. MUGA...........MEMBERGEORGE KASHINDI..........MEMBERMOHAMED A. DIRIYE........MEMBERSPENCER S. OLOLCHIKE............MEMBER