[2025] KETAT 234 (KLR)

Reckitt Benckiser Services (Kenya) Limited v Commissioner of Domestic Taxes (Tax Appeal E471 of 2024) [2025] KETAT 234 (KLR) (9 May 2025) (Judgment)

Neutral citation: [2025] KETAT 234 (KLR)

Republic of Kenya

In the Tax Appeal Tribunal

Tax Appeal E471 of 2024

CA Muga, Chair, BK Terer, EN Njeru, E Ng'ang'a & SS Ololchike, Members

May 9, 2025

Between

Reckitt Benckiser Services (Kenya) Limited

Appellant

and

Commissioner of Domestic Taxes

Respondent

Judgment

Background 1. The Appellant is a limited liability Company incorporated in Kenya whose principal business is importing and distributing fast moving consumer goods in the Kenya Market.

2. The Respondent is a principal officer appointed under Section 13 of the Kenya Revenue Authority Act, CAP 469 of Kenya’s Laws (hereinafter “the Act”). Under Section 5 (1) of the Act, the Kenya Revenue Authority is an agency of the Government for the collection and receipt of all tax revenue. Further, under Section 5(2) of the Act with respect to the performance of its functions under subsection (1), the Authority is mandated to administer and enforce all provisions of the written laws as set out in Part 1 and 2 of the First Schedule to the Act for the purposes of assessing, collecting and accounting for all revenues in accordance with those laws.

3. The Appellant imported two consignments of pharmaceutical products from Reckitt Benckiser Healthcare (UK) Limited on 15th November, 2023 and 30th December, 2023 respectively and the Respondent raised queries on the customs values declared by the Appellant and this resulted in an uplift of customs value of the consignments amounting in the sum total to Kshs. 4,030,202. 00.

4. The Appellant enquired on the reasons for the uplift and was instructed by the Respondent to pay additional duties under protest pending resolution and it complied. On 16th January, 2024 the Appellant also imported another consignment and the Respondent again initiated an uplift of the goods declared and this resulted in a payment of Kshs. 423,320. 00, by the Appellant, under protest.

5. On 26th January, 2024 the Appellant wrote to the Respondent requesting a detailed explanation for the rejection of the customs values it had declared. On 23rd February, 2024 the Appellant applied for a review of the decisions and the Respondent issued its review decision on 21st March, 2024.

6. Aggrieved by the Respondent’s review decision, the Appellant filed an Appeal at the Tribunal, lodging its Notice of Appeal dated 19th April, 2024 on even date.

The Appeal 7. The Appeal was premised on the following grounds as outlined in his Memorandum of Appeal dated and filed on 3rd May, 2024:a.That the Respondent erred in law and in fact by alleging that the documents availed by the Appellant were not sufficient to support the Appellant’s use of the Transaction Value (hereinafter “TV”) method.b.That the Respondent erred in law and in fact by alleging that the TV method of customs valuation was not the most appropriate method for the Appellant’s valuations.c.That the Respondent erred in law and in fact by failing to adequately examine the circumstances surrounding the sale in its erroneous uplift of the Appellant's customs values.d.That the Respondent erred in law and in fact by breaching the Appellant’s legitimate expectation by departing from the TV method on imported goods.

Appellant’s Case 8. The Appellant’s case was premised on its Statement of Facts dated and filed on 3rd May, 2024, its supplementary Statement of Facts dated and filed on 11th March, 2025 having been granted leave to do so by the Tribunal on 28th February 2025.

9. The Appellant stated that at its inception, it provided marketing and business development services for the Reckitt Group. At the time, the Appellant engaged a third- party distributor to import and sell its products in the Kenyan market. However, from July 2022, the Appellant restructured its internal operations to become the importer of its products for local sale and distribution. The Appellant also established warehouses for storage of stock in light of this restructuring.

10. The reason for the change in business model was motivated by the volatile nature of the Kenyan market and the need to have efficient supply chains. While the market has experienced growth, external disruptions motivated the Appellant to take more control of its supply chain and rely less on third party distribution. Ultimately, this would reduce its exposure to external inefficiencies within the supply chain.

11. In December 2023 and January 2024, the Appellant imported two consignments of pharmaceutical products under the brand name Gaviscon (It is a type of medicine called a reflux suppressant classified under HS code 3004. 49. 00) from Reckitt Benckiser Healthcare (UK) Ltd. The consignments were declared under import entry numbers 23MBAIXXXX989 dated 23rd December 2023 and 24MBAIXXXX951 dated 16th January 2024 by the company’s customs agent, AGL Kenya Limited (“AGL”).

12. The Respondent subsequently raised a query in respect of the customs values declared by the Appellant for the two consignments cleared through the port of Mombasa and proceeded to subject the goods to Customs value uplifts as shown in the indicative workings for additional duties amounting to Kshs. 4,030,202. 00.

13. Following communication from AGL regarding the proposed Customs value uplifts, the Appellant submitted a letter dated 26 January 2024 requesting the Respondent to release the goods declared under entry numbers 23MBAIXXXX989 and 24MBAIXXXX951 under a bank guarantee as the parties worked towards resolving the valuation dispute. In its letter, the Appellant also requested the Respondent to provide reasons for the customs value uplift.

14. The Respondent, upon receipt of the letter, instructed the Appellant to settle the additional duties of Kshs 4,030,202. 00 under protest pending resolution of the matter via an electronic mail dated 30th January 2024. It is upon this instruction that the Appellant proceeded to pay the assessed taxes under protest.

15. Consequently, the Respondent issued the Appellant with payment slips no. 1020240000125165 dated 31st January 2024 and no. 1020240000165249 dated 9th February 2024 for additional taxes amounting to Kshs. 1,472,636. 00 and Kshs. 2,557,566. 00 respectively [Kshs. 4,030,202. 00 in total].

16. On 16th January 2024, the Appellant also imported one consignment comprising of Lubes under the brand name Durex (classified under HS code 3307. 90. 00) and medicaments under the brand name Strepsils (classified under HS code 3004. 49. 00) from Reckitt Benckiser Healthcare Manufacturing (Thailand) Ltd. The consignment was declared by AGL under entry number 24MBAIXXXX497 dated 16th January 2024.

17. Following this declaration, the Respondent initiated an uplift on the goods declared under entry number 24MBAIXXXX497 via the Integrated Customs Management System (“iCMS”) resulting in additional taxes amounting to Kshs. 423,320. 00. Following this uplift, AGL received a prompt on iCMS to pay the additional taxes under protest under payment slip no. 1020240000136515 dated 2nd February 2024.

18. In its Application for Review, dated 23rd February, 2024, the Appellant had sought the Commissioner’s Review Decision in relation to three (3) consignments, 23MBAIXXXX989, 24MBAIXXXX951 and 24MBAIXXXX497. In its Review Decision, the Respondent has only referred to and issued an adverse decision on the customs entry 23MBAIXXXX989 thereby allowing the Appellant’s Application for Review, in part, specifically in relation to the customs entries 24MBAIXXXX951 and 24MBAIXXXX497 which did not feature in the Respondent’s Review Decision. This was in line with the provisions of Section 229(5) of the EACCMA which provides as follows:“229. (1)A person directly affected by the decision or omission of the Commissioner or any other officer on matters relating to Customs shall within thirty days of the date of the decision or omission lodge an application for review of that decision or omission…The Commissioner shall, within a period not exceeding 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.(4)Where the Commissioner has not communicated his or her decision review within to the person lodging the application for the review within time specified in subsection (4) the Commissioner shall be deemed to have made a decision to allow the application. [Emphasis is ours]”

19. The Appellant in reiterating its grounds of Appeal analysed the same in detail as follows:I.The Respondent erred in law and in fact by alleging that the documents availed by the Appellant were not sufficient to support the Appellant’s use of the Transaction Value (“TV”) method

20. In its Review Decision, the Respondent stated that the documents provided by the Appellant were not sufficient to support the transaction value of the Appellant. The Appellant averred that it provided the Respondent with copies of the proforma and commercial invoices issued by the exporting entity, packing lists for the imported consignments as well as the company’s transfer pricing policy while submitting its application for review.

21. The Appellant further averred that the Respondent’s assertion that it did not avail documentation to show how other costs and charges incurred in the process of causing goods to be brought onboard was flawed. A review of the entry document sufficiently proved that the Appellant at the time of declaration included the incidental costs incurred in the process of importing the goods into Kenya.

22. In its Supplementary Statement of Facts the Appellant attached proof of payment receipts for the commercial invoices i.e., Invoice no. 210XXXX826 and 210XXXX827 to demonstrate that these were the actual costs incurred to purchase the goods. The Appellant was of the view that the new documents attached supported its use of TV method by attaching evidence of the price paid/payable as provided for by the 4th Schedule to EACCMA.

23. To further substantiate the accuracy of the transaction value used, the Appellant adduced additional evidence of elevant freight invoices and their corresponding proof of payment. The freight invoices provide a detailed breakdown of the shipping costs, including product pick up and port handling charges incurred by the shipper to cause the goods to be brought on board the shipping vessel as per the Appellant’s instructions.

24. The Appellant stated that these documents (commercial and freight invoices and their corresponding proof of payment) collectively demonstrated that all costs and charges incurred in the process of importing the goods were duly accounted for. In addition, the Appellant included as part of its documentary evidence, the marine cover note which confirmed, in its view, the payment of insurance coverage for the goods during transit.

25. It was worth noting that in arriving at the above total Customs Value declared, the Appellant relied on the provisions of Paragraph 9 (2) of the Fourth Schedule of the EACCMA which provides as follows:“In determining the value for duty purposes of any imported goods, there shall be added to the price actually paid or payable for the goods;a.the cost of transport of the imported goods to the port or place of importation into the Partner State; …;b.loading, unloading and handling charges associated with the transport of the imported goods to the port or place of importation into the Partner State; andc.the cost of insurance.”

26. The Appellant averred that the documentation it provided were sufficient to prove its transaction values as these were the same set of documents used in the declaration of the imports. Additionally, at no point did the Respondent request to be furnished with any other documentation apart from this.

27. The Appellant further averred that it was the Respondent’s duty to consider the supporting documentation provided by the Appellant as provided for under Article 47 of the Constitution of Kenya 2010 (hereinafter “the Constitution”), which guarantees a right to administrative action that is expeditious, efficient, lawful, reasonable, and procedurally fair. The right to a fair administrative action entails taking into consideration explanations and information availed by the party against whom an assessment is made.

28. The Appellant relied on the case of Nizaba International Trading Company Limited v Kenya Revenue Authority [2000] eKLR, where the High court held that failure to consider material facts presented by a party against whom an assessment had been raised amounts to an abuse of legislative provisions and such an assessment cannot be acted upon.

29. The Appellant, to buttress its position also cited the High court in Republic v Kenya Revenue Authority ex-parte Amsco Kenya Limited [2014] eKLR where the holding was as follows:“Further an administrative action cannot be said to be procedurally fair where a decision is arrived at based on an opinion formed as a result of the consideration of the version of only one side since by a consideration of one side one cannot be said to have felt certain about the truth of the matter in dispute.”

30. Further, the High Court in the case of Kenya Medical Association Housing Cooperative Society Limited v Attorney General & another [2016] eKLR held that it was a breach of the rules of natural justice to fail to consider the person against whom a decision is made. Citing Lord Reid in Ridge v Baldwin [1963] 2 ALL ER 66 at page 81 the Court emphasized the effect of this as follows:“Time and again in the cases I have cited it has been stated that a decision given without regard to the principle of natural justice is void.”

31. The Appellant therefore averred that the Respondent has acted in a manner that is procedurally unfair and prays that the Respondent’s Review decision be vacated accordingly.

II. The Respondent erred in law and in fact by alleging that the TV method of customs valuation was not appropriate method for the Appellant’s valuations 32. The Respondent, in its Review Decision, indicated that it had reviewed the documents provided by the Appellant and concluded that it doubted the sufficiency of the availed documents in support of the declared transaction value. On this basis therefore, the Respondent upheld its uplift. Having demonstrated under ground 1 above that the documents provided were sufficient to prove the transaction value of the goods, the Appellant avers that it applied the TV method correctly in accordance with the requirements of the EACCMA.

33. Section 122 (1) of EACCMA states 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 that value”. [Emphasis added]

34. Further, Paragraph 2 (1) of the Fourth Schedule to the EACCMA provides that the customs value shall be the TV, which is the price actually paid or payable for goods when sold for export to the Partner State (Kenya) adjusted in accordance with the provisions of Paragraph 9. The Interpretative Notes to Paragraph 2 of the Fourth Schedule to the EACCMA define the “price actually paid or payable” as the “total payment made or to be made by the buyer to or for the benefit of the seller for the imported goods.”

35. The Appellant averred that it complied with all the four conditions, stated in Paragraph 2(1), for the use of TV method as laid out below:a.The suppliers have not imposed any restrictions as to how the Appellant may use or dispose the goods that it purchases from it;b.There are no other conditions or considerations imposed by the suppliers with respect to the sale or price charged to the Appellant other than the ones foreseen in Paragraph 2 (1) of the Fourth Schedule to EACCMA;c.Disposal proceeds from the subsequent resale of products by the Appellant do not accrue directly or indirectly to the suppliers; andd.The relationship between the Appellant, and Reckitt Benckiser Healthcare (UK) has not influenced the price of the imported items as the price is charged at an arm’s length basis.

36. According to the Interpretative Notes to the Fourth Schedule, the TV method is the primary method for valuation and imported goods are to be valued in accordance with the method whenever the conditions prescribed under it are fulfilled. Further, it is only when the customs value cannot be determined using the TV method that other methods of valuation can be applied, in sequential order.

37. This position was reiterated in the matter between Opium Lubricants Limited -v- Commissioner of Customs and Border Control (App. No. 7 of 2021) where the Tribunal held as follows:“… the transactional value method is the primary method of valuation, while other methods can only be used if the said method is insufficient.” [Emphasis added]

38. The Appellant averred that it declared the value of the goods invoiced by the supplier in accordance with the TV guidelines in the EACCMA and it requested the Tribunal to find that the Respondent erred in law and in fact by finding that the TV method of customs valuation was not appropriate for the valuation of the Appellant’s consignments.

III. The Respondent erred in law and in fact by failing to adequately examine the circumstances surrounding the sale in its erroneous uplift of the Appellant's customs values 39. In its Review Decision, the Respondent noted that the currency in the Appellant’s Transfer Pricing (TP) document is the British Pound (GBP), however the invoice issued by Reckitt Benckiser Healthcare (UK) Ltd is in United States Dollar currency (USD). The Appellant averred that the deviation by Reckitt Benckiser Healthcare (UK) Ltd to invoice the Appellant in USD instead of GBP was consistent with the normal pricing practices of the industry which the Appellant has no control over. Further, the TP document issued by the Appellant to the Respondent in July 2023, was to act as a guide for the Respondent to understand the build up from the factory price to the invoice price and did not constitute a document for Customs declaration purposes.

40. The Appellant averred that it therefore followed that the Commercial invoice relied on by the Appellant for Customs declaration issued by Reckitt Benckiser Healthcare (UK) Ltd was at arm’s length, and the Respondent was misguided in applying a Customs value uplift on the subject consignments.

41. The Appellant averred that in reaching its conclusion to reject the TV, the Respondent failed to appreciate the circumstances surrounding the sales between the Appellant and its supplier and in doing so, the Respondent failed to adhere to the interpretative notes to the provisions of Paragraph 2(2)(a) of the Fourth Schedule to EACCMA which provides as follows:“…where the proper officer is unable to accept the transaction value without further inquiry, the importer should be given an opportunity to supply such further detailed information as may be necessary to enable him/her to examine the circumstances surrounding the sale. Relevant aspects of the transaction to be examined include the way in which the buyer and seller organize their commercial relations and the way in which the price in question was arrived at, in order to determine whether the relationship influenced the price.” [Emphasis added]

42. In addition to the above, the guidance contained in the EACCMA interpretative notes to paragraph 2(2) provides as follows:“Where it can be shown that the buyer and seller, although related … buy from and sell to each other as if they were not related, this would demonstrate that the price had not been influenced by the relationship. As an example of this, if the price had been settled in a manner consistent with the normal pricing practices of the industry in question or with the way seller settles prices for sales to buyers who are not related to the seller, this would demonstrate that the price had not been influenced by the relationship. As a further example, where it is shown that the price is adequate to ensure recovery of all costs plus a profit which is representative of the firm’s overall profit realised over a representative period of time, e.g., on an annual basis in sales of goods of the same class or kind, this would demonstrate that the price had not been influenced” [Emphasis added]

43. Further, Section 122 (6) of the EACCMA provides as follows:“In applying or interpreting this 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 the World Trade Organisation or the Customs Cooperation Council.” [Emphasis added]

44. Additionally, the World Customs Organisation (“WCO”), formally the Customs Cooperation Council referenced in Section 122(6), issued Commentary 23. 1 which states as follows:“…the use of a transfer pricing study as a possible basis for examining the circumstances of the sale should be considered on a case-by-case basis. As a conclusion, any relevant information and documents provided by an importer may be utilized for examining the circumstances of the sale. A transfer pricing study could be one source of such information…” [Emphasis added]

45. Chapter 4 of the WCO Guide to Customs Valuation and Transfer Pricing covers “Linkages between Transfer Pricing and Customs Valuation”. Paragraph 1 of the Chapter states as follows:“… it can be seen that the aim of both Customs valuation and transfer pricing methodologies is very similar: whereas Customs are establishing whether or not a price has been ‘influenced’ by the relationship between the parties, the tax objective is to seek an ‘arm’s length price’. Each is ensuring that the price is set as if the parties were not related and had been negotiated under normal business conditions.” [Emphasis added]

46. The Appellant requested the Tribunal to find that the Respondent erred in law and in fact by failing to adequately examine the circumstances surrounding the sale in scrutinizing the customs values.

IV. The Respondent erred in law and in fact in breaching the Appellant’s legitimate expectation by departing from the TV method on imported goods. 47. The Appellant averred that since the change in operating model highlighted earlier, it has routinely declared and cleared various consignments of Gaviscon based on the TV valuation method with no queries from the Respondent. In light of this, the Appellant averred that the Respondent’s attempt to depart from the TV valuation method applied on past consignments of Gaviscon by the Appellant went against the doctrine of legitimate expectation.

48. As such, it was the Appellant’s understanding that by processing the declarations and subsequently clearing the goods based on the provided documentation, the Respondent was satisfied that the Appellant had correctly applied the TV valuation method. In light of the above facts, the Appellant relied on the observations of Nyamu, J (as he was then) in the case of Keroche Industries Limited v. Kenya Revenue Authority & 5 Others Nairobi [2007] eKLR, wherein his Lordship held as follows:“…legitimate expectation is based not only on ensuring that legitimate expectations by the parties are not thwarted but on a higher public interest beneficial to all including the respondents, which is, the value or the need of holding authorities to promises and practices they have made and acted on and by doing so upholding responsible public administration. This in turn enables people affected to plan their lives with a sense of certainty, trust, reasonableness, and reasonable expectation. An abrupt change as was intended in this case, targeted at a particular company or industry is certainly an abuse of power. Stated simply, legitimate expectation arises for example where a member of the public as a result of a promise or other conduct expects that he will be treated in one way and the public body wishes to treat him in a different way… Public authorities must be held to their practices and promises by the courts and the only exception is where a public authority has a sufficient overriding interest to justify a departure from what has been previously promised” [Emphasis added].

49. Based on the above facts and case law, it was evident that the Respondent has routinely relied on the TV method as declared by the Appellant in accepting the Appellant’s declarations and subsequently clearing them. It therefore followed that the sudden attempt to change the valuation method applied on these goods breached the Appellant’s legitimate expectation. The Appellant prayed that the Tribunal to find that the Respondent erred in law and in fact by breaching the Appellant’s legitimate expectation by departing from the TV valuation method on imported goods.

50. The Appellant prayed that the Tribunal considers its grounds of appeal and finds that:a.This appeal be allowed;b.The Respondent’s decision dated 21st March 2024 be set aside in its entirety;c.The payments made by the Appellant under protest be refunded, or alternatively, set off against future Customs liabilities;d.The costs of and incidental to this Appeal be awarded to the Appellant; ande.Any other orders that the Tribunal may deem fit.

Respondent’s Case 51. The Respondent replied to the Appeal through its Statement of Facts dated 31st May 2024 and filed on 4th June, 2024. The Respondent filed a Supplementary Statement of Facts dated 5th June 2024 on 6th June, 2024 without the leave of the Tribunal first having been obtained. Accordingly, the same have been expunged from the Record.

52. The Tribunal notes however, that the Supplementary statement of facts dated and filed on 17th March, 2025 will be considered since the same were filed with Leave of the Tribunal first having been obtained vide a Ruling delivered on 28th February, 2025. The consideration of the Supplementary facts dated 17th March, 2025 is only to the extent of the exclusion of any reference to the expunged Supplementary statement of facts. In support of its case the Respondent also relied on the testimony of its officer, Ms. June Adipo Kachieng whose witness statement dated 3rd December, 2024 and filed on 9th December 2024 was adopted as evidence in chief during the hearing on 18th March, 2025.

53. The Respondent stated that the Appellant imported Gaviscon liquid and that it uplifted the same with a valuation uplift. The Respondent stated that it reviewed the documents provided by the Appellant which included the following: Proforma invoice;

Commercial invoice;

Packing list; as well as

Financial manual on transfer pricing in line with Section 122 and Paragraph 2 of the Fourth Schedule to the East Africa Community Customs Management Act, 2004 in support of Method 1, (Transaction value),

54. The Respondent stated that upon examining the documents it noted the following:a.Commercial Invoice Number 210XXXX827 dated 17th November, 2023 indicated that the payment terms were 30 days after receipt of invoice and no evidence of payment was provided.b.That the declared FOB USD 43,016. 85 is indicated as EXW on the invoice and no information was availed to show other costs and charges incurred in the process of causing the goods to be brought on board;c.A further analysis of the Appellant's documents attached to its application for review indicates that the commercial invoice number 2100017215-A dated 12th October 2023 also indicates payment terms 30 days after receipt of invoice and no evidence of payment was provided; The declared fob USD 73,350. 06 is also indicated as EXW on the invoice and no information was availed to show other costs and charges incurred in the process of causing the goods to be brought on board;d.The transfer pricing document dated 17th July 2023 indicates invoice price GBP 8. 175 which differs from the equivalent value of USD 8. 175 on the invoice.

55. In view of the fact that the documents provided by the Appellant were not sufficient to support its declared transaction value that the Respondent proceeded to uphold the previous uplift decision.

56. In further response to Paragraph 21 of the Appellant’s Supplementary Statement of Facts, the Respondent stated the Appellant relied on an outdated valuation method, that is, Brussels Definition of Value (BDV) whereby there was a defined customs value that was considered inaccurate because freight and insurance was a percentage of the item value. This value was arbitrarily given by customs and was found to be inefficiently unfair to importers. Kenya applied 18% of the given value for freight and 15% of Freight and value for insurance. This method was used taking into account that customs would allocate item values.

57. This system was replaced in the WTO GATT 1994 Agreement to Actual Customs Value (ACV) requiring the importer to present documents and support the declared values for greater fairness and efficiency. The fact that the Appellant failed to provide the said supporting documents meant that the Respondent had to use other subsequent methods of valuation.

58. With regard to the Transaction Value method (TV) not being most appropriate, the Respondent stated that Paragraph 2 to the Fourth Schedule of the EACCMA provides that where there is reason to doubt supporting documents under Transaction Value (TV) method, subsequent methods are applied. On failing to adequately clarify the circumstances surrounding the sale, the Respondent stated that the comparison was made under the identical method and considered previously accepted transaction value of identical import from the same seller and same country of origin.

59. On the issue of breaching the Appellant’s legitimate expectation by departing from the Transactional Value (TV), the Respondent was guided by Section 122 and the Fourth Schedule of EACCMA which outlines the six methods and their application in valuation of imported goods.

60. The Respondent stated that it enforces the provisions of Section 122 as read together with the Fourth Schedule of EACCMA while determining customs value of imported goods. The Respondent may apply the TV (that is, invoice value) of the goods or sequentially apply other methods where method 1 fails. In doing so, the Respondent is only enforcing the provisions of EACCMA in determining the custom value of imported goods.

61. It was the Respondent’s position that the Review Decision was issued based on the information presented by the Appellant at the time of reviewing the Appellant’s application for review. For any new information and/or documentation provided by the Appellant, then the Respondent should have been given the opportunity to review that information.

62. The Appellant did not cross examine the Respondent’s witness who testified that the Respondent uplifted the customs value since the Appellant failed to produce documents to support its objection to the uplift of the customs value.

63. The Respondent sought the following reliefs:i.That the Tribunal finds that this Appeal lacks merit;ii.That the Tribunal would uphold its Review decision dated 21st March 2024; andiii.The Tribunal would dismiss Appeal with costs to it.

Parties’ Written Submissions 64. The Appellant’s written submissions were dated and filed on 2nd April, 2025 as were those of the Respondent which were dated 28th March, 2025 and filed on 1st April 2025. Both parties complied with the Tribunal’s directions in this regard.

65. The Appellant submitted that at its inception, it provided marketing and business development services for the Reckitt Group. As already outlined in its Statement of Facts, it changed its business model in July 2022 to lower exposure to supply chain disruptions and global supply chain impacts, increase its speed to market, improve services to local distributors, and fuel growth of the Kenyan market. The Appellant went on to outline in diagrammatic form its previous business model and then its current one.

66. The Appellant submitted that under the old model, the local 3rd party, Harleys, would purchase products from Reckitt Benckiser Arabia (“RB Arabia”) based in the United Arab Emirates. RB Arabia would source the products from Reckitt Benckiser Healthcare (UK) limited (on a cost plus 5% markup basis), load its margins to arrive at the price at which the products were sold to Harleys, which is the company that used to import the products into Kenya.

67. The Appellant submitted that the current supply chain is shorter compared to the old model which has an impact on pricing. It further submitted that RB Arabia (one of the companies in its structure) no longer featured within the supply chain under the new model following the conclusion of the transition period in 2023. The Appellant submitted that where goods are sourced from other Reckitt entities within the Reckitt group, the prices for the goods are still based on a cost plus 5% mark-up as illustrated by Reckitt Group’s Finance Manual dated October 2016 which provides the methodology for the calculation of transfer prices related to the sale of goods within the Reckitt Group.

68. Further, the Appellant avowed that there are other factors that affect the pricing of the products, for example; marketing costs previously borne by the Reckitt group for the third-party distributor are currently borne directly by the Appellant. Additionally, the Appellant bears the responsibility for insuring and warehousing the products in Nairobi as the Appellant now sells to the local distributors directly. As such, the Appellant is currently expected to maintain large inventory levels and take up the risks associated with defaults by local customers.

69. The Appellant framed the following as the issues for determination and proceeded to analyse them as herein under:

i. Whether the Respondent erred in law and in fact by alleging that the documents availed by the Appellant were not sufficient to support the Appellant’s use of the Transaction Value (“TV”) method. 70. In its Review Decision, the Respondent averred that the documents provided by the Appellant were not sufficient to support the TV of the Appellant. The Respondent further averred the following in their Statement of Facts, Supplementary Statement of Facts and witness statement:a.No evidence of payment has been provided to support the transaction value, being the price actually paid or payable.b.No information is availed to show other costs and charges incurred in the process of causing goods to be brought on board, like transport to the port of exporting and handing.

71. The Appellant submitted that it provided the Respondent with copies of the proforma invoice and commercial invoices issued by the exporting entity, packing list for the imported consignments as well as the company’s transfer pricing policy while submitting its application for review.

72. The Appellant further submitted that the Respondent’s assertion that the Appellant did not avail documentation to show how other costs and charges incurred in the process of causing goods to be brought onboard is flawed. A review of the entry document would sufficiently prove that the Appellant at the time of declaration included the incidental costs incurred in the process of importing the goods into Kenya.

73. The Appellant avowed that it provided proof of receipts and freight invoices and corresponding proof of payment and that the documents corroborate the TV method used to determine the Customs value and affirmed the correctness of the same. It submitted that the documents used were sufficient to prove the Appellant’s transaction values as these were the same documents that it had used in the declaration of imports. The Appellant submitted that at no point did the Respondent request to be furnished with any other documentation apart from these.

74. The Appellant reiterated the High Court holdings in Nizaba International Nizaba International Trading Company Limited v Kenya Revenue Authority [2000] eKLR, Republic v Kenya Revenue Authority ex-parte Amsco Kenya Limited [2014] eKLR Kenya Medical Association Housing Cooperative Society Limited v Attorney General & another [2016] eKLR.

75. On this issue, the Appellant submitted that the Respondent had acted in a manner that was procedurally unfair.

ii. Whether the Respondent erred in law and in fact by alleging that the TV method of customs valuation was not the most appropriate method for the Appellant’s valuations. 76. The Appellant reiterated its statement of facts under this issue for determination and the Tribunal will not re-hash the same.

ii. Whether the Respondent erred in law and in fact by failing to adequately examine the circumstances surrounding the sale in its erroneous uplift of the Appellant's customs values. 77. The Appellant submitted that at paragraph 3 of the Respondent’s Supplementary Statement of Facts dated 17th March 2025, the Respondent stated that they compared goods under the identical method and considered previously accepted transaction value of identical import from the same seller and same country of origin.

78. The Appellant submitted that the Respondent changed its business model and reiterated in detail its previous and current model and the way it had carried out re-structuring. Accordingly, the Appellant submitted that the Respondent should have been comparing the price sold to the Appellant from Reckitt UK, which remains unchanged despite the change in its business model.

79. The Respondent’s claim that it compared previously accepted transaction value of identical import from the same seller and same country of origin was inaccurate as the Respondent has not compared the price from the same seller. The Appellant relied on the case of TAT No. 908 Of 2022 Cadbury Kenya Limited Vs. Commissioner of Customs & Border Control, where the Court held as follows:“The Tribunal perused the documents submitted by the Appellant plus the pleadings and noted that, in its new model of operation and supported by the agreement, the Appellant was indeed to be at a different commercial level with the previous distributor (Hasbah) who previously imported the same products, and the Respondent had sought to use its price in the transaction value on identical goods. Further, it was not in dispute that the Appellant was a related party to Mondelez International AMEA PTE. Ltd whom the Appellant was to import the goods from. However, this on itself is not reason for rejection of the transaction value method as provided for at Paragraph 2(2)(a) of the Fourth Schedule to the EACCMA which states: “…the fact that the buyer and the seller are related…. shall not in itself be a ground for regarding the transaction value as unacceptable. In such a case the circumstances surrounding the sale shall be examined and transaction value shall be accepted provided that the relationship did not influence the price…”“The Appellant in this case demonstrated that it was indeed at a different commercial level with Hasbah Kenya Limited which previously imported the products due to the additional responsibilities it would take over from the parent company (Mondelez International AMEA PTE. Ltd). These responsibilities and the fact that it would even supply Hasbah Kenya Limited meant that even the volumes would be different from that previously handled by Hasbah. After taking into account the circumstances of the trade between the Appellant and the exporter and after considering the pleadings, submissions and documents presented by both parties, the Tribunal was persuaded that the relationship between the Appellant and the related company (Mondelez International AMEA PTE Ltd will not affect the price of goods to be imported by the Appellant. Consequently, the Tribunal finds that Respondent erred in its decision to depart from the Appellant’s proposed transaction value method as the valuation method for goods to be imported by the Appellant.”

80. The Appellant submitted that the Cadbury case shared several similarities with the instant Appeal as in both instances, there was a change in the business model that the Respondent failed to consider. Additionally, in both cases, the Respondent argued that the relationship between the parties had an impact on the pricing.

81. The other issues submitted on under this issue for determination were a reiteration of the Appellant’s statement of facts and the Tribunal will not re-hash the same.

ii. – Whether the Respondent erred in law and in fact by breaching the Appellant’s legitimate expectation by departing from the TV method on imported goods. 82. The Tribunal will not re-hash this issue for determination as the same would be a reiteration of the Appellant’s statement of facts.

83. The Respondent identified a single issue for determination in its submissions which it proceeded to analyse as follows:Whether the Respondent was justified in uplifting the Appellant’s importation

84. The Respondent submitted that its Review Decision was issued in compliance with Section 229 (4) of the EACCMA which provides as follows:“(4)The Commissioner shall, within a period not exceeding 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.”

85. The Respondent submitted that the it is guided by the following modes in confirming the correct amount of import duty to be paid by the Appellant:a.Transaction valueb.Transaction value of identical goodsc.Transaction value of similar goods.d.Reversal of order of application of deductive value and computed values.e.Deductive value.f.Computed valueg.Fall back value

86. The Respondent submitted that with regard to the transaction value, it reviewed the Appellant’s documentation and noted some inconsistencies that were brought to the attention of the Appellant in the Review Decision and that it was guided by the provisions of Section 122 (4) of EACCMA which provides as follows:“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”.

87. Further to that, the Respondent referred to Section 122 (6) of EACCMA, in response to Paragraph 6 of the Appellant’s Supplementary Statement of Facts, which provides that the Respondent is required to take into consideration the decisions, rulings, opinions, guidelines and interpretations given by the Directorate, the World Trade Organization or the Customs Cooperation Council.

88. The Respondent submitted that the Tribunal ought not to have considered or allowed the Appellant to introduce new documents in referring to Section 29 of the Tax Appeals Tribunal Act, CAP 469A of the Laws of Kenya (hereinafter “TATA”). In stating that the Appellant filed this Appeal challenging the Respondent’s Review Decision dated 21st March 2024 which was prepared pursuant to the Respondent receiving the Appellant’s Application for review. The Respondent was of the view that it was only prudent that if the Tribunal considers the documents provided by the Appellant after the Respondent issued its Review Decision, then the Tribunal should refer the matter to the Respondent for reconsideration.

89. The Respondent stated that this was to confirm whether the Appellant had paid the correct amount of taxes and/or duty since the Respondent is the one responsible for the management and control of the Customs including the collection of, and accounting for, Customs revenue in Kenya pursuant to the following provisions of Section 5 (2) of EACCMA:''A person required to submit tax returns under a tax law shall submit the returns in the approved form and in the manner prescribed by the Commissioner"

Issues for Determination 90. The Tribunal has considered the Parties pleadings and documentation and is of the view that this Appeal distils into the following two issues for determination:a.Whether the Respondent erred in failing to apply the TV method to determine the customs value of the Appellant’s consignment.b.Whether the Respondent’s review decision dated 21st March 2024 was justified.

Analysis and Findings 91. The Tribunal having established two issues for determination will proceed to analyze them as follows:a.Whether the Respondent erred in failing to apply the TV method to determine the customs value of the Appellant’s consignment.

92. This dispute began on 23rd February 2024, when the Appellant lodged its Application for review against two decisions that the Respondent had made pursuant to Section 229 of EACCMA. The Application for review was necessitated by the fact that at the date of Review decision the Respondent was yet to offer the Appellant grounds for uplifting of the customs values it had declared. The Respondent issued its decision on 21st March, 2024 on one of the consignments namely entry number 23MBAIXXXX989 in respect to Gaviscon Liquid packed in groups of a dozen in 200ml bottles. The Respondent expressed a contrary view that it doubted the sufficiency of the availed documents in respect of the declared transaction value and upheld its uplift decision.

93. The Tribunal notes the following provisions of Section 229 of EACCMA:“229. (1)A person directly affected by the decision or omission of the Commissioner or any other officer on matters relating to Customs shall within thirty days of the date of the decision or omission lodge an application for review of that decision or omission.(2)The application referred to under subsection (1) shall be lodged with the Commissioner in writing stating the grounds upon which it is lodged.(3)Where the Commissioner is satisfied that, owing to absence from the Partner State, sickness or other reasonable cause, the person affected by the decision or omission of the Commissioner was unable to lodge an application within the time specified in subsection (1), and there has been no unreasonable delay by the person in lodging the application, the Commissioner may accept the application lodged after the time specified in subsection (1).(4)The Commissioner shall, within a period not exceeding 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.(5)Where the Commissioner has not communicated his or her decision review within to the person lodging the application for the time specified in subsection (4) the Commissioner shall be deemed to have made a decision to allow the application.(6)During the pendency of an application lodged under this section the Commissioner may at the request of the person lodging the application release any goods in respect of which the application has been lodged to that person upon payment of duty as determined by the Commissioner or provision of sufficient security for the duty and for any penalty that may be payable as determined by the Commissioner. “

94. In its application for review dated 23rd February, 2024 the Tribunal notes that the Appellant lodged its application for review with the Respondent and objected against the uplifts on all its consignments but that the Respondent only issued its review decision on consignment number 23MBAIXXXX989 in respect of Gaviscon [12X200ml]. The finding by the Tribunal in this regard is that with respect to the Appellant’s application for review of the uplift of consignment numbers 24MBAIMXXXX9497 and 24MBAIXXXX951 the Respondent was deemed to have allowed its application for review.

95. The Tribunal has therefore established that the subject of the instant Appeal is the review decision upholding of the uplift of consignment number 23MBAIXXXX989 pursuant to the Respondent’s letter dated 21st March, 2024.

96. The Tribunal notes that pursuant to the provisions of Section 122(1) of EACCMA, the value of goods is determined in accordance with the Fourth Schedule. Section 122 of EACCMA as read in tandem with the Fourth Schedule of EACCMA provides for the manner in which valuation should be undertaken. Specifically, the Fourth Schedule as the interpretative section defines how the value of the imported goods is to be determined. Paragraphs 2,3,4,5,6,7 and 8 of the said Schedule are applied sequentially through the succeeding paragraphs. The Tribunal is of the view that under the Fourth Schedule of EACCMA,2004 the transaction value method is the primary method of valuation and the Respondent can only resort to the other methods of valuation after the primary method fails.

97. The view of the Tribunal is that the Respondent was within its rights to determine first whether the TV method was applicable. The Tribunal notes that the Appellant was required to discharge its burden of proving that the primary method of valuation was applicable because under this method Paragraph 2(1) of the Fourth Schedule provides as follows;“2. (1)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, but where—(a)there are no restrictions as to the disposition or use of the goods by the buyer other than restrictions which:(i)are imposed or required by law or by the public authorities in the Partner State;(ii)limit the geographical area in which the goods may be resold; or(iii)do not substantially affect the value of the goods;(b)the sale or price is not subject to some condition or consideration for which a value cannot be determined with respect to the goods being valued;(c)no part of the proceeds of any subsequent resale, disposal or use of the goods by the buyer will accrue directly or indirectly to the seller, unless an appropriate adjustment can be made in accordance with the provisions of Paragraph 9; and(d)the buyer and seller are not related, or where the buyer and seller are related, that the transaction value is acceptable for customs purposes under the provisions of subparagraph (2).(2) (a)In determining whether the transaction value is acceptable for the purposes of subparagraph (1), 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. In such case the circumstances surrounding the sale shall be examined and transaction value shall be accepted provided that the relationship 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 price, 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;(b)In the sale between related persons, the transaction value shall be accepted and the goods valued in accordance with the provisions of subparagraph (1) whenever the importer demonstrates that such value closely approximates to one of the following accruing at or about the same time.(i)the transaction value in sales to unrelated buyers of identical or similar goods for export to the Partner State;(ii)the customs value of identical or similar goods as determined under the provisions of Paragraph 6;(iii)the customs value of identical or similar goods as determined under the provisions of Paragraph7. Provided that, in applying the provisions under subparagraph (2) (a) and (b) of this Paragraph, due account shall be taken of demonstrated differences in commercial levels, quantity levels, the elements enumerated in paragraph 9 and costs incurred by the seller in sales in which the seller and the buyer are not related that are not incurred by the seller in sales in which the seller and the buyer are related.The tests set forth in subparagraph (2) (b) are to be used at the initiative of the importer and only for comparison purposes. Substitute values may not be established under the provisions of subparagraph (2)(b).[emphasis ours]

98. The Tribunal notes that first pursuant to the provisions of paragraph 2 of the Fourth Schedule of the EACCMA, the Respondent must establish that the TV method is correct and there should be no doubt on the choice of the method. If there is any doubt, then the Respondent is within its rights to determine the next possible applicable method and this determination is made sequentially and not interchangeably or not according to what suits the Respondent.

99. The Tribunal note that upon review of the proforma invoice, commercial invoice, packing list and finance manual on transfer pricing found the documents provided by the Appellant to be insufficient and upheld its review decision. However, the more pertinent contention was a letter from Reckitt Benkiser UK dated 17th July 2023 in which the unit transfer price for Gaviscon (2x200ml) was confirmed as being GBP 8. 175 yet in commercial invoice number 210XXXX827 dated 17th November 2023 the unit price of the same product supplied by Reckitt UK was expressed as USD 8. 175. Accordingly the Respondent found the unit price to be uncertain.

100. The Tribunal sighted and reviewed the Appellant’s Financial Manual on Transfer Pricing at paragraph 2. 3.3 where it states that sale of goods should be invoiced in the local currency of the supplying factory and hard currencies such as the USD, GBP or the Euro can be used with prior approval. The Tribunal notes that in its set of documents including the one that the Appellant was granted leave to adduce as additional evidence, the Appellant failed to provide the letter or other written document containing the approval allowing it to apply a different currency in respect of the unit price when importing goods from its related company in the UK.

101. Accordingly, the finding of the Tribunal is that the Respondent did not err in failing to apply the TV method to determine the customs value of the Appellant’s consignment.

b. Whether the Respondent’s review decision dated 21st March 2024 was justified. 102. In view of the finding of the Tribunal in issue (a) above, the Tribunal finds and holds that the Respondent justified its reasons for departure from the use of the TV method in respect of the consignment and consequently, its review decision dated 21st March, 2024 was justified.

Final Decision 103. The upshot to the foregoing is that the Tribunal finds that the Appeal fails and makes the following Orders:a.The Appeal be and is hereby dismissed.b.The Respondent’s review decision dated 21st March, 2024 be and is hereby upheld.c.Each party to bear its own cost.

104. It is so Ordered.

DATED AND DELIVERED AT NAIROBI ON THIS 9TH DAY OF MAY 2025. CHRISTINE A. MUGA - CHAIRPERSONBONIFACE K. TERER - MEMBERELISHAH N. NJERU - MEMBEREUNICE N. NG’ANG’A - MEMBEROLOLCHIKE S. SPENCER - MEMBER