https://new.kenyalaw.org/akn/ke/judgment/ketat/2026/311

REPUBLIC OF KENYA IN THE TAX APPEALS TRIBUNAL AT NAIROBI TAX APPEAL NO E10 OF 2026 PIGEON BABY LAB KENYA LIMITED.............................................................APPELLANT VERSUS COMMISSIONER OF LEGAL SERVICES AND BOARD COODINATION ... RESPONDENT JUDGMENT BACKGROUND 1. The Appellant is a limited liability company incorporated in Kenya and a wholly owned subsidiary of Pigeon Corporation (Pigeon) that is incorporated in Japan. Its principal business activity is the manufacturing, sale, importation and exportation of baby and child care products, maternity items, women’s care products, home healthcare products and nursing care products. 2. The Respondent is a principal officer appointed under Section 13 of the Kenya Revenue Authority Act, 1995, Cap 469 Laws of Kenya. Under Section 5(1), the Respondent is an agency of the Government for the collection and receipt of all tax revenue. Further, under Section 5(2) with respect to the performance of its functions under subsection (1), the Respondent is mandated to administer and enforce all provisions of the written laws as set out in Part 1 & 2 of Judgment TAT No. E10 of 2026 – Pegion Baby lab Kenya Limited -vs- Commissioner for Legal Coordination Services Page 1 of 40 Board and the First Schedule to the Act for the purposes of assessing, collecting, and accounting for all revenues in accordance with those laws. 3. The Respondent imposed a value uplift on the consignment of baby feeding bottles imported by the Appellant and demanded uplifted duty of Kshs 149,904.00. 4. The Appellant objected to the demand vide its letter dated 31 st October 2025. 5. The Respondent reviewed the Appellant’s objection and, vide a letter dated 25th November 2025, issued the Review Decision upholding the assessment of Kshs 149,904.00. 6. Aggrieved by the Respondent’s Review Decision, the Appellant filed its Notice of Appeal dated 24th December 2025 and filed on even date. THE APPEAL 7. The Appeal is premised on the following grounds of appeal as stated in the Appellant’s Memorandum of Appeal dated and filed on 6th January 2026. a. That the Respondent erred in law by failing to furnish the Appellant with reasons informing its Review Decision, in contravention of Section 229(4) of the East Africa Community Customs Management Act, 2004(EACCMA). b. That the Respondent erred in law and fact by disregarding the Transaction Value Method as the primary method of customs Judgment TAT No. E10 of 2026 – Pegion Baby lab Kenya Limited -vs- Commissioner for Legal Coordination Services Page 2 of 40 Board and valuation, contrary to Section 122, as read together with the Fourth Schedule of the EACCMA. c. That the Respondent erred in law and in fact by holding that the relationship between the Appellant and its non-resident related party, Pigeon Indonesia, influenced the price of the products under review. d. That the Respondent erred in law and in fact by failing to follow the procedure for upsetting the Transaction Value method as outlined under paragraph 2 of Part 1 of the Fourth Schedule to the EACCMA; and e. That the Respondent erred in law and in fact by purporting to apply the Transaction Value of Identical Goods method under paragraph 3 of the Fourth Schedule to the EACCMA without satisfying the mandatory statutory prerequisites for its application. THE APPELLANTS CASE 8. The Appellant’s case is premised on its: - a. Statement of Facts dated and filed on 6 January 2026 together with the documentation attached thereto; b. Written submission dated and filed on 25 May 2026. 9. The Appellant stated that the Respondent, in paragraph 10 of its Review Decision, averred that an analysis of the importation data showed that the declared values were lower than when compared to previous Identical imports made by the Appellant and that there was a general reduction in declared value when the Appellant changed Judgment TAT No. E10 of 2026 – Pegion Baby lab Kenya Limited -vs- Commissioner for Legal Coordination Services Page 3 of 40 Board and its business model in August 2024 and started to import from Pigeon Indonesia, a related company. The Respondent argued that it was therefore not indisputable that the relationship between the two parties influenced the transfer price. 10. The Appellant contended that the Respondent’s basis for rejecting the Transaction Value Method was contrary to Paragraph 2(2) (a)(1) of Part 1 of the Fourth Schedule to the EACCMA, which expressly prohibits the Respondent, in mandatory terms, from disregarding the Transaction Value solely on the ground that the parties to the transaction are related. 11. The Appellant further contended that, in the circumstances where related parties are involved, as in this case, the Respondent is obligated to examine the conditions surrounding the sale and, where it forms the view that the relationship influenced the price, then, as per Paragraph 2(2) (a)(1) of the EACCMA, the Respondent is required to communicate the grounds upon which it concluded that the relationship affected the pricing. 12. The Appellant averred that, from its reading of the Review Decision, it was evident that the Respondent had not provided any reasons/grounds for finding that the relationship influenced the price. It argued, therefore, that this effectively rendered the Respondent’s Review Decision invalid and contrary to the requirements of Section 229(1) of the EACCMA. 13. The Appellant asserted that, under the Fourth Schedule to the EACCMA, the customs value of imported goods is to be determined using one of the six methods of valuation and that these methods must be applied sequentially, and further that Method 1 must be attempted first. Judgment TAT No. E10 of 2026 – Pegion Baby lab Kenya Limited -vs- Commissioner for Legal Coordination Services Page 4 of 40 Board and 14. The Appellant stated that Paragraph 2 of the Fourth Schedule to the EACCMA 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, and adjusted in accordance with the provisions of Paragraph 9. However, where there are no restrictions regarding the disposal or use of the goods by the buyer, the only restrictions should be those imposed or required by law or by the public authorities in the Partner state. Further, that the restriction should not limit the geographical area in which the goods may be sold or do not substantially affect the value of the goods. It asserted further that the sale or price of the goods relied on should not be subjected to some conditions as consideration for which the value cannot be determined. 15. The Appellant averred that it had met the conditions set out in Paragraph 9 on the basis that the Supplier did not impose any conditions or restrictions as to how the Appellant used or disposed of the goods that it purchased from them and that there are no other conditions or considerations imposed by the Third Party Sellers with respect to the sale price charged to the Appellant other than those foreseen in Paragraph 2(1) of the Fourth Schedule to EACCMA. Further, that disposal proceeds by the Appellant do not accrue directly or indirectly to the third-party suppliers. It argued that whilst the sale related to an intercompany sale, the relationship between the parties did not influence the price. 16. It averred that the Respondent had, in rejecting the use of the Transaction Value Method, acted in breach of the mandatory statutory regime and parameters for the determination of the value and assessment of imported goods as duly provided for under Judgment TAT No. E10 of 2026 – Pegion Baby lab Kenya Limited -vs- Commissioner for Legal Coordination Services Page 5 of 40 Board and Section 122 (1) of the EACCMA as read together with Section 2(1) of the Fourth Schedule to the EACCMA. 17. The Appellant reiterated that the use of the term ‘shall’ under Section 122 of the EACCMA and Paragraph 2 of the Fourth Schedule was a close indication that its provisions are in mandatory terms. It therefore argued that the transaction value method was the starting point in customs valuation and that the Respondent is granted no latitude whatsoever in disregarding its application. It stated further that it was only upon successfully demonstrating that the Transaction Value Method is inapplicable that the Respondent can proceed to apply any of the subsequent methods of valuation. 18. It stated that in rejecting the transaction value method, the Respondent had purported to rely on Section 122(1) of the EACCMA. However, it was notable that neither the Respondent’s Review Decision nor its earlier correspondence specified with any degree of particularity which information or documents furnished by the Appellant were found to be inaccurate. 19. It was the Appellant’s contention that, pursuant to Section 122 (4) of the EACCMA, the burden lay with the Respondent to identify the specific information or documents alleged to be inaccurate so as to afford the taxpayer a fair opportunity to respond. It therefore averred that, in the absence of such specificity, the Respondent’s position amounted to no more than casting aspersions, and it was insufficient for the Respondent to merely invoke Section 122(1) of the EACCMA without clearly articulating the basis for the purported inaccuracies. 20. The Appellant further argued that it was pertinent to note that, in June 2025, it imported a consignment of the same product under Judgment TAT No. E10 of 2026 – Pegion Baby lab Kenya Limited -vs- Commissioner for Legal Coordination Services Page 6 of 40 Board and Entry No. 25NBOIM407014512 from Indonesia, which consignment was cleared without any customs value uplift, stating that the Respondent duly accepted the declared transaction values, which were identical to those declared in respect of the impugned consignment. 21. The Appellant asserted that the Respondent’s unconditional acceptance of the June consignment demonstrated the legitimacy of the Appellant’s pricing from Pigeon Indonesia. It pointed out, however, that despite the prior acceptance, the Respondent subsequently sought to uplift the customs value of a similar consignment under Entry No. 25NBOIM410694363 in September 2025 without taking into account the effect, precedent, and comparability of the June clearance. 22. It was therefore the Appellant’s assertion that the Respondent erred in law and in fact by holding that the transaction value method was incorrect on the assumption that the prices had been influenced. It therefore argued that the tax demand of Kshs 149,904.00 by the Respondent ought to be vacated in its entirety. 23. The Appellant highlighted that its relationship with Pigeon Indonesia, who are the supplier of the Appellant’s product, did not affect the prices of the products. The Appellant placed reliance on Paragraph 2(2) (I) of Part I of the Fourth Schedule to EACCMA, which stipulates that the fact that the buyer and the seller are related within the meaning of Paragraph (1) shall not in itself be a ground for regarding the transaction value unacceptable. 24. The Appellant further relied on Paragraph 2(2)(1) of Part 1 of the Fourth Schedule to EACCMA and asserted that the tests in this Judgment TAT No. E10 of 2026 – Pegion Baby lab Kenya Limited -vs- Commissioner for Legal Coordination Services Page 7 of 40 Board and paragraph are to be used at the initiative of the importer, who is the Appellant herein, and only for comparative purposes. 25. The Appellant averred that subparagraph 2 of the Interpretative Notes under Part II of the Fourth Schedule to the EACCMA provides that a proper officer can use two main approaches for examining whether or not a related party transaction has been influenced by the relationship, particularly subparagraph 2(3).It averred that the World Customs Organization (WCO) Guide to Customs Valuation and Transfer Pricing provides that, in proving the circumstances surrounding a sale and that the price was not affected by the relationship, transfer pricing information may be used. 26. The Appellant stated that it has an existing Transfer Pricing Policy (TP Policy) as required by the provisions of the Income Tax (Transfer Pricing Rules 2006.It stated further that the TP Policy documents the arm’s length pricing arrangements between the Appellant and its non-resident related parties, including Pigeon Indonesia. 27. The Appellant asserted that it carried out a comprehensive benchmarking analysis of comparable companies involved in the purchase of similar products and that, based on this benchmarking analysis, it was established that its gross margins were within the identified inter-quartile range of gross margins of comparable companies; hence the pricing of the products purchased from non- resident related parties was considered to be at arm’s length. 28. The Appellant therefore argued that the Respondent should have been guided by the TP Policy, which clearly demonstrated that the transactions were at arm’s length and that the agreed prices agreed were sufficient for the Appellant to recover its costs plus a profit; Judgment TAT No. E10 of 2026 – Pegion Baby lab Kenya Limited -vs- Commissioner for Legal Coordination Services Page 8 of 40 Board and thus, the relationship between the parties did not influence the price. 29. The Appellant averred that it clearly explained to the Respondent during the review stage that the observed price variations were attributable to the fact that the products sourced from Pigeon India incorporated additional costs, including assembly fees and a markup charged by Pigeon India, thereby resulting in higher FOB prices. It illustrated that the FOB prices from Pigeon India were approximately USD 3.00 for a 240 ml bottle, USD 2.00 for a 160 ml bottle, and USD 2.50 for nipples. 30. It therefore argued that, in order to remain competitive in the market, it subsequently transitioned to sourcing the products from Indonesia with a view to streamlining the supply chain and reducing costs by eliminating unnecessary intermediaries. It stated that its decision to procure directly from Pigeon Indonesia resulted in additional cost efficiencies without compromising product quality. It therefore stated that for that reason, the FOB prices from Pigeon Indonesia were naturally lower, reflecting improved operational efficiency and accurately representing the true transaction value. 31. The Appellant asserted that, as per the provisions of Paragraph 2(2)(a)(1) of Part 1 of the Fourth Schedule to the EACCMA, the fact that the buyer and the seller are related shall not, in itself, be a ground for disregarding the transaction value method. The Appellant therefore argued that the Respondent ought to have examined the circumstances surrounding the sale and demonstrated which facts of the sale or the relationship influenced the price. 32. In view of the foregoing, the Appellant stated that the Respondent erred in law and fact in holding that the Transaction Judgment TAT No. E10 of 2026 – Pegion Baby lab Kenya Limited -vs- Commissioner for Legal Coordination Services Page 9 of 40 Board and Value Method used by the Appellant was not acceptable because the buyer and seller were related entities and that this relationship influenced the price. 33. The Appellant asserted that Section 122(6) of the EACCMA provides that, in the determination of the value of imported goods liable to ad valorem import duty, due regard shall be taken of the decisions, rulings, opinions, guidelines, and interpretations provided by the Directorate of the World Trade Organization or the Customs Cooperation Council. 34. The Appellant relied on Paragraphs 2(2) of the Fourth Schedule to the EACCMA and Article 1(2)(a) of the Agreement on Implementation of Article VII of the GATT and stated that, in the present case, it provided all the information and supporting documentation, including the transactional documents, to justify the acceptability of the Transaction Value Method. 35. The Appellant averred that the Respondent was required to properly consider the documentation provided and to understand the information, and that it was not sufficient for the Respondent to merely request supporting documentation, disregard the information, and proceed to issue a Demand by merely stating that analysis of previous importations indicates that the declared values are low. It asserted that the Respondent had the responsibility to investigate the circumstances of the sale before arriving at such a conclusion. 36. It asserted that, under customs legislation, there is no room for arbitrary or felicitous valuation. It averred that the Respondent’s Value uplift and Decision fell short of the legal requirement on the basis that it disregarded the explanations given by the taxpayer and Judgment TAT No. E10 of 2026 – Pegion Baby lab Kenya Limited -vs- Commissioner for Legal Coordination Services Page 10 of 40 Board and the transactional documents to demonstrate use of the Transaction Value Method. It therefore averred that the failure by the Respondent to address itself to the explanation given by the Appellant was contrary to the provisions of the EACCMA. 37. It was the Appellant’s averment that, having provided documentation and explanations to support that it correctly used the Transaction Value Method, it discharged its burden of proof, in that it declared the correct prices and paid the correct taxes as per the provisions of the EACCMA. It asserted that the Respondent failed to substantiate why the information availed was insufficient to demonstrate reliance on the Transaction Value Method. It averred that it was not enough to state that the current declarations were low; it ought to have gone a step further to understand the circumstances of the sale and demonstrate why the declared values could not be used. 38. The Appellant stated that the Respondent’s preferred method to value the consignment was the transaction value of identical goods. It stated further that Paragraph 3(1) (a) of the Fourth Schedule provides that the Respondent may resort to the transaction value of identical goods where: i. The customs value of the imported goods cannot be determined under Paragraph 2; meaning the transaction value was rejected on lawful grounds. ii. There exists a transaction value for identical goods sold for export to Kenya. iii. Those identical goods were exported at or about the same time as the consignment being valued. Judgment TAT No. E10 of 2026 – Pegion Baby lab Kenya Limited -vs- Commissioner for Legal Coordination Services Page 11 of 40 Board and 39. It argued that the Respondent, in all instances, failed to lawfully displace the Transaction Value Method. As such, the Respondent’s recourse to the Transaction Value of Identical Goods Method was equally untenable. It argued that a lawful and effective invocation of the Transaction Value of Identical Goods Method presupposes a prior and valid determination that the Transaction Value Method was inappropriate. It asserted that, in the absence of such a determination, the Respondent reliance on the Transaction Value of Identical Goods Method could not stand. 40. The Appellant argued that the transaction value of the identical goods method required the Respondent to demonstrate that there were truly identical goods; that its goods were alike in all material respects, including physical characteristics, quality, and reputation; and that such goods were exported within a comparable time frame to ensure the relevance of the valuation. The Appellant averred that the Respondent did not make available to the Appellant the identical goods it had identified and relied on as proof that indeed the said goods were exported within a comparable time frame within the region. 41. The Appellant asserted that Paragraph 3(1)(b) of the Fourth Schedule mandates a like-for-like comparison of identical goods, where those goods must be sold at the same commercial value and in substantially the same quantities as the goods being valued. It argued that the Respondent’s reliance on the transaction value of identical goods cannot be verified, and that, indeed, the Respondent’s comparison had not complied with the requirements of Paragraph 3 of the Fourth Schedule to EACCMA. Judgment TAT No. E10 of 2026 – Pegion Baby lab Kenya Limited -vs- Commissioner for Legal Coordination Services Page 12 of 40 Board and 42. It was the Appellant’s averment that Paragraph 3(2) of the Fourth Schedule further requires that where the transaction value of identical goods includes costs and charges referred to in Paragraph 9(2) (including transport, insurance and related costs), the Respondent must adjust the value to reflect significant differences in such costs and charges between; i. The imported goods under review; and ii. the identical goods used for comparison. 43. It stated that the above requirement ensured that valuation was not distorted by differing transport models, distances, or logistical agreements. It therefore averred that it cannot verify that indeed these adjustments were made, as the Respondent’s Review Decision was silent on the process and circumstances that went into applying the transaction value of identical goods. 44. It stated that what could however be verified was that the Respondent erroneously compared the Appellant’s own previous prices of the products with the current impugned consignment without considering or factoring in the basis of price variations, an approach that was untenable under the provisions of Paragraph 3 of the Fourth Schedule to the EACCMA. 45. The Appellant stated that Paragraph 3(3) of the Fourth Schedule provides that where the Respondent identified more than one transaction value of identical goods that meets the statutory criteria, the law mandated that the Respondent must adopt the lowest of those values as the customs value. 46. It stated that Paragraph 3 of the Fourth Schedule to the EACCMA prescribes a clear and structured procedure for the application of the transaction value of identical goods. It therefore argued that the Judgment TAT No. E10 of 2026 – Pegion Baby lab Kenya Limited -vs- Commissioner for Legal Coordination Services Page 13 of 40 Board and Respondent ought to have demonstrated that each element of the procedure had been duly compared with, and the comparable data relied upon should similarly have been disclosed to the Appellant. 47. It was the Appellant’s averment that the Respondent failure to establish adherence to Paragraph 3 of the Fourth Schedule, coupled with its omission to furnish the Appellant with the underlying comparable data, placed the Appellant in an untenable position and effectively deprived the Appellant of the ability to mount a proper and informed defence against the Review Decision. 48. It was the Appellant’s assertion that the Respondent’s decision to value the products using the transaction value of identical goods was fundamentally flawed. It stated that the Respondent failed to disclose the comparative data allegedly relied upon, including the particulars of the purported identical goods, the dates of their importation, and whether the importers of those goods operated at the same commercial level as the Appellant. In the absence of this information, the Appellant averred that it was impossible to ascertain whether the Respondent correctly applied the transaction value of identical goods in arriving at the customs value of the products. 49. In its written submissions, the Appellant submitted on five issues. a) Whether the Respondent erred in law by failing to furnish the Applicant with the reasons informing its Review Decision, in contravention of Section 229(4) of the East African Community Customs Managements Act (EACCMA) Judgment TAT No. E10 of 2026 – Pegion Baby lab Kenya Limited -vs- Commissioner for Legal Coordination Services Page 14 of 40 Board and 50. The Appellant disputed the Respondent’s contention vide its Statement of Facts that its Review Decision dated 25th November 2025 was a valid review meeting the requirements of Section 229(4) of the EACCMA. It submitted that the singular reason preferred by the Respondent for rejecting the Transaction Value Method under Paragraph 10 of its Review Decision was that: - “it is therefore irrefutable that the relationship between the two parties influenced the transfer price.” 51. The Appellant submitted that the Respondent’s basis for rejecting the Transaction Value Method was contrary to Paragraph 2(2)(a)(i) of Part 1 of the Fourth Schedule to the EACCMA, which expressly prohibits the Respondent in mandatory terms from disregarding the Transaction Value solely on the ground that the parties to the transaction are related. It stated that, in the circumstances where the related parties were involved, the Respondent was obligated to examine the conditions surrounding the sale and, where it formed the view that the relationship influenced the price, Paragraph 2(2)(b)(i) of the EACCMA requires the Respondent to communicate the grounds upon which it concluded that the relationship affected the pricing. 52. The Appellant submitted that the Respondent did not provide any reasons/grounds for finding that the relationship influenced the price. It therefore argued that this rendered the Respondent’s Review Decision invalid and contrary to the express requirements of Section 229() of the EACCMA, which enjoins the Respondent to provide reasons underpinning its decision. Judgment TAT No. E10 of 2026 – Pegion Baby lab Kenya Limited -vs- Commissioner for Legal Coordination Services Page 15 of 40 Board and 53. The Appellant submitted further that the Respondent’s failure to issue a valid Review Decision infringed the Appellant’s right to fair administrative action as enshrined in Article 47 of the Constitution of Kenya, which provides that every person has a right to administrative action that is expeditious, efficient, lawful, reasonable, and procedurally fair. It submitted further that Section 4(2) of the Fair Administrative Action Act also provides that every person has the right to be given written reasons for any administrative action taken against them. 54. It was the Appellant’s submission that the provisions of the Constitution of Kenya, the EACCMA, and the Fair Administrative Action Act collectively underscore the centrality of the Respondent’s obligation to give reasons for its decision, arguing that the underlying rationale for this requirement was to ensure that taxpayers are apprised of the basis upon which decisions affecting them have been made, to safeguard against the arbitrary imposition of taxes by the Respondent. It therefore asserted that, in the absence of articulated reasons demonstrating how the relationship was deemed to have influenced the price, the Respondent’s Review Decision is rendered void ab initio. 55. To buttress its argument, the Appellant relied on the following cases: - Kenya Medical Association Housing Cooperative Society Limited vs Attorney General & Another (2016) eKLR. - Local Productions Kenya Limited vs Commissioner of Domestic Taxes (Tax Appeal No. 50 of 2017) - Richard Bonham Safaris Limited vs the Commissioner of Income Tax (2006) eKLR. Judgment TAT No. E10 of 2026 – Pegion Baby lab Kenya Limited -vs- Commissioner for Legal Coordination Services Page 16 of 40 Board and - Geothermal Development Company Limited vs Attorney General & 3 others (2013) eKLR. b) Whether the Respondent erred in law and in fact by disregarding the Transaction Value Method as the primary method of customs valuation contrary to Section 122, as read together with the Fourth Schedule of the EACCMA. 56. The Appellant submitted that, in issuing the Review Decision, the Respondent failed to appreciate the fact that the Appellant in valuing its imports, was correct in using the Transaction Value Method, which is the price actually paid or payable for the goods when sold for export and the primary method of valuation pursuant to the provisions of Section 122 of the EACCMA. 57. It was the Appellant’s submission that, under the Fourth Schedule to the EACCMA, the customs value of imported goods is to be determined using one of the six methods which must be applied sequentially. It submitted further that Section 122 of the EACCMA is supplemented by the provisions of Paragraph 2(1) of the Fourth Schedule to the EACCMA which stipulate that the customs value of imported goods shall be the transaction value, being 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. 58. The Appellant submitted that it met the conditions set out in Paragraph 9 of the Fourth Schedule to the EACCMA in that: i. The supplier did not impose any conditions or restrictions as to how the Appellant used or disposed of the goods that it purchased from them; Judgment TAT No. E10 of 2026 – Pegion Baby lab Kenya Limited -vs- Commissioner for Legal Coordination Services Page 17 of 40 Board and ii. There were no other conditions or considerations imposed by the third-party sellers with respect to the sale price charged to the Appellant other than the ones foreseen in Paragraph 2(1) of the Fourth Schedule to the EACCMA. iii. Disposal proceeds from the subsequent resale of products by the Appellant did not accrue directly or indirectly to the third-party suppliers; and iv. While the same related to an intercompany sale, the relationship between the parties did not influence the price. 59. It was the Appellant’s submission that the Respondent, in rejecting the use of the Transaction Value Method, acted in breach of the mandatory statutory regime and parameters for the determination of the value and assessment of imported duty provided for under Section 122(1) of the EACCMA, as read together with Section 2(1) of the Fourth Schedule to the EACCMA. 60. The Appellant reiterated that the use of the term ‘shall’ under Section 122 of the EACCMA and Paragraph 2 of the Fourth Schedule was a clear indication that its provisions are in mandatory terms. As such, the transaction value method is the starting point in customs valuation, and the Respondent is granted no latitude whatsoever in disregarding its application. It argued that it was only upon successfully demonstrating that the Transaction Value Method was inapplicable that the Respondent could proceed to apply any of the subsequent methods of valuation. 61. The Appellant relied on the Tribunal’s decision in the case of Wallpaper Kenya versus Commissioner of Customs & Border Control, Tax Appeals No. 279 of 2020, where the Tribunal applied the decision of the High Court of Uganda in the case of Judgment TAT No. E10 of 2026 – Pegion Baby lab Kenya Limited -vs- Commissioner for Legal Coordination Services Page 18 of 40 Board and Testimony Motors Limited versus the Commissioner of Customs (Uganda Revenue Authority) 2012 HC Civil Suit No. 212, where the Court held: “Section 122(1) is couched in mandatory terms. It provides that the value of such goods shall be determined in accordance with the Fourth Schedule and import duly shall be paid on that value. It does not give any discretionary power to the Commissioner to rely on an alternative method without following the procedure or directives laid out in the Fourth Schedule. In other words, it is the price paid for goods by the buyer or importer which forms the basis of assessing the customs duty payable on the goods” 62. The Appellant submitted that, in rejecting the transaction Value Method, the Respondent purportedly relied on Section 122 (4) of the EACCMA. However, it was notable that neither the Respondent’s Review Decision nor its earlier correspondence, with any degree of particularity, specified which information or documents furnished by the Appellant were found to be inaccurate. 63. The Appellant submitted that, pursuant to Section 122(4) of the EACCMA, once a taxpayer furnished the Respondent with documents, the burden lay with the Respondent to identify the specific information or documents alleged to be inaccurate so as to afford the taxpayer a fair opportunity to respond. It argued, therefore, that in the absence of specificity, the Respondent’s position amounted to no more than casting aspersions and that it was insufficient for the Respondent to merely invoke Section 122(1) of the EACCMA without clearly articulating the basis of the purported inaccuracies. Judgment TAT No. E10 of 2026 – Pegion Baby lab Kenya Limited -vs- Commissioner for Legal Coordination Services Page 19 of 40 Board and 64. The Appellant pointed out that, in June 2025, it imported a consignment of the same product under Entry Number 25NBOM407014512 from Indonesia and that the said consignment was cleared without any customs value uplift, as the Respondent duty accepted the declared transaction values, which were identical to those declared in respect of the impugned consignment. 65. The Appellant argued that the Respondent’s unconditional acceptance of the June consignment demonstrated the legitimacy of the Appellant’s pricing from Pigeon Indonesia. However, despite this prior acceptance, the Respondent subsequently sought to uplift the customs value of a similar consignment under Entry No. 25NBOIM410694363 in September 2025 without taking into account the effect, precedent, and comparability of the June clearance. 66. The Appellant submitted that it provided supporting documents for the use of the Transaction Value. It argued that the Respondent was expected to consider these documents and not merely request documents and disregard the information. The Appellant, in buttressing its argument, relied on the case of Kenya Revenue Authority v Man Diesel & Turbo Se, Kenya (2021) eKLR where the High Court held that; - “But more important, in auditing a taxpayer, the Commissioner is required to properly consider the documentation provided and to understand the information. It is not sufficient for the Commissioner to merely request information and then disregard it and to issue an assessment as it sees fit. Where the Commissioner issues an assessment based on the taxpayer’s accounts and records but has misconstrued these records then it will be sufficient for the taxpayer to Judgment TAT No. E10 of 2026 – Pegion Baby lab Kenya Limited -vs- Commissioner for Legal Coordination Services Page 20 of 40 Board and explain the nature of the Committee misconception, point out the flaws in the analysis and to explain how those records and accounts should be properly understood…” 67. The Appellant therefore submitted that, having provided documents and explanations to support that it correctly used the Transaction Value Method, it discharged its burden of proof that it paid the correct taxes as per EACMMA. Accordingly, having made a prima facie case that it paid the correct taxes, the burden of proof shifted to the Respondent to give reasons for rejection of the Transactions Value Method in its Review Decision, which burden of proof, the Respondent failed to discharge. c) Whether the Respondent erred in law and in fact in finding that the relationship between the Appellant and its non-resident related party, Pigeon Indonesia, influenced the prices of the products under review. 68. The Appellant highlighted that its relationship with Pigeon Indonesia, the supplier of the product, did not affect the prices of the products and placed reliance on Paragraph 2(2)(a)(1) of the Fourth Schedule to EACCMA, which stipulates that the fact that the buyer and the seller are related within the meaning of Paragraph (1) shall not in itself be a ground for regarding the transaction value unacceptable. 69. It averred that subparagraph 2 of the Interpretative Notes under Part II of the Forth Schedule to the EACCMA provides that a proper officer can use two main approaches for examining whether or not a related party transaction has been influenced by the relationship. In addition, it stated that the World Customs Organisation (WCO) Guide Judgment TAT No. E10 of 2026 – Pegion Baby lab Kenya Limited -vs- Commissioner for Legal Coordination Services Page 21 of 40 Board and to Custom Valuation and Transfer Pricing provides that, in proving the circumstances surrounding a sale and that the price was not affected by the relationship, transfer pricing information may be used. 70. The Appellant reiterated that it has a Transfer Pricing Policy which documents the arm’s length pricing arrangement between the Appellant and its non-resident related party, including Pigeon Indonesia. It argued that the Respondent should have been guided by the TP Policy which clearly demonstrated that the transactions were at arm’s length and that the prices agreed were sufficient for the Appellant to recover its cost, plus a profit. It argued, therefore, that the relationship between the parties did not influence the price. To buttress its case, the Appellant relied on the case of GlaxoSmithKline (Kenya) Limited versus the Commissioner of Customs and Border Control, Tax Appeal No. 340 of 2020. d) Whether the Respondent erred in law and in fact by failing to follow the procedure for upsetting the Transaction Value Method as outlined under Paragraph 2, Part 1 of the Fourth Schedule to the EACCMA. 71. The Appellant submitted that it provided all the information and supporting documentation, including the transactional documents, to justify the acceptability of the Transaction Value Method. It reiterated that the Respondent was required to properly consider the documentation provided and understand the information, and that it was not sufficient for the Respondent to merely request support documentation, disregard the information, and proceed to issue a Demand. It stated that the Respondent had the responsibility to Judgment TAT No. E10 of 2026 – Pegion Baby lab Kenya Limited -vs- Commissioner for Legal Coordination Services Page 22 of 40 Board and investigate the circumstances of the sale before arriving at such a conclusion. 72. The Appellant asserted that, under customs legislation, there is no room for arbitrary or fictitious valuation. It averred that the Respondent’s value uplift and Decision fell short of the legal requirement on the basis that it disregarded the explanations given by the taxpayer and the transactional documents to demonstrate the use of the Transaction Value Method. It averred further that the failure by the Respondent to address itself to the explanation given by the Appellant was contrary to the provisions of the EACCMA. 73. To buttress its argument, the Appellant relied on the following cases: - Auto Express Limited v Commissioner of Customs and Board Control, Tax Appeals No. 119 of 2018. - Parnod Ricard Kenya Limited v Commissioner of Customs and Board Control, Tax Appeal No. 25 of 2018. - Optimum Lubricants Limited v Commissioner of Customs and Boarder Control, Appeal No. 7 of 2021. e) Whether the Respondent erred in law and in fact by purporting to apply the Transaction Value of Identical Goods Method under paragraph 3 of the Fourth Schedule to the EACCMA without satisfying the mandatory statutory prerequisite for its application. 74. The Appellant submitted that the Transaction Value of Identical Goods method requires the Respondent to demonstrate that the goods are truly identical. It averred that the Respondent failed to avail the Appellant the identical goods it had identified and relied on, Judgment TAT No. E10 of 2026 – Pegion Baby lab Kenya Limited -vs- Commissioner for Legal Coordination Services Page 23 of 40 Board and and proof that the said goods were exported within a comparable time frame in the region. 75. The Appellant submitted that the Respondent’s decision to use the Transaction Value of Identical Goods was fundamentally flawed because the Respondent failed to disclose the comparable data allegedly relied upon. It therefore argued that it was impossible to ascertain whether the Respondent correctly applied the Transaction Value of Identical Goods in arriving at the customs value of the products. 76. The Appellant submitted that the Respondent, as an administrative body, is bound by reasonableness when raising assessments and should not raise arbitrary assessments. The Appellant relied on the case of Republic v Kenya Revenue Authority, Ex parte Althaus Management & Consultancy Limited (2017) eKLR where it was held: “Therefore, whereas this court is not entitled to question the merits of the decision of a taxing authority, that authority must exercise its powers fairly and there ought to be a basis for the exercise of such powers. 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. It would be an unreasonable exercise of power and discretion, and that would justify the Court in intervening. In Republic v Institute of Certified Accountants of Kenya Ex parte Vipichandra Bhatt T/A J.V Bhatt & Company Nairobi HCMA No. 285 of 2006,it was held that, in the absence Judgment TAT No. E10 of 2026 – Pegion Baby lab Kenya Limited -vs- Commissioner for Legal Coordination Services Page 24 of 40 Board and of a rational explanation, one must conclude that the decision challenged can only be termed irrational within the meaning of the Wednesbury unreasonableness, was in bad faith, and constitutes a serious abuse of statutory power since no statute can ever allow anyone on whom it confers a power to exercise such power arbitrarily and capriciously or in bad faith.” 77. The Appellant therefore submitted that the Respondent arbitrarily applied the transaction value of identical goods method to uplift the valuation of the Appellant’s goods. It averred that the Respondent erred in law and in fact by purporting to apply the transaction value of identical goods method under Paragraph 3 of the Fourth Schedule of the EACCMA without satisfying the mandatory statutory prerequisites for its application; hence, the tax demanded of Kshs 149,904.00 ought to be vacated. Appellant’s Prayers 78. The Appellant prayed that: - a. The Respondent’s Review Decision contained in the letter dated 25th November 2025 demanding payment of Kshs 149,904.00 be set aside in its entirety. b. The Appeal be allowed with costs to the Appellant. c. Any other orders that the Honourable Tribunal may deem fit. THE RESPONDENT’S CASE 79. The Respondent’s case is premised on its: a. Statement of Facts dated and filed on 9th February 2026 together with the documentation attached thereto Judgment TAT No. E10 of 2026 – Pegion Baby lab Kenya Limited -vs- Commissioner for Legal Coordination Services Page 25 of 40 Board and b. Written submissions dated 22nd May 2026 and filed on 25th May 2026 80. In response to ground (a) of the Memorandum of Appeal, the Respondent averred that, in making its Review Decision, it noted that in the Transfer Pricing (TP) Policy availed by the Appellant, there were assets utilized by Pigeon Suppliers in the controlled transaction. It further averred that Pigeon Indonesia and Pigeon India both employed their manufacturing plants, production lines, machinery, equipment, buildings, and warehouses as their assets. It asserted that the position that Pigeon India bought from Pigeon Indonesia and added a mark up before selling to Pigeon Kenya did not hold since both Pigeon India and Pigeon Indonesia manufactured the products, and hence it did not make business sense for Pigeon India to buy from Pigeon Indonesia and then sell to Kenya. 81. The Respondent further averred that, in its Review Decision, it placed relevance on the application of procedures under World Trade Organization (WTO) Decision 6.1, namely, that Customs had doubts regarding the truth and accuracy of the declared Value which were conveyed to the importer, and that Customs’ doubts remained after the due consultation process was followed; then the application of an alternative valuation method sufficed. 82. In response to ground (b) of the Memorandum of Appeal, the Respondent averred that Section 122(1) of the East African Community Customs Management Act, 2004(EACCMA) states 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.” Judgment TAT No. E10 of 2026 – Pegion Baby lab Kenya Limited -vs- Commissioner for Legal Coordination Services Page 26 of 40 Board and 83. The Respondent averred that the Fourth Schedule spells out the application of methods 1 to 6 on Valuation of imported goods. Further that the Fourth Schedule states, in pertinent part, 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. 84. The Respondent averred that the transaction value was rejected following the application of the procedure under WTO Decision 6.1; namely, Customs had doubts regarding the truth and accuracy of the declared value, which were conveyed to the importer, and the Customs doubts remained after the due consultation process was followed then application of the alternative valuation method sufficed. 85. In response to ground (c), the Respondent averred that, from the transfer pricing (TP) policy availed by the Appellant, it was observed that there were assets utilized by Pigeon suppliers in the controlled transaction. It reiterated that Pigeon Indonesia and Pigeon India both employ their manufacturing plants, production lines, machinery, equipment, buildings, and warehouses as their assets. 86. It reiterated that the Appellant’s position that Pigeon India bought from Pigeon Indonesia and added mark up before selling to Pigeon Kenya did not hold, since both Pigeon India and Pigeon Indonesia manufactured the products in question; hence, it did not make business sense for Pigeon India to buy from Pigeon Indonesia and then sell to Pigeon Kenya. 87. The Respondent averred that Section 122(4) of the EACCMA provides that Judgment TAT No. E10 of 2026 – Pegion Baby lab Kenya Limited -vs- Commissioner for Legal Coordination Services Page 27 of 40 Board and “Nothing in the Fourth Schedule shall be construed as restricting or calling into question the rights of 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” 88. It averred that, during the objection review process, doubts about the accuracy of the declared values remained, leading to the upholding of the assessment. It therefore asserted that it was justified in disallowing the objection based on the available information. 89. In response to ground (e) of the Memorandum of Appeal, the Respondent averred that an analysis of the importation data showed that the declared value was low when compared with previous identical imports by the Appellant. It noted that there were several reductions in the declared values when the Appellant changed its business strategy in August 2024 and started to import from Pigeon Indonesia, which is a related company, and it was therefore irrefutable that the relationship between the two parties influenced the transfer price. 90. In its written submissions, the Respondent submitted on two issues: a) What is the law on the customs valuation of imported goods. 91. The Respondent submitted that Section 122 of the EACCMA provides for the determination of the custom valuation of imported goods liable to ad valorem duty, while Section 122 (b) of the Judgment TAT No. E10 of 2026 – Pegion Baby lab Kenya Limited -vs- Commissioner for Legal Coordination Services Page 28 of 40 Board and EACCMA then guides that, when applying or interpreting the said section and the provisions of the Fourth Schedule, due regard shall be taken of the decisions, rulings, opinions, guidelines, and interpretations given by the Directorate, the World Trade Organization of the Customs Cooperation Council. 92. The Respondent submitted that the Fourth Schedule to the EACCMA further provides for the valuation of the value of goods liable to ad valorem duty and that Paragraph 1 of the Fourth Schedule to the EACCMA provides for the definition of customs value of imported goods to mean the value of the goods for the purposes of levying ad valorem duties of customs on imported goods. 93. It submitted that the Fourth Schedule to the EACCMA provides for six valuation methods (identical to those suggested by the WTO Agreement) used for the determination of customs value of imported goods liable to ad valorem duties. It asserted that these six methods for the valuation of customs duty on imported goods must be applied sequentially, beginning with the Transaction Value Method, which is the price actually paid or payable for goods when sold for export. 94. It was the Respondent’s submissions that the Fourth Schedule further provides for conditions to be adhered to when seeking to apply any specific method, and where such conditions are absent or have not been met by a taxpayer, then the next sequential method is to be considered. 95. It submitted that Paragraph 2 of the Fourth Schedule to the EACCMA provides for the Transaction Value Method, while Paragraph 3 provides for the Transaction Value of Identical Goods Method. It stated that the dispute before the Tribunal revolved around the Judgment TAT No. E10 of 2026 – Pegion Baby lab Kenya Limited -vs- Commissioner for Legal Coordination Services Page 29 of 40 Board and applicability of the Transaction Value Method vis-à-vis the Transaction Value of Identical Goods method. 96. The Respondent asserted that the Appellant should apply the Transaction Value of Identical Goods in the valuation of the baby feeding bottle products that it imported from its related entities, while the Appellant opined that the proper method of valuation was the transactional value method. 97. The Respondent referred to Paragraph 2(1) (2) of the Fourth Schedule to the EACCMA and stated that the transaction value method is the first method of customs valuation that should be utilized in determination of the customs value of imported goods subject to valorem duty, provided that all the conditions stipulated under Paragraph 2 of the Fourth Schedule are met. 98. It asserted that one of the conditions to be met under Paragraph 2 (1)(d) of the Fourth Schedule to the EACCMA was the relationship between parties. It stated that the said provision requires the buyer and the seller should not be related, however where the buyer and seller are related, the transaction value is acceptable for customs purposes and the provisions of subparagraph (2). b) Whether the Respondent applied the Transaction Value of Identical goods method correctly and hence whether the assessments are proper in law. 99. The Respondent submitted that an analysis of the Appellant’s importation data established the following: a. The declared values were lower when compared to previous identical imports by the Appellant; Judgment TAT No. E10 of 2026 – Pegion Baby lab Kenya Limited -vs- Commissioner for Legal Coordination Services Page 30 of 40 Board and b. The Respondent noted that the Appellant was importing from a related company and therefore questioned the declared lower value that came as a result of the Appellant’s change in business model; c. The Respondent observed that irrefutably the relationship between parties influenced the transfer; and d. As a result of this relationship, the Respondent interrogated the Transfer Pricing Policy and observed that the Appellant’s explanations and what was contained in the TP Policy did not tally. 100. The Respondent submitted that there were assets utilized by Pigeon suppliers in controlled transaction where Pigeon Indonesia and Pigeon India employed their manufacturing plants, production lines, machinery, equipment, building and warehouses as their assets. As such the position that Pigeon India buys from Pigeon Indonesia and add markup before selling to Pigeon Kenya did not hold water. 101. The Respondent stated that the Appellant’s assertions that the price difference between product sourced from Pigeon India and Pigeon Indonesia were due to extra costs incurred by Pigeon India such as assembly fees and mark ups which resulted in higher FOB prices from India, was a mere assertion that was unsupported by any form of documentation. 102. The Respondent submitted that whereas the Transactional value method is first in the hierarchy of valuation methodologies, this does not prevent the Respondent from departing. It stated that it had issued guidance in its advance ruling that by application of Section Judgment TAT No. E10 of 2026 – Pegion Baby lab Kenya Limited -vs- Commissioner for Legal Coordination Services Page 31 of 40 Board and 112(4) of EACCMA, there was a doubt of the transaction value based on previous identical imports by the importer. 103. It asserted that the consequently, the second valuation method was used. It submitted that the sequence existed for a reason where the Respondent was dissatisfied with the transactional value method. It argued that it may, with reasonable cause depart from the use of Transactional Value Method, as is the case in this matter thus its Review Decision was in order. 104. The Respondent relied on the case of Gira Enterprises vs Commissioner of Customs on 23 August 2005 (Customs Excise and Gold Tribunal -Mombasa) where it was stated: “The Transaction value has been defined to be the actual price paid or payable. The declared value may not represent the transaction value in every case when the declared value is ridiculously lower compared to the ordinary competitive price of comparable goods contemporaneously imported, such declared values cannot be adopted as customs value. In such cases, the transactions value method is clearly inapplicable as the declared value does not conform to the requirement of the said section 14(1). Valuation by adopting value of comparable goods contemporaneously imported is unequally efficacious method of valuation. Such valuation is also perfectly legal as has been held by the Honourable Supreme Court and various Tribunal Benches vide various decisions cited by the learned SDR and listed in Paragraph 4 above. On the other hand, where the declared value is ridiculously low and does not correspond to the ordinary Judgment TAT No. E10 of 2026 – Pegion Baby lab Kenya Limited -vs- Commissioner for Legal Coordination Services Page 32 of 40 Board and competitive price in international trade, then the other methods of valuation under the rules are to be used to arrive at the customs value as has been done in this case adopting the lowest of the values of comparable contemporaneous imports.” 105.The Respondent further submitted that the adjustment/uplifts of the customs value took into account the quantity, commercial level, reasonableness and accuracy. It argued that as it stood, the Appellant had not produced any evidence to demonstrate that the Respondent made adjustment to the values whose quantity or quality were at variance. The Respondent’s Prayers 106.The Respondent prayed that the Tribunal would find: a. That the Review Decision dated 25th November be upheld. b. That the Appeal be dismissed with costs to the Respondent as the same lacks merit. ISSUES FOR DETERMINATION 107.The Tribunal has considered the parties pleadings, documentation and submissions and is of the view that this appeal raises one issue for determination. Judgment TAT No. E10 of 2026 – Pegion Baby lab Kenya Limited -vs- Commissioner for Legal Coordination Services Page 33 of 40 Board and Whether the Respondent was justified in applying the transaction value of identical goods method of customs valuation. ANALYSIS AND FINDINGS 108.Having established the one issue for determination the Tribunal will proceed to analyse it as herein under: Whether the Respondent was justified in applying the transaction value of identical goods method of customs valuation. 109.The dispute arose after the Appellant imported a consignment of seftouch PP Bottle and Nipple under Entry No.25NBO1M410694363 and used the Transaction Value method of customs valuation for import duty purposes. The Respondent however uplifted the customs value and adopted the transaction value of identical goods method and demanded tax of Kshs 149,904.00 110.Section 122(1) of the East African Community Customs Management Act (EACCMA) 2004 stipulates that the customs value of imported goods is liable to ad valorem import duty. It provides as follows: “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 the value” 111. The Fourth Schedule to the EACCMA identifies six valuable methods to be used one seeking to establish the custom value of imported commodities the primary of these methods being the Judgment TAT No. E10 of 2026 – Pegion Baby lab Kenya Limited -vs- Commissioner for Legal Coordination Services Page 34 of 40 Board and Transaction Value Method. The conditions for use of these methods are that they must be applied sequentially and one may depart to another due to valid reasons. 112. In adopting the second valuation method, Transaction value of identical good, one of the Respondent’s justification was that it had noted that there was a general reduction in declared values when the Appellant changed its business strategy in August 2024 and started to import from Pigeon Indonesia which is a related company and that it was therefore irrefutable that the relationship between the two parties influenced the transfer price. 113. The Appellant had stated that it initially imported its product through Pigeon India but changed its strategy from August 2024 and shifted to importing from Pigeon Indonesia. The reason it gave for changing was that the manufacturing and logistic costs were higher in India therefore causing a higher Free on Board (FOB) prices as compared to sourcing its product from its related company, Pigeon Indonesia. 114. The Tribunal notes that the Respondent’s main contention and the reason to depart from the primary method was that the Appellant and Pigeon Indonesia were related hence this relationship influenced the reduction in FOB prices post August 2024 when the Appellant changed its business model. 115. Paragraph 2(2) of the Fourth Schedule to the EACCMA stipulates how to consider the prices where the buyer and the seller are related. It provides as follows: “In determining whether the transaction value is acceptable per the purposes of subparagraph (1), the fact that the buyer and the seller are related within the Judgment TAT No. E10 of 2026 – Pegion Baby lab Kenya Limited -vs- Commissioner for Legal Coordination Services Page 35 of 40 Board and meaning of Paragraph (1) shall not in itself be a ground for regarding the transaction value as unacceptable. In such cases, circumstances surrounding the sale shall be accepted provided that the relationships did not influence the price. If, in light of information provided by the importer or otherwise the proper officer has grounds for considering that the relationship influenced the prices, he shall communicate his grounds to the importer and such importer shall be given reasonable opportunity to respond and where the importer so requests, the communication of the grounds shall be in writing” 116. The Respondent, at Paragraph 10 of its Review Decision dated 25th November 2025 gave its reasons for departing from the Transaction Value Method. It stated as follows; “An analysis of the importation data showed that the declared values were lower when compared to previous identical imports by yourselves. We note that there was a general reduction in declared values when you changed your business strategy in August 2024 and started to import from Pigeon Indonesia, a related company. It is therefore, irrefutable that the relationship between the two parties influenced the transfer price” 117. The Tribunal notes that business entities change, revise or adopt strategies that will make economic sense and be beneficial to their entities. This may be informed by various factors. Other than citing the Appellant’s change of business strategy in August 2024, the Respondent has not faulted the said strategy expounded how it negatively affected imposition or collection of import duty. Judgment TAT No. E10 of 2026 – Pegion Baby lab Kenya Limited -vs- Commissioner for Legal Coordination Services Page 36 of 40 Board and 118. As has been cited at Paragraph 2(2)(a) of the Fourth Schedule to the EACCMA above, the fact that the buyer and the seller are related within the meaning of Paragraph (1), shall not in itself be a ground for regarding the transaction value as unacceptable. 119. Paragraph 3(1) (b) and 3(2) of the Fourth Schedule to the EACCMA outlines the justification that may be used in adopting the Transaction Value of Identical Good Method. It provides as follows; “b)In applying the provisions of this paragraph , the transaction value of identical goods in a sale of the same commercial level and in substantially the same quantity as the goods being valued shall be used to determine the customs value where no such sale is found, the transaction value of identical goods sold at the different commercial level or in different quantities, adjusted to take account of differences attributable to commercial level or to quantity shall be used provided that such adjustments can be made on the basis of demonstrated evidence which clearly establishes the reasonableness and accuracy of the adjustment, whether the adjustment leads to an increase or decrease in the value. 3(3) Where the costs and charges referred to in Paragraph 9(2) are included in the transaction value, an adjustment shall be made to take account of significant differences in such costs and charges between the imported goods and the identical goods in question arising from differences in distances and modes of transport” 120.In adopting the Transaction value of Identical Goods method, the Respondent has not brought out the various considerations that Judgment TAT No. E10 of 2026 – Pegion Baby lab Kenya Limited -vs- Commissioner for Legal Coordination Services Page 37 of 40 Board and would be identical to the Appellants goods do justify its departure from the primary method of valuation. It is important to note that such considerations like distance, mode of transport, supply of raw material, tax jurisdictions and such like consideration can affect the pricing. The Respondent in this case has not highlighted the parameters it considered that were similar to the Appellant to justify the change of the customs valuation method. 121.The Appellant had stated that it imported a similar consignment in June 2025 under Entry No.25NBOIM407014512 from Pigeon Indonesia, which consignment was cleared without any uplift and that the Respondent accepted the declared transaction value which were identical to those declared in respect of the impugned consignment. It is worth noting that the Respondent has not addressed this issue which in the Tribunals view may have created legitimate expectation from the Appellant. 122.The Tribunal relies on the case of Noor Machar Hussein & 4 others vs Minister of State for Planning National Development and Vision 2030 & 2 other (2012) where the court held that: - “If statutory power is exercised in a manner contrary to the drafters or against public interest the power can be said to have exercised capriciously, irrationally or unreasonably. Thus, irrationality and unreasonableness would play a major role, and we shall, as courts continue to assert our traditional duty and intervene in situations where authorities like ministers and persons act in bad faith, abuse power, fail to take into account relevant considerations or act contrary to legitimate expectations.” Judgment TAT No. E10 of 2026 – Pegion Baby lab Kenya Limited -vs- Commissioner for Legal Coordination Services Page 38 of 40 Board and 123.It is the Tribunal’s considered view that the Respondent failed to adduce the data it used to determine that the Appellant’s consignment was identical to other consignments the Respondent had cleared to help the Tribunal make an informed decision. 124.Consequently, the Tribunal finds that the Respondent was not justified to depart from the Appellant’s valuation method. FINAL DECISION 125. The upshot of the foregoing is that the Appeal is meritorious and the Tribunal proceeds to issue the following orders: a. The Appeal be and is hereby allowed b. The Respondent’s Review Decision dated 25th November 2025 be and is hereby set aside. c. Each party to bear its own costs. 126.It’s so ordered. DATED and DELIVERED at NAIROBI this……31st …….…..day of ……… July…….…2026 ..........................………………………. DR. RODNEY ODHIAMBO OLUOCH CHAIRPERSON Judgment TAT No. E10 of 2026 – Pegion Baby lab Kenya Limited -vs- Commissioner for Legal Coordination Services Page 39 of 40 Board and .…..….……………………. ..…. ………………………. ABDULLAHI M. DIRIYE DR. ERICK MEMBER MEMBER KOMOLO Judgment TAT No. E10 of 2026 – Pegion Baby lab Kenya Limited -vs- Commissioner for Legal Coordination Services Page 40 of 40 Board and