https://new.kenyalaw.org/akn/ke/judgment/ketat/2026/292

**REPUBLIC OF KENYA** **IN THE TAX APPEALS TRIBUNAL AT NAIROBI** **TAT APPEAL NO E1399 OF 2025** **MAXAM LIMITED...........................................................................…....……APPELLANT** **-VS-** **COMMISSIONER FOR CUSTOMS & BORDER CONTROL.........................RESPONDENT** **JUDGMENT** **BACKGROUND** 1. The Appellant is a limited liability company incorporated in Kenya and engaged in the business of importing and distributing alcoholic beverages in Kenya. 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. 1. In or around June 2025, the Appellant imported consignments of Corona Extra Beer under customs entry numbers 25EMKIM700366764 and 25NBOIM405048915, and declared their value based on the transaction value of US$ 10.37 per case. The Respondent rejected the Appellant’s declared transaction value and applied an uplift, assessing the value at US$ 14.77 per case. 2. On 4th July 2025, the Appellant filed its Letter of Objection challenging the uplift on the declared value of the two customs entry numbers. 3. On 26th September 2025, the Respondent issued a decision rejecting the Appellant’s objection and maintaining the uplift. 4. On 23rd October 2025, the Appellant filed its Application for Review and did a follow up letter on 30th October 2025. 5. On 3rd November 2025, the Respondent wrote to the Appellant, upholding its decision on the ground that the Application for Review was made out of time. However, after further correspondence with the Appellant’s agents, the Respondent deemed the application to have been filed on time and issued a fresh decision on 19th November 2025, sustaining its previous decision on the ground that the Appellant did not support the application of the transaction value method with relevant documents. 6. Aggrieved by the Respondent’s decision, the Appellant lodged this Appeal vide Notice of Appeal dated 2nd December 2025. **THE APPEAL** 1. In its Memorandum of Appeal dated 2nd December 2025, the Appellant raised the following grounds of appeal: - * 1. The Respondent erred in law and fact by rejecting the Appellant’s Application for Review on the erroneous ground that it was filed out of time, when in fact the application was filed timeously on 23rd October 2025, three (3) days before the expiry of the statutory thirty-day period prescribed under Section 229(1) of the East African Community Customs Management Act, 2004 (EACCMA). 2. The Respondent erred in law and fact by erroneously misconstruing a follow-up letter dated 30th October 2025 as the initial Application for Review, thereby denying the Appellant a fair hearing on the substantive merits of its case. 3. The Respondent erred in law and fact in its initial decision dated 3rd November 2025 and subsequent decision dated 19th November 2025 by failing to consider the substantive evidence and documentation provided by the Appellant, thereby dismissing the Application for Review on technical grounds. 4. The Respondent erred in fact and in law by failing to comply with Section 229(4) of the EACCMA, which requires a decision to be made within sixty (60) days from the date of the application on the merits of the case. 5. The Respondent erred in law and fact by rejecting the declared transaction value of US$ 10.37 per case of Corona Extra Beer despite comprehensive documentary evidence supporting the same, including: - 1. Payment remittance (telegraphic transfer) confirming payment of US$ 34,843.20 to the supplier; 2. Remittance confirmation from the supplier verifying the agreed price; 3. Email correspondence documenting the price negotiation process; 4. Evidence of the distribution arrangement with the brand owner. 1. The Respondent erred in law and fact by failing to properly apply the First Method of Customs Valuation (Transaction Value) as provided under Section 122(1) of the EACMMA, which defines transaction value as *“the price actually paid or payable.”* 2. The Respondent erred in fact and law by failing to consider that the Appellant conclusively demonstrated through payment records and supplier confirmation that USD 10.37 is the actual transaction value, yet the Respondent arbitrarily imposed a value of USD 14.77 per case. 3. The Respondent erred in fact and in law by demanding the following documents, which are unreasonable, unnecessary, or commercially impractical: - 5. **Distributorship Agreement:** While negotiations are ongoing, the Appellant provided sufficient evidence of its appointment as the current official distributor for Corona Extra Beer in Kenya; 6. **Supplier’s Official Price List:** The negotiated price represents a commercially agreed reduction specific to the Kenyan market and would not necessarily appear on the general price list; 7. **Volume Commitment Agreement:** Such agreements are not standard requirements for customs valuation purposes; 8. **Proof of Lower Trade Level:** The price reduction was negotiated based on market competitiveness, not trade level differences. 1. The Respondent erred in fact and in law by failing to exercise its power under the EACCMA to verify the transaction value directly with the brand owner/supplier, despite the Appellant’s invitation to do so. 2. The Respondent erred in fact and in law by comparing the Appellant’s imports with *“similar products”* previously imported by Viva Global Limited, which were non-standard 355ml SKUs, materially different from the standard 330ml products imported by the Appellant, thereby using an inappropriate metric for valuation purposes under the EACCMA. 3. The Respondent erred in fact and in law by failing to give due consideration to the legitimate commercial context of the price reduction, namely: - 9. The brand owner’s dissatisfaction with low sales volumes recorded by the previous distributor; 10. The brand owner’s strategic decision to enhance market competitiveness in Kenya through revised pricing; 11. The resulting retail price reduction from Kshs. 430 to Kshs. 320 per bottle, demonstrating genuine market-driven pricing. **APPELLANT’S CASE** 1. The Appellant’s case is based on its Statement of Facts dated 2nd December 2025. The Appellant also filed its Written Submissions dated 22nd May 2026. 2. The Appellant averred that it declared the Transaction Value of the imported Corona Extra Beer at USD 10.37 per case in accordance with the First Method of Customs Valuation (Transaction Value) as provided under Section 122(1) of the EACCMA and Paragraph 2 of the Fourth Schedule to the EACCMA. The declared value was based on the actual price paid or payable to the non-resident supplier, who is the brand owner of Corona Extra Beer. 3. The Appellant further averred that the Respondent rejected the Appellant’s declared transaction value and applied an uplift, assessing the value at USD 14.77 per case, allegedly based on a comparison with “similar products” previously imported by another entity, Viva Global Limited, which imported non-standard 355ml SKUs. 4. The Appellant contended that the comparison made by the Respondent was untenable and inapplicable for the following reasons: - 5. The previous imports were of a different SKU size (355ml vs 330ml). 6. The previous distributor (Viva Global Limited) had recorded low sales volumes. 7. The brand owner had agreed to the revised pricing specifically to enhance market competitiveness in Kenya. 8. The brand owner of Corona Extra Beer had expressed dissatisfaction with the low sales volumes and market penetration achieved by the previous distributor, Viva Global Limited. 9. Following comprehensive market research and analysis, the brand owner approached the Appellant to explore new distributorship opportunities in the Kenyan market. 10. Based on a detailed market survey conducted by the Appellant, which revealed that the retail price point was not competitive in the Kenyan market, the brand owner agreed to a revised landed cost of USD 10.37 per case. 11. This price reduction enabled the Appellant to reduce the retail price from approximately Kshs. 430 to Kshs. 320 per bottle, thereby making the product more competitive and increasing market accessibility. 12. The Appellant further contended that the price negotiation was a legitimate commercial decision aimed at improving product competitiveness and market share in Kenya, as it was the current distributor of Corona Extra Beer in Kenya, having been appointed by the brand owner. 13. It is the Appellant’s case that while the formal distribution agreement was still under negotiation and not yet executed at the time of importation, the Appellant provided evidence of its appointment and the agreed pricing structure through: - 14. Email correspondence with the brand owner. 15. Written confirmation from the supplier. 16. Evidence of ongoing negotiations. 17. The Appellant stated that it provided comprehensive documentary evidence to support the declared transaction value of USD 10.37 per case, including the following: - 18. ***Payment Evidence:*** - Telegraphic Transfer (T/T) remittance confirmation showing payment of USD 34,843.20 to the supplier, which corresponds exactly to the commercial invoice value based on USD 10.37 per case; 19. ***Supplier Verification:*** - Written confirmation letter from the supplier verifying the agreed price of USD 10.37 per case. Supplier invoice reflecting the transaction value of USD 10.37 per case. 20. ***Price Negotiation Evidence:*** - Email correspondence between the Appellant and the brand owner documenting the price negotiation process. Evidence of the commercial rationale for the price reduction. 21. ***Market Evidence:*** - Evidence of a retail price reduction from Kshs. 430 to Kshs. 320 per bottle, and documentation demonstrating enhanced market competitiveness resulting from the revised pricing. 22. The Appellant contended that all documentary evidence demonstrated that USD 10.37 per case was the actual price paid or payable for the imported goods, satisfying the requirements for the First Method of Valuation under Section 122 of the EACCMA. The Appellant further relied on Paragraph 2 of the Fourth Schedule, which provides that the customs value of imported goods shall be the transaction value. 23. It is the Appellant’s case that the transaction value is acceptable where there is a sale for export to the Partner State; the price has actually been paid or is payable; and the relationship between the buyer and seller (if any) has not influenced the price. 24. The Appellant stated that under Section 122 (2) of the EACCMA, where the Respondent had reason to doubt the truth or accuracy of the declared value, the Respondent must provide the importer with a written explanation of those reasons. Consequently, the burden then shifts to the importer to provide further information to demonstrate that the transaction value represents the actual price paid or payable. 25. The Appellant asserted that it is only where the transaction value cannot be determined or is unacceptable under Paragraph 2 of the Fourth Schedule that the Respondent may proceed to apply subsequent methods sequentially: - 26. Method 2: Transaction Value of Identical Goods. 27. Method 3: Transaction Value of Similar Goods. 28. Method 4: Deductive Value. 29. Method 5: Computed Value. 30. Method 6: Fall-back Method. 31. The Appellant stated that the provision has been interpreted in court precedent to require the Respondent to: - 32. Provide specific, articulated reasons for doubting the declared value (not mere suspicion); 33. Give the importer an opportunity to respond with further evidence; 34. Assess the further evidence objectively and in good faith; and 35. Provide a written explanation on how the customs value was determined. 36. The Appellant averred that the Respondent cannot arbitrarily reject the transaction value and proceed to other methods without proper legal and factual basis. Thus, the Respondent acted outside its best judgment, the ambit of the statute and relied on extraneous evidence in determining the transaction value. 37. The Appellant stated that it met all requirements for transaction value and that provided comprehensive evidence that there was an export to Kenya; the price of USD 10.37 per case was actually paid, as evidenced by the telegraphic transfer of USD 34,843.20; that the price was verifiable through supplier confirmation and commercial invoices; and the transaction was at arm’s length between independent parties. Thus, the Appellant satisfied all the requirements under Paragraph 2 of the Fourth Schedule for the acceptance of the transaction value. 38. On the Respondent’s demand for documents, the Appellant averred that the Respondent’s demand for documents such as a formal distributorship agreement; an official price list; a volume commitment agreement; and proof of a lower trade level are not legal requirements under Section 122 or the Fourth Schedule for accepting transaction value. 39. The Appellant contended that, without prejudice to the foregoing, it nonetheless provided the substantive elements typically contained in a distributorship or supply arrangement notwithstanding the absence of a codified agreement. 40. The Appellant further contended that, through the documents availed during the verification review process, it demonstrated the existence, terms, and commercial reality of the transaction. 41. On the Respondent’s reliance on previous imports by Viva Global Limited, the Appellant averred that the Respondent failed to demonstrate how the absence of these documents negated the actual evidence of payment at USD 10.37 per case. Accordingly, the Respondent’s reliance on previous imports by Viva Global Limited was untenable as it amounted to an improper comparison with non-comparable goods. 42. The Appellant further averred that the imports by Viva Global Limited were of different Stock Keeping Unit (SKU) specifications (355ml vs. 330ml); imported under different commercial arrangements; did not represent contemporaneous comparable transactions; and the brand owner had changed its pricing strategy for the Kenyan market. 43. The Appellant contended that even if the Respondent were to apply Method 3 (Transaction Value of Similar Goods), the proper application would require goods of like characteristics imported at or about the same time, which was not the case 44. In its written submissions dated 22nd May 2026 in support of its case, the Appellant reiterated its contentions above and sought to rely on various precedents including *Optimum Lubricants Limited -vs- Commissioner of Customs & Border Control (2022) KETAT 1172 (KLR); and Airtel Networks Kenya Limited -vs- Commissioner of Customs & Border Control (2025) KETAT 136 (KLR).* **Appellant’s Prayers** 1. The Appellant prayed to the Tribunal for the following orders: - 2. A declaration that the Appellant’s Application for Review dated 23rd October 2025 was filed within the statutory period prescribed under Section 229(1) of EACCMA; 3. The Respondent’s decision dated 3rd November 2025 and subsequent decision dated 19th November 2025 rejecting the Application for Review be set aside; 4. The Appellant’s declaration of USD 10.37 per case of Corona Extra Beer as the correct customs value for Entry numbers 25MKIM700366764 and 25NBOIM405048916 under Section 122(1) of the EACCMA First Method of Valuation; 5. Award costs of the Appeal to the Appellant; and 6. Grant such further or alternative relief as the Tribunal may deem just and expedient. **RESPONDENT’S CASE** 1. The Respondent filed its Statement of Facts dated 2nd January 2026 and Written Submissions dated 4th May 2026 in opposition to the Appeal. 2. The Respondent averred that, upon further review of the Appellant’s email dated 23rd October 2025, the Respondent exercised administrative fairness and accepted the same as a valid and timeous objection. The Respondent thereafter substantively considered the objection and duly communicated the Review Decision on 19th November 2025. 3. It is the Respondent’s case that the Appellant was accorded an opportunity to object and be heard pursuant to Sections 229 and 230 of the EACCMA. The objections were duly considered and decisions were communicated to the Appellant within reasonable time; thus, the Respondent complied fully with the principles of procedural fairness and transparency, but the Appellant failed to provide critical source documents. 4. The Respondent posited that, in arriving at the review decision dated 19th November 2025, it carefully evaluated all documentation submitted by the Appellant, including payment records and supplier correspondence. However, the said documentation did not sufficiently dispel the Respondent’s reasonable doubt regarding the accuracy of the declared transaction value as required under the Fourth Schedule to the EACCMA. The Respondent therefore lawfully upheld the uplifted valuation based on identical goods, and the Application was determined on substantive legal and factual grounds, and not mere technicalities. 5. On the allegation that the Respondent failed to issue a decision within sixty days, it is the Respondent’s contention that the Appellant objected on 12th November 2025 and that a review decision was issued on 19th November 2025, which is within timelines prescribed under Section 229(4) of the EACCMA. 6. On the allegation that the Respondent erred by rejecting the transaction value of USD 10.37 per case despite comprehensive documentary evidence supporting the same, the Respondent asserted that the declared value was based on Method 1 (Transaction Value) under the Fourth Schedule of the EACCMA. However, pursuant to Section 122 and Paragraph 2 of the Fourth Schedule, the Respondent is mandated to reject a declared transaction value where reasonable doubt exists as to its truth or accuracy. 7. On the Appellant’s ground that, the Respondent erred by failing to properly apply the First Method of Customs Valuation (Transaction Value) as provided under Section 122(1) of the EACCMA, the Respondent stated that upon rejection of Method 1, it correctly applied Method 2 – Transaction Value of Identical Goods as provided under Paragraph 3 of the Fourth Schedule of the EACCMA. The uplifted value of USD 14.77 per case was derived from a previous importation by Viva Global Limited involving identical Coro Extra Beer 300 ml 4x69 WBT imported from the same manufacturer. The uplift was lawful, reasonable, and consistent with the customs valuation framework. 8. The Respondent contended that the Appellant did not conclusively demonstrate that USD 10.37 per case was the true transaction value within the meaning of Paragraph 2 of the Fourth Schedule to EACCMA. While the Appellant availed payment records and supplier confirmations, the same did not sufficiently dispel the Respondent’s reasonable doubt arising from the significant variance between the Appellant’s declared value and values declared by other importers for identical goods from the same manufacturer. 9. On the ground that the Respondent erred by demanding documents which are unreasonable, unnecessary, or commercially impractical, the Respondent stated that under Section 235 and 236 of EACCMA, it is expressly empowered to require any documents, records, and information necessary for the purpose of verifying the truth or accuracy of a customs declaration. Thus, the documents requested were reasonably necessary to verify the declared transaction value in light of the reasonable doubt that had arisen, and were neither excessive nor commercially impractical. 10. On the ground that the Respondent erred by failing to exercise its power under EACCMA to verify the transaction value directly with the brand owner/supplier despite the Appellant’s invitation to do so, the Respondent averred that the primary legal burden of substantiating the truth and accuracy of the declared transaction lies with the declarant pursuant to Section 229 of EACCMA. The Respondent is not legally obligated to independently verify value with third parties where the Appellant has failed to provide sufficient and verifiable documentation to dispel reasonable doubt. Nevertheless, the Respondent duly considered all documents provided by the Appellant before arriving at its valuation decision, which was lawful and procedurally fair. 11. On the ground that the Respondent erred by comparing the Appellant’s imports with “similar products” previously imported by Viva Global Limited, the Respondent stated that the reference importation relied upon concerned identical goods, namely Coro Extra 11.3P, 330ml 4x60 WBT, which are identical in description, quantity, quality, alcohol content, packaging, and manufacturer to those imported by the Appellant. Thus, the allegation that the reference importation involved non-standard 355ml SKUs is misleading and unsupported, as the Respondent applied Method 2 (Transaction Value of Identical Goods) strictly in accordance with Paragraph 3 of the Fourth Schedule to EACCMA. 12. On the ground that the Respondent erred by failing to give due consideration to the legitimate commercial context of a price reduction, the Respondent averred that the Appellant failed to provide sufficient contemporaneous commercial documentation to demonstrate that the alleged price reduction was a genuine, at arm’s length commercial discount applicable to the subject importation. 13. In its Written Submissions dated 4th May, 2026, the Respondent reiterated the above assertions and sought to rely on various precedents, including ***Wananchi Group (K) Limited vs Commissioner of Customs (2024) KEHC 2037 (KLR); Gira Enterprises vs Commissioner of Customs (2005); Commissioner of Domestic Taxes vs Trical & Hard Limited (2022) KEHC 9927 (KLR); and Afya Xray Centre Ltd vs Comm of Domestic Taxes (TAT Appeal No. 70 of 2017).*** **Respondent’s Prayer**s 1. The Respondent prayed to the Tribunal for the following orders: - 2. The Appeal be dismissed entirely for lack of merit. 3. The Respondent’s Review Decision dated 19th November 2025 be upheld. 4. Costs be awarded to the Respondent. **ISSUES FOR DETERMINATION** 1. Having examined the parties’ pleadings, the Tribunal identified the following issues for determination: #### *Whether the Appeal is valid.* #### *Whether the Respondent erred in the rejection of the Transaction Value Method and the application of alternative valuation.* **ANALYSIS AND FINDINGS** #### **Whether the Appeal is valid.** 1. The Tribunal notes that as a preliminary matter, the Appellant submitted that its Appeal stood allowed as the Respondent rendered its Review Decision outside the statutory period of 30 days provided for in Section 229(4) of the EACCMA. 2. From the documentary evidence on record, it can be deduced that the Respondent issued a decision on 26th September 2026 rejecting the Appellant’s objection to the application of uplift, instead of the Transaction Value Method. The Appellant then made an Application for Review of the decision on 23rd October 2025 and a subsequent follow-up on 30th October 2025. The Respondent then issued a letter dated 3rd November 2025 deeming the Appellant’s Review Application as having been filed out of time, contrary to Section 229(1) of the EACCMA. The letter of 3rd November 2025 specifically refers to the Appellant’s appeal letter of 30th October 2025. After further correspondence with the Appellant’s agent clarifying the chronology of events, the Respondent issued its Review Decision on 19th November 2025. 3. However, the Tribunal notes that in its Notice of Appeal, the Appeal has specifically appealed against the Respondent’s decision dated 3rd November 2025, and “sustained a letter dated 21st November, 2025”. The said letter dated 21st November 2025 is, however, not on record. 4. The Tribunal further notes that the Respondent’s letter dated 3rd November 2025 communicated is to the effect that the Appellant’s Review Application was filed out of time, a fact that the Respondent subsequently conceded to have been an administrative error in its pleadings. The Tribunal thus deems it unnecessary to delve into this particular issue any further. 5. Be that as it may, the Tribunal notes that the appropriate decision on record that logically would have triggered this appeal is the Respondent’s Review Decision dated 19th November 2025. Typos aside, Section 229(4) of EACCMA provides as follows: - *The Commissioner shall, within a period of thirty days of the receipt of the application under subsection (2) and any further information the Commissioner may require from the person lodging the application communicate his or her decision in writing to the person lodging the application stating reasons for the decision.* 1. From the records before the Tribunal, it is apparent that the Respondent rendered an erroneous decision in its letter of 3rd November 2025, deeming the Appellant’s Review Application out of time, and this was corrected vide further information provided by the Appellant’s agent in subsequent correspondences on record. This led the Respondent to issue its Review Decision of 19th November 2025. Accordingly, the Respondent correctly issued its Review Decision on 19th November 2025 after receiving additional information, and the same cannot be taken to have been time-barred. Indeed, it would have been of no material relevance even if the Review Decision was issued on 21st November 2025. #### **Whether the Respondent erred in rejecting the Transaction Value Method and applying an alternative valuation.** 1. Having deemed the Respondent’s Review Decision to have been issued on time, the second central question in this appeal is whether the Respondent was justified in rejecting the Appellant's declared transaction value and applying Method 2 (transaction value of identical goods) instead of the Transaction Value Method (Method 1). 2. Section 122(1) of the EACCMA provides that: "Where imported goods are liable to import duty ad valorem, then the value of such goods shall be determined in accordance with the Fourth Schedule and import duty shall be paid on that value." 3. The Fourth Schedule to the EACCMA prescribes six methods of valuation to be applied sequentially: * **Method 1:** Transaction Value * **Method 2:** Transaction Value of Identical Goods * **Method 3:** Transaction Value of Similar Goods * **Method 4:** Deductive Value * **Method 5:** Computed Value * **Method 6:** Fall-back Value 1. Paragraph 2(1) of the Fourth Schedule provides that: "The customs value of imported goods shall be the transaction value, which is the price actually paid or payable for the goods when sold for export to the Partner State adjusted in accordance with the provisions of Paragraph 9." 2. The interpretative notes in Part II of the Fourth Schedule clarify that the methods are to be applied in sequential order. The primary and mandatory method of valuation is the transaction value. Alternative methods can only be applied where the conditions for the preceding method have not been fulfilled or where the transaction value is unreliable. 3. In the case of **Testimony Motors Limited v The Commissioner of Customs (Uganda Revenue Authority)** [2012] HC Civil Suit No. 212, the court held that: "Section 122 of the East African Community Customs Management Act, 2004 subsection I therefore is couched in mandatory terms. It provides that the value of such goods shall be determined in accordance with the Fourth Schedule and import duty shall be paid on the value. It does not give any discretionary power on the Commissioner to rely on alternative methods without following the procedures or directives laid out in the Fourth Schedule. The primary method ... is the method that must first be attempted. It is only upon failure of the primary method that alternative methods can be applied." 4. This principle was also affirmed in the case of **Commissioner of Customs & Border Control v Bidco Oil Refineries Limited** (Income Tax Appeal E011 of 2021), where the High Court reiterated that the customs value should be based on the price actually paid for the goods and the adjustment of the customs value must be in conformity with the provisions of Section 122 and the Fourth Schedule to the EACCMA." 5. The Tribunal notes that the Appellant declared its imports using the primary method, which is the transaction value method. However, the Respondent rejected the Appellant's declared transaction value on the grounds that, while the Appellant availed payment records and supplier confirmations, the same did not sufficiently dispel the Respondent’s reasonable doubt arising from the significant variance between the Appellant’s declared value and the values declared by other importers for identical goods from the same manufacturer. 6. The Respondent further submitted that the reference importation relied upon concerned identical goods, namely Coro Extra 11.3P, 330ml 4x60 WBT, which are identical in description, quantity, quality, alcohol content, packaging, and manufacturer to those imported by the Appellant. Thus, the allegation that the reference importation involved non-standard 355ml SKUs is misleading and unsupported, as the Respondent applied Method 2 (Transaction Value of Identical Goods) strictly in accordance with Paragraph 3 of the Fourth Schedule to EACCMA. 7. The Appellant inevitably has a duty in law to prove that the Respondent erred in deviating from the transaction value declared by the Appellant. Section 223 of the EACCMA provides as follows: ***223. In any proceedings under this Act—*** *(a) the onus of proving the place of origin of any goods or the payment of the proper duties, or the lawful importation, landing, removal, conveyance, exportation, carriage coast- wise, or transfer, of any goods shall be on the person prosecuted or claiming anything seized under this Act.* 1. Further, Section 30 of the Tax Appeals Tribunal Act provides as follows: *In a proceeding before the Tribunal, the appellant has the burden of proving—* *(a) Where an appeal relates to an assessment, that* *the assessment is excessive; or* *(b) In any other case, that the tax decision should not have been made or should have been made differently.* 1. Whereas the burden of proof lies on the taxpayer, the burden is not static. It swings between the taxpayer and the Respondent at different points. If the taxpayer produces documents to counter the Respondent’s decision, the Respondent has the burden of demonstrating that its decision was correct. 2. In the case of in **Commissioner of Domestic Taxes v Trical and Hard Limited [2022] KEHC 9927 (KLR)**, the Court emphasized that the burden of proof is not stationary. The Court observed as follows at paragraph 25 of the judgment: *I agree with the Tribunal’s holding that the burden of proof in tax matters is not stationary but is like a pendulum swinging between the taxpayer and taxman at different points, but more times than not swings towards the taxpayer. The uniqueness of our tax system in placing the evidential burden of proof on the taxpayer is neither a mistake nor is it unconstitutional.* 1. Further, in the case of **Commissioner of Domestic Taxes v Bosky Industries Limited (Income Tax Appeal E049 of 2022) [2025] KEHC 7965 (KLR),** the High Court held as follows at paragraphs 42, 46 and 46 of the judgment: *42. However, under general evidentiary principles, sections 107-109 of the Evidence Act, Cap 80, on the burden of proof, once a taxpayer has produced prima facie evidence supporting its position, the evidential burden can shift to the Commissioner to prove otherwise, especially where fraud or other serious allegations are raised by the Commissioner.* *45. The “burden of proof” is not a static concept in tax litigation. Initially, the taxpayer must challenge an assessment by tendering evidence of legitimate transactions. Once the taxpayer has done so to a minimum level by demonstrating that the goods were paid for and ETR invoices exist, the burden shifts to the Commissioner to substantiate its allegations of fraud or fictitious transactions.* *46. In Hickman Motors Ltd vs Canada 1977 CanLII 357(SCC) it was stated that: -* *“The taxpayer’s initial onus of demolishing the Minister’s exact assumptions is met where the Appellant makes out a prima facie case. Where the Minister’s assumption is demolished by the Appellant, the onus shifts to the Minister to rebut the prima facie case made out by the Appellant and to prove the assumptions...The law is settled that unchallenged and uncontrolled evidence demolishes the Minister’s assumptions.”* 1. The Appellant submitted that it had provided comprehensive documentary evidence to support the declared transaction value of USD 10.37 per case, including the following: - 2. ***Payment Evidence:*** - Telegraphic Transfer (T/T) remittance confirmation showing payment of USD 34,843.20 to the supplier, which corresponds exactly to the commercial invoice value based on USD 10.37 per case; 3. ***Supplier Verification:*** - Written confirmation letter from the supplier verifying the agreed price of USD 10.37 per case. Supplier invoice reflecting the transaction value of USD 10.37 per case. 4. ***Price Negotiation Evidence:*** - Email correspondence between the Appellant and the brand owner documenting the price negotiation process. Evidence of the commercial rationale for the price reduction. 5. ***Market Evidence:*** - Evidence of a retail price reduction from Kshs. 430 to Kshs. 320 per bottle, and documentation demonstrating enhanced market competitiveness resulting from the revised pricing. 6. The Appellant further submitted that all documentary evidence demonstrated that USD 10.37 per case was the actual price paid or payable for the imported goods, satisfying the requirements for the First Method of Valuation under Section 122 of the EACCMA. 7. On the Respondent’s contention regarding the lack of a Distribution Agreement, the Appellant submitted that while the formal distribution agreement was still under negotiation and not yet executed at the time of importation, it provided evidence of its appointment and the agreed pricing structure by including *email correspondence with the brand owner; written confirmation from the supplier, and evidence of ongoing negotiations*. 8. The Respondent, in its review decision dated 19th November 2025, did not dispute receipt of the aforementioned documents and correspondences. However, the Respondent averred that the Appellant had not provided the following documents, which to upholding of its decision to apply *Method 2- Transaction Value of Identical Goods: - Distributorship Agreement; the supplier’s official price list indicating the new prices; the volume commitments agreement; and proof of a lower trade level.* 9. In rebuttal, the Appellant submitted that the Respondent’s demand for documents such as a formal distributorship agreement; an official price list; a volume commitment agreement; and proof of a lower trade level are not legal requirements under Section 122 or the Fourth Schedule for accepting transaction value. 10. Section 122(2) of EACCMA empowers the Respondent to seek further information, including documents, as follows:- *"Where the proper officer has reason to doubt the truth or accuracy of the particulars or documents produced* *in support of a declared value, he may ask the importer to provide further information including documents or other evidence that the declared value represents the total amount actually paid or payable."* 1. Section 122(4) of the EACCMA empowers the proper officer to ‘satisfy himself or herself as to the truth or accuracy of any statement, document or declaration presented for customs valuation purposes." 2. The Tribunal is of the considered view that this power must be exercised reasonably and not arbitrarily. The Respondent must demonstrate that the transaction value is unreliable based on cogent evidence, not merely on suspicion or general comparisons. 3. In the case of **Republic v Kenya Revenue Authority (ex parte J. Mohamed)** Civil Application 312 of 2011, the court stated: “A taxing authority is not entitled to pluck a figure from the air and impose it upon a taxpayer without some rational basis for arriving at that figure and not another figure. Such action would be arbitrary, capricious and in bad faith." 4. The Tribunal finds that the Respondent’s rejection of the transaction value was not sufficiently justified based on the reliability of the documents availed during the Review stage. The Respondent failed to demonstrate, with concrete evidence, that the Appellant’s declared transaction values were inaccurate or unreliable. The Respondent’s attempt to seek additional documents, as outlined in its Review Decision dated 19th November 2025, does not buttress the reliability of the documents already provided by the Appellant to justify the application of the Transaction Value Method. 5. Accordingly, the Tribunal finds and holds that the Respondent erred in rejecting the Appellant’s declared transaction value method. The Respondent failed to discharge its evidentiary burden to demonstrate that the Appellant’s transaction value was unreliable, and the rejection was therefore unlawful and unsupported by cogent evidence. Consequently, the Respondent erred in rejecting the Transaction Value Method and applying alternative valuation. **DETERMINATION** 1. The upshot to the foregoing is that the Tribunal finds and holds that the Appeal is meritorious and makes the following orders: - 1. The appeal be and is hereby allowed; 2. The Review Decision dated 19th November 2025 be and is hereby set aside; 3. Each party to bear its own costs. 2. It is so ordered. **DATED and DELIVERED at NAIROBI this ………7th..……. Day of ……August...…… 2026** **………….……………………..….** **DR RODNEY ODHIAMBO OLUOCH** **CHAIRPERSON** **……………………………… ……..….……..……………..** **CYNTHIA MAYAKA DR. ERICK KOMOLO MEMBER MEMBER** **……………………………..….** **ABDULLAHI DIRIYE** **MEMBER**