https://new.kenyalaw.org/akn/ke/judgment/ketat/2026/305

REPUBLIC OF KENYA IN THE TAX APPEALS TRIBUNAL AT NAIROBI TAT APPEAL NO. E052 OF 2026 KITUI FLOOR MILLS LIMITED...................................................... …....……APPELLANT -VS- COMMISSIONER FOR CUSTOMS & BORDER CONTROL......................RESPONDENT JUDGMENT BACKGROUND 1. The Appellant is a limited liability company incorporated in Kenya and whose principal activity is the milling of maize flour. 2. The Respondent is the principal officer appointed under Section 13 of the Kenya Revenue Authority Act. The Kenya Revenue Authority is an agency of the Government of Kenya mandated with the duty of collection and receipting of all tax revenue, and the administration and enforcement of all tax laws set out in parts 1 & 2 of the First Schedule to the Act, including assessing, collecting, and accounting for all tax revenues in accordance with those laws. 3. The Respondent conducted a post clearance customs compliance review of the Appellant and issued a Notice of Demand for unpaid taxes of Kshs. 1,391,936.00 on 21st November, 2025. Judgment TAT No. E052 of 2026 – Kitui Flour Mills Limited -vs- Commissioner for Customs & Control Border Page 1 of 16 4. The Appellant objected to the Respondent’s Notice of Demand on 24th November, 2025 on the ground that its impugned imports were lawfully exempted from all taxes. 5. The Respondent issued its Review Decision on 8th December, 2025 upholding its demand for taxes. Aggrieved by the Review Decision, the Appellant lodged this Appeal vide a Notice of Appeal dated 16th January, 2026. THE APPEAL 6. In its Memorandum of Appeal dated 16th January, 2026, the Appellant raised the following grounds of appeal: - a. The Respondent erred in law and fact by demanding taxes yet it had created a legitimate expectation that taxes were not due as per the exemptions provided. b. The Respondent erred in law and fact by demanding taxes yet the Appellant had not met the conditions required to enjoy the exemption. c. The Respondent erred in law and fact by stating that the basis of demanding tax was due to the fact that the National Treasury did not honor its undertaking. APPELLANT’S CASE 7. The Appellant’s case is based on its Statement of Facts dated 16th January 2026. The Appellant also filed its written submissions dated 17th April, 2026. 8. The Appellant averred that, in anticipation of the holy month of Ramadhan that was determined to fall within the period 1st March 2024 Judgment TAT No. E052 of 2026 – Kitui Flour Mills Limited -vs- Commissioner for Customs & Control Border Page 2 of 16 to 20th April, 2024, it sought to import dates for sharing with Muslim faithful as they broke their fast. 9. The Appellant further averred that the Supreme Council of Kenya Muslims (SUPKEM), the umbrella body of all Muslims in Kenya, in a letter dated 25th January 2025 wrote to the Cabinet Secretary, Ministry of Finance & National Treasury, to request for an exemption for dates that were to be distributed to Muslim faithful observing the holy month of Ramadhan. 10. The Appellant stated that in a letter dated and received on 29th January 2024, the National Treasury issued a letter to the Respondent authorizing that dates imported and cleared during the Ramadhan period were to be exempt from payment of taxes, import declaration fees (IDF) and railway development levy (RDL). 11. It is the Appellant’s contention that it subsequently imported dates for consumption during the Ramadhan period on 15th March 2024 through the port of Mombasa under entry number 24MBAIM401564370. 12. The Appellant asserted that the decision of the Respondent to demand duty yet its consignment was expressly exempted from duty offends the provisions of Article 47 of the Constitution and the Fair Administrative Act. 13. On whether the Respondent created legitimate expectation, it is the Appellant’s case that demanding duty where an express exemption was issued by the Cabinet Secretary, National Treasury & Economic Planning, the parent ministry in charge of the Respondent, and the Respondent’s own internal memo providing guidance can only be deemed as absurd, and legitimate expectation was created from the exemptions. Judgment TAT No. E052 of 2026 – Kitui Flour Mills Limited -vs- Commissioner for Customs & Control Border Page 3 of 16 14. The Appellant contended that the Supreme Court has expounded on the doctrine of legitimate expectation in Communications Commission of Kenya & 5others -vs- Royal Media Services Ltd & 5 Others (2014) eKLR as follows: - “(269) The emerging principles may be succinctly set out as follows: a. There must be express, clear and unambiguous promise given by a public authority; b. The expectation itself must be reasonable; c. The representation must be one which it was competent and lawful for the decision-maker to make; and d. There cannot be a legitimate expectation against clear provisions of the law or the Constitution.” 15. The Appellant averred that flowing from the above, it noted that the National Treasury and the Respondent were clear and unambiguous on the fact that the importation of dates was exempt. Further, the decision to issue the exemption was well within the powers of the two entities as lawful decision-makers. 16. On whether the Appellant met the conditions required to enjoy the exemption, the Appellant averred that for an entity to enjoy the provisions of the exemption, both the Treasury and the Respondent required to fulfil certain conditions including: - a) That the dates ought to be imported and cleared between 1st March 2024 and 20th April, 2024. b) The importers clearing the dates ought to use the exemption processing codes and attach relevant importation documents. Judgment TAT No. E052 of 2026 – Kitui Flour Mills Limited -vs- Commissioner for Customs & Control Border Page 4 of 16 17. The Appellant stated that its consignment was cleared on 15th March 2024 and that the exemption code provided by the Respondent was used in effecting the consignment on the ICMS system. 18. The Appellant stated that it had demonstrated that its consignment fell within the exempt period and consequently the Respondent had no right to demand taxes from the Appellant. 19. On whether the Respondent erred in demanding tax on the basis that the National Treasury did not honour its undertaking, the Appellant averred that the actions of the Respondent in demanding taxes simply because the Treasury has not honoured its undertaking creates no right to demand taxes. 20. It is the Appellant’s case that as per paragraph 7 of the Respondent’s letter dated 29th January 2024, the only time duty could be demanded is if any imports of dates came after 20th April 2024. 21. The Appellant stated that, in instances where an undertaking has been issued, the duty lies on the Respondent to enforce the undertaking and not to delegate its role to third parties who were not privy to the inner details of the undertaking. 22. The Appellant asserted that the actions of the Respondent in demanding duty, yet it is its own parent ministry that owes it taxes, and that this is something that can be solved internally through memos, show that the Respondent is not interested in collecting revenue through proper channels, but rather through coercion. 23. The Appellant averred that the Respondent has acknowledged that indeed there was no duty to pay duty on the part of the Appellant unless the National Treasury defaults. However, curiously, the Respondent has not provided any proof that the National Treasury has Judgment TAT No. E052 of 2026 – Kitui Flour Mills Limited -vs- Commissioner for Customs & Control Border Page 5 of 16 defaulted as provided for by Section 107 – 109 of the Evidence Act (cap. 80). 24. In conclusion, the Appellant averred that the demand for duty by the Respondent is arbitrary and highly prejudicial to the Appellant, and unless the Honourable Tribunal intervenes, the Appellant shall suffer irreparable economic loss at the hands of the Respondent. 25. The Appellant largely reiterated the above assertions in its written submissions filed with the Tribunal. Appellant’s Prayers 26. The Appellant prayed to the Tribunal for the following orders: - a) The Appeal be allowed with costs to the Appellant. b) The Respondent’s Review Decision dated 8th December 2025 be set aside. c) Any other orders that the Tribunal may deem fit. RESPONDENT’S CASE 27. The Respondent filed its Statement of Facts dated 14th January, 2026 and Written Submissions dated 22nd April, 2026 in opposition to the Appeal. 28. The Respondent averred that pursuant to Section 235 of the East African Community Customs Management Act (EACCMA) 2004, it undertook a compliance audit on the Appellant’s import-export operations. The audit revealed that import duties due on the import of dates remained outstanding after the National Treasury failed to honour its undertaking to pay the taxes on their behalf. Accordingly, and pursuant to Section 133 of the EACCMA 2004, the Respondent issued a Demand Notice to the Appellant, the bearer of the primary Judgment TAT No. E052 of 2026 – Kitui Flour Mills Limited -vs- Commissioner for Customs & Control Border Page 6 of 16 obligation to pay the tax, calling for payment of Kshs. 1,391,936 on 21st November, 2025. 29. The Respondent contended that Section 130 of EACCMA provided that “...where any goods are liable to duty, then such duty shall constitute a civil debt due to a Partner State and be charged on the goods in respect of which the duty is payable; and such duty shall be payable by the owner of the goods and may, without prejudice to any other means of recovery be recovered summarily by legal proceedings brought by the Partner state.” Therefore, this section places the primary obligation to pay duty on the owner of the goods. 30. The Respondent further stated that Section 133(1) of the Act provides that “...where any obligation has been incurred, whether by bond or otherwise, for the payment of any duty, then such obligation shall be deemed to be an obligation to pay all duties which are or may become payable or recoverable under the provisions of this Act.” 31. According to the Respondent, the import of the above section, therefore, is that where a taxpayer incurs an obligation to pay taxes, then the same will be recoverable in accordance with the relevant provisions of the Act. The letter of undertaking may have relaxed the obligation to pay on the taxpayer, but it did not in any way extinguish it. 32. The Respondent posited that Section 235 of the Act gives them powers to carry out post-clearance audit for a period of five years after importation of goods, and thus it was within the law to review the Appellant’s import-export operations. 33. It is the Respondent’s assertion that the exemptions regime is governed by the provisions of Section 114 of the Act, which provides as follows: - Judgment TAT No. E052 of 2026 – Kitui Flour Mills Limited -vs- Commissioner for Customs & Control Border Page 7 of 16 (1) Duty shall not be charged on the goods listed in Part A of the Fifth Schedule to this Act, when imported, or purchased before clearance through the Customs, for use by the person named in that Part in accordance with any condition attached thereto as set out in that Part; (2) Duty shall not be charged on the goods listed in Part B of the Fifth Schedule to this Act when imported in accordance with any condition attached thereto as set out in that Part. 34. The Respondent stated that Part A and B of the Fifth Schedule of the Act provide a limitative list of persons and bodies that qualify for exemption privileges. Part A provides specific exemptions for goods imported or purchased before clearance through customs, while Part B provides general exemptions for goods imported or purchased before clearance through customs. The Appellant and, by extension, SUPKEM did not qualify for exemption from import duties under the provisions of the Fifth Schedule. 35. The Respondent further stated that Section 253 if the Act provides that “This Act shall take precedence over the Partner States laws with respect to any matter to which its provisions relate.” Consequently, any provisions made outside the province of the Act have no legal backing. Thus, the Treasury’s letter of undertaking did not shift the onus to pay taxes due from the Appellant in the event that the undertaking was not made good. 36. The Respondent averred that this position was emphasized by the High Court in Tax Appeal No. E234 of 2024 – Cale Infrastructure Construction Co. Ltd -vs- Commissioner of Customs & Border Control & Another, where while upholding the Judgment TAT No. E052 of 2026 – Kitui Flour Mills Limited -vs- Commissioner for Customs & Control Border Page 8 of 16 decision of the TAT, the court made the following determination regarding National Treasury undertakings: - “It was incumbent upon the Appellant, having benefited from the exemption process, to ensure that the undertaking was honoured by the Treasury. The Tribunal rightly held that the existence of the undertaking did not relieve the Appellant of its primary tax obligation.” 37. The Respondent asserted that the letter of undertaking was a promissory note not anchored on any specific provision of the law. Suffice to say that legitimate expectation cannot be established on an undertaking that has no legal force. 38. The Respondent posited that it was not in doubt that whereas the National Treasury had undertaken to pay taxes on behalf of the Appellant (Section 130), the primary responsibility for tax payment lies squarely with the Appellant, unless specifically exempted (Fifth Schedule). In the event the National Treasury defaults on such payment, as in the instant case, the Respondent is entitled to recover the tax due from the Appellant. This legal duty existed at the time of entry; that is why the National Treasury issued a letter of undertaking to pay the taxes on their behalf. 39. The Respondent averred that smooth facilitation of cargo clearance does not preclude a post-clearance audit, nor does it curtail the powers of the Respondent as provided for in Section 234 and 235 of the EACCMA, 2004. 40. The Respondent further averred that the fact that the National Treasury had undertaken to pay the taxes on behalf of the Appellant does not absolve the Appellant from the primary responsibility for tax payment unless specifically exempted by law. Judgment TAT No. E052 of 2026 – Kitui Flour Mills Limited -vs- Commissioner for Customs & Control Border Page 9 of 16 41. The Respondent contended that it is upon the Appellant to follow up with the National Treasury and ensure that the undertaking is honoured otherwise, the Appellant has a legal obligation to pay the taxes due. 42. The Respondent further contended that under Section 133 of EACCMA, 2004, where there is an obligation to pay any duty, the same is deemed to be an obligation to pay all duties which are payable and recoverable under the Act. 43. The Respondent averred that Section 120(1) of the EACCMA 2004 provides for the computation of import duty, and it states in part as follows: - “(1) Subject to subsection (3) and Section 94, import duty shall be paid at the rate in force at the time when the goods liable to such duty are entered for home consumption” 44. The Respondent further averred that it is therefore noteworthy and in accordance with the above provisions that the duties were payable at the time of importation of the dates. However, the National Treasury undertook to pay these taxes. 45. The Respondent thus averred that the undertaking should not imply that there was no duty implication, but rather it clarifies the revenue implication and the undertaking to pay the same, and tax liability remains unless expressly exempted by law. Thus, the short- levied taxes demanded from the Appellant under Section 135 of the EACCMA, 2004 are proper in law. 46. In its Written Submissions dated 22nd April, 2026, the Respondent reiterated the above assertions. Judgment TAT No. E052 of 2026 – Kitui Flour Mills Limited -vs- Commissioner for Customs & Control Border Page 10 of 16 Respondent’s Prayers 47. The Respondent prayed to the Tribunal for the following orders: - a) The Appeal be dismissed with costs. b) The Respondent’s Review Decision dated 8th December 2025 be deemed proper in law. ISSUES FOR DETERMINATION 48. The Tribunal, having considered the parties’ pleadings, submissions and documents filed before it, is of the view that the issue that falls for its determination is whether the Respondent’s Review Decision dated 8th December, 2025 is proper and justified. ANALYSIS AND DETERMINATION 49. The instant Appeal is premised on the Respondent’s Review Decision dated 8th December, 2025, which confirmed its demand for duties of Kshs. 1,391,936 from the Appellant. The Respondent grounded its decision on Sections 130, 133(1) and 253 of the EACCMA 2004. 50. In its pleadings and objection to the duties, the Appellant submitted that the imported dates were lawfully exempted from taxes by the directive from the National Treasury dated 26th January 2024 and KRA internal memo dated 29th January 2024, which was allegedly granted after request by SUPKEM. The letter by SUPKEM dated 25th January 2024 to the Cabinet Secretary, National Treasury is on record. Equally on record are the referenced letters by the Cabinet Secretary dated 26th January, 2024 and the Respondent’s Internal Memo dated Judgment TAT No. E052 of 2026 – Kitui Flour Mills Limited -vs- Commissioner for Customs & Control Border Page 11 of 16 29th January 2024 that allegedly exempted importation of dates to be used during the month of Ramadhan from duties. 51. The Appellant further submitted that the impugned correspondences created a legitimate expectation that the duties would be paid by the National Treasury, and therefore the Respondent is estopped from demanding the said duties on the ground that the National Treasury has not made good its promise to pay the duties. 52. To buttress its point on legitimate expectation, the Appellant cited the Supreme Court finding in Communications Commission of Kenya & 5others -vs- Royal Media Services Ltd & 5 Others (2014) eKLR, which proffered criterion for establishing whether legitimate expectation has been created thus: - “(269) The emerging principles may be succinctly set out as follows: e. There must be express, clear and unambiguous promise given by a public authority; f. The expectation itself must be reasonable; g. The representation must be one which it was competent and lawful for the decision-maker to make; and h. There cannot be a legitimate expectation against clear provisions of the law or the Constitution.” (emphasis added) 53. The Tribunal notes that the underlying question in this Appeal is whether the letter by the Cabinet Secretary, National Treasury, dated 26th January 2024, indeed exempted the Appellant from payment of duties on its impugned importation, and that is the subject of the duties demanded in Respondent’s Review Decision of 8th December 2025. Judgment TAT No. E052 of 2026 – Kitui Flour Mills Limited -vs- Commissioner for Customs & Control Border Page 12 of 16 54. The law governing importation of goods into the country is the East Africa Community Customs Management Act, 2004 (as revised). Sections 130, 131 and 253 of EACCMA provide as follows regarding the obligations of importers and Respondent: - S. 130 “...where any goods are liable to duty, then such duty shall constitute a civil debt due to a Partner State and be charged on the goods in respect of which the duty is payable; and such duty shall be payable by the owner of the goods and may, without prejudice to any other means of recovery be recovered summarily by legal proceedings brought by the Partner state.” (emphasis added) S. 133(1) “...where any obligation has been incurred, whether by bond or otherwise, for the payment of any duty, then such obligation shall be deemed to be an obligation to pay all duties which are or may become payable or recoverable under the provisions of this Act.” S. 253 “This Act shall take precedence over the Partner States laws with respect to any matter to which its provisions relate.” (emphasis added) 55. Besides, Section 114 of the Act provides as follows regarding exempted goods: - (1)Duty shall not be charged on the goods listed in Part A of the Fifth Schedule to this Act, when imported, or purchased before clearance through the Customs, for use by the person named in that Part in accordance with any condition attached thereto as set out in that Part; Judgment TAT No. E052 of 2026 – Kitui Flour Mills Limited -vs- Commissioner for Customs & Control Border Page 13 of 16 (2)Duty shall not be charged on the goods listed in Part B of the Fifth Schedule to this Act when imported in accordance with any condition attached thereto as set out in that Part. (3)The Council may by notice in the Gazette amend the Fifth Schedule. 56. The Tribunal notes, from the governing law above, that the statutory obligation to pay duties rests with the Appellant as the uncontested owner of the impugned consignment. It is equally apparent that the provisions of this statute take precedence over any administrative measures, including those by the Cabinet Secretary. The Cabinet Secretary does not, therefore, have powers to grant exemptions on account of customs duty. 57. The Tribunal further notes that the Act details a specific list of exempted items in its Fifth Schedule. A perusal of the Fifth Schedule shows that the Appellant, which was the importing entity therein of the impugned consignment, is not listed therein. 58. Be that as it may, the Tribunal is cognizant of the fact that the letter by the Cabinet Secretary itself does not speak to exemption from payment of duties. Instead, the Cabinet Secretary undertook to pay the duties on behalf of the importers of dates during the period outlined therein for the month of Ramadhan. This amounts to a promise, and not a waiver, within the meaning of tax statutes. 59. With regard to the Import Declaration Fee (IDF) and the Railway Development Levy (RDL), the Tribunal notes that the Miscellaneous Fees and Levies Act Cap. 469C donates to the Cabinet Secretary for Judgment TAT No. E052 of 2026 – Kitui Flour Mills Limited -vs- Commissioner for Customs & Control Border Page 14 of 16 the time being responsible for Finance the power to grant tax exemptions. In particular, Part A and B of the Second Schedule to the said Act provide for goods exempt from import declaration fee when imported or purchased before clearance through customs; and goods exempt from the railway development levy when imported or purchased before clearance through customs. 60. Paragraphs (xxvi) and (x) Part A and B of the Second Schedule to the Miscellaneous Fees and Levies Act, Cap. 469C, empower the Cabinet Secretary for the time being responsible for Finance to grant exemptions to goods in the public interest. Having perused the letters that the Appellant provided, it is the Tribunal’s view that the Cabinet Secretary lawfully issued tax exemptions in relation to the imported dates. 61. Considering the foregoing, the Respondent had no business assessing import declaration fee and Railway Development Levy on dates that the Appellant imported. 62. The Respondent cited the case of Cale Infrastructure Construction Co. Limited -vs- Commissioner of Customs & Border Control Tax Appeal No. E234 of 2024 to support its case. The Tribunal examined the said case law and noted that the only common factor in the said case law and this appeal is that the taxpayer was granted tax exemptions on imports used to construct the Nairobi expressway on condition that the imports must be used on the said project. All other facts were not similar. 63. Consequently, the Tribunal finds and holds that the Respondent was justified in confirming assessments in relation to import duty, but erred in confirming import declaration fee and Railway Development Levy. Judgment TAT No. E052 of 2026 – Kitui Flour Mills Limited -vs- Commissioner for Customs & Control Border Page 15 of 16 FINAL DETERMINATION 64. The upshot to the foregoing is that the Tribunal finds and holds that the Appeal is partially meritorious and consequently makes the following orders: a) The appeal be and is hereby partially allowed; b) The Review Decision dated 8th December 2025 be and is hereby varied as follows: i. Assessments in relation to import duty are hereby upheld; and ii. Import Declaration Fee and Railway Development Levy are set aside; and c) Each party to bear its own costs. 65. It is so ordered. DATED and DELIVERED at NAIROBI this…………10th ……..…..day of…..… July………..…2026 ..........................………………………. DR. RODNEY ODHIAMBO OLUOCH CHAIRPERSON .…..….……………………. ..….………………………. ABDULLAHI DIRIYE DR. ERICK KOMOLO MEMBER MEMBER Judgment TAT No. E052 of 2026 – Kitui Flour Mills Limited -vs- Commissioner for Customs & Control Border Page 16 of 16