https://new.kenyalaw.org/akn/ke/judgment/ketat/2026/165

Rohto Mentholatum (Kenya) Ltd v Commissioner of Legal and Board Services (Tax Appeal E1437 of 2025) [2026] KETAT 165 (KLR) (13 July 2026) (Judgment) Neutral citation: [2026] KETAT 165 (KLR) Republic of Kenya In the Tax Appeal Tribunal Tax Appeal E1437 of 2025 RM Mutuma, Chair, G Ogaga, T Vikiru & JM Malla, Members July 13, 2026 Between Rohto Mentholatum (Kenya) Limited Appellant and Commissioner of Legal and Board Services Respondent Judgment Background 1.The Appellant is a private limited liability company incorporated in the Republic of Kenya whose principal business activity is the importation of various pharmaceutical and cosmetic (beauty) products from its related entities in the United Kingdom and Vietnam for sale in the Kenyan market. 2.The Respondent is a principal officer appointed under Section 13 of the Kenya Revenue Authority Act, Cap 469 of the Laws of Kenya (“the KRA Act”). Under Section 5(1) of the KRA Act, the Kenya Revenue Authority is an agency of the Government for the collection and receipt of all tax revenue. Under Section 5(2) of the KRA Act, with respect to the performance of its functions under subsection (1), KRA is mandated to administer and enforce all provisions of the written laws set out in Parts I and II of the First Schedule to the KRA Act for the purposes of assessing, collecting and accounting for all revenues in accordance with those laws. 3.In February 2025, the Appellant requested a quotation from Rohto Vietnam for the following products: Acnes Scar Care, Acnes Creamy Wash 100g, Acnes Creamy Wash 50g, Acnes Sealing Gel 9g, Acnes Vitamin Cleanser 50g, Acnes C10, Selsun Shampoo 1% 100ml, Selsun Shampoo 1% 50ml, Selsun Shampoo 1% sachet 5ml (semi product), Acnes Blemish Control Toner 90ml and Acnes Moisturizing Cream 75g ("the Products"). 4.Rohto Vietnam responded on 12th February 2025 with a quotation for the Products, and by an email dated 17th February 2025 explained that it had revised the prices of the Products with effect from 1st May 2025 pursuant to the Rohto Group’s intercompany transaction policy, which mandates an annual review of product pricing subject to prevailing product specifications, including changes in formulation and design. 5.On 3rd July 2025, the Appellant and Rohto Vietnam entered into a contract for the purchase of the Products (“the Contract”), following which the Appellant imported a consignment of the Products declared under entry number 25NBOIM408425695 (“the Consignment”). During the clearance process, the Respondent’s officers flagged the Consignment on the basis that the Appellant had under-declared its values compared to previously declared values, and indicated that the transaction documents provided were insufficient to support reliance on the transaction value method. 6.By a letter dated 4th August 2025 issued through its clearing agent, Intrasped Arcopro Kenya Limited, the Appellant contested the value uplift and requested the release of the Consignment. The Respondent, vide a letter dated 6th August 2025, advised the Appellant to execute a bank guarantee equivalent to the taxes in dispute to procure the release of the Consignment. The Appellant executed a bank guarantee with Stanbic Bank dated 12th August 2025 in favour of the Respondent, upon which the Consignment was released. 7.The Respondent thereafter issued a demand letter dated 4th September 2025 (“the Demand”) through the Appellant’s clearing agent, uplifting the declared values of the Products under the Consignment and demanding short-levied import duties amounting to Kshs. 122,689.00. 8.Aggrieved by the Demand, the Appellant lodged an application for review dated 3rd October 2025, which was received by the Respondent on 6th October 2025, reiterating that it had correctly applied the transaction value method. 9.The Respondent issued its Review decision in a letter dated 30th October 2025 upholding the Demand and confirming its decision to value the Consignment using the transaction value of identical goods method. 10.The Appellant, being dissatisfied with the Review decision, filed its Notice of Appeal dated 11th December 2025 on even date. The Appeal 11.The Appeal is premised on the Memorandum of Appeal dated and filed on 11th December 2025, which raised the following grounds of appeal:a)That the Respondent erred in law by failing to furnish the Appellant with the reasons informing its Review Decision, in contravention of Section 229(4) of the East African Community Customs Management Act, 2004 (EACCMA);b)That 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;c)That the Respondent erred in law and in fact by holding that the relationship between the Appellant and its non-resident related party, Rohto Mentholatum Vietnam Co. Limited, 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, Part I of the Fourth Schedule to the EACCMA; ande)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. Appellant’s Case 12.The Appellant’s case is premised on the following documents filed before the Tribunal:a)The Appellant’s Statement of Facts dated and filed on 11th December 2025, together with the documents attached thereto; andb)The Appellant’s Written Submissions dated 4th May 2026 and filed on even date, together with the bundle of authorities attached thereto. 13.The Appellant stated that the invoice prices it declared represented the price actually paid for the imported goods, and that the pricing was arrived at on an arm’s length basis guided by its approved Transfer Pricing Policy. 14.The Appellant explained that the annual price review undertaken by Rohto Vietnam in February 2025 resulted in varied price movements across the Products: the prices of the Acnes Blemish Control Toner 90ml, the Selsun Anti-Dandruff Shampoo 50ml and the Selsun Anti-Dandruff Shampoo 100ml decreased; the price of the Acnes Creamy Wash 100g remained unchanged; while the price of the Acnes Scar Care 12g increased from USD 0.69 to USD 0.97. I. The Respondent Erred in Law by Failing to Furnish the Appellant with the Reasons Informing its Review Decision, in Contravention of Section 229(4) of the EACCMA 15.The Appellant noted that, at paragraph 8 of the Review decision, the Respondent rejected the Appellant’s reliance on the transaction value method in the following terms: -“Analysis of the importation data showed that the declared values were lower when compared to previous identical imports by the same taxpayer accepted by Customs. We note that there was a general reduction in declared values when the Rohto Mentholatum Company (Supplier) changed their business model in 2015 and started to only avail their goods to a related company. It is, therefore, irreputable that the relationship between the two parties influenced the transfer price.” 16.The Appellant pointed out that the change in business model referenced in the Review Decision and its impact on the pricing of the Products was the subject of an earlier appeal before this Tribunal in Tax Appeal No. 789 of 2021, Rohto Mentholatum (Kenya) Limited v Commissioner of Customs and Border Control (“the previous appeal”). 17.That the previous appeal raised the same issue, where the Respondent rejected the Appellant’s reliance on the transaction value method in respect of the same products, and the Tribunal, in setting aside the Respondent’s review decision, found that the transaction value method is the primary method of valuation under the EACCMA and that the Respondent would need to provide reasons beyond the relationship between the parties in order to upset it. 18.The Appellant added that the Respondent did not challenge the judgment in the previous appeal before the High Court, and that, given that the present Appeal arises from the same change of business model and concerns the same Products, the Tribunal’s earlier judgment, which has neither been overturned nor varied, remains binding on the Respondent. 19.The Appellant contended that the singular reason proffered by the Respondent for rejecting the transaction value method was that it was "irreputable that the relationship between the two parties influenced the transfer price", which basis is contrary to Paragraph 2(2)(a)(i) of Part I of the Fourth Schedule to the EACCMA. 20.That the said provision expressly prohibits the Respondent, in mandatory terms, from disregarding the transaction value solely on the ground that the parties to the transaction are related, and obligates the Respondent, where it forms the view that the relationship influenced the price, to communicate the grounds upon which it reached that conclusion and to afford the importer a reasonable opportunity to respond. 21.The Appellant averred that no such grounds were provided in the Review Decision, which failure renders the decision invalid and contrary to Section 229(4) of the EACCMA, which provides as follows: -“The Commissioner shall within a period not exceeding thirty days of 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.” 22.The Appellant further posited that the Respondent’s failure to issue a valid review decision infringes its right to fair administrative action under Article 47(1) of the Constitution of Kenya, which guarantees every person administrative action that is expeditious, efficient, lawful, reasonable and procedurally fair, 23.as read with Section 4(2) of the Fair Administrative Action Act, 2015 (“FAAA”), which provides that every person has the right to be given written reasons for any administrative action taken against him, and Sections 6(1) and 6(2) of the FAAA on the right to be supplied with the information, reasons and documents relating to the action. 24.In support of its position on the centrality of reasons, the Appellant relied on Geothermal Development Company Limited v Attorney General & 3 Others [2013] eKLR, where Majanja, J. observed that as a component of due process it is important that a party has reasonable opportunity to know the basis of allegations against it, and on Richard Bonham Safaris Limited v Commissioner of Income Tax [2006] eKLR, where the High Court held that: -“In the absence of reasons… how is the aggrieved party supposed to know the grounds of the decision and assess his position before exercising his right of appeal? Without reasons… it is not harsh to say that the right of a party who wishes to challenge the assessment of the tax due from him is arbitrarily taken away.” 25.The Appellant also cited Local Productions Kenya Limited v Commissioner of Domestic Taxes (Tax Appeal No. 50 of 2017), where this Tribunal held that the Respondent cannot cast aside the constitutional test for administrative action at the expense of collecting revenue, and Kenya Medical Association Housing Co-operative Society Limited v Attorney General & Another [2016] eKLR, where the High Court held that a decision given without regard to the principles of natural justice is void and must be declared to be no decision. 26.The Appellant concluded on this ground that, in the absence of articulated reasons demonstrating how the relationship is deemed to have influenced the price, the Review decision is rendered void ab initio and the tax demanded of Kshs. 122,689.00 should be vacated in its entirety. II. 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 27.The Appellant submitted that, in valuing its imports, it correctly used the transaction value method, being the price actually paid or payable for the goods when sold for export, which is the primary method of valuation pursuant to Section 122(1) of the EACCMA, which provides that: -“Where imported goods are liable to import duty ad valorem, then the value of such goods shall be determined in accordance with the Fourth Schedule and import duty shall be paid on that value.” 28.The Appellant stated that under the Fourth Schedule to the EACCMA, the customs value of imported goods is to be determined using one of six methods of valuation: the Transaction Value Method (Method 1 or the primary method); the Transaction Value of Identical Goods Method (Method 2); the Transaction Value of Similar Goods Method (Method 3); the Deductive Value Method (Method 4); the Computed Value Method (Method 5); and the Fall-Back Value Method (Method 6). 29.That, as stipulated under the Fourth Schedule and the East African Community Customs Valuation Manual, these methods must be applied sequentially: Method 1 must be attempted first; Method 2 can only be considered if a value cannot be determined under the first method; Methods 3 to 6 follow the same procedure; and Method 6 can only be applied if all the previous methods cannot be used. 30.The Appellant submitted that it was justified in using the transaction value method as it fulfilled all the conditions set out under Paragraph 2(1)(a) to (d) of the Fourth Schedule, in that: the supplier did not impose any conditions or restrictions as to how the Appellant used or disposed of the goods purchased; there were no other conditions or considerations imposed with respect to the sale price other than those foreseen under Paragraph 2(1); disposal proceeds from the subsequent resale of the Products by the Appellant do not accrue directly or indirectly to the supplier; 31.and, whilst the sale related to an intercompany sale, the relationship between the parties did not influence the price. 32.On the primacy of the transaction value method, the Appellant relied on the decision of Nyamweya, J. in Republic v Kenya Revenue Authority Ex-parte Neolife International Limited [2018] eKLR, where the Court held that the methods of valuation are set out in a sequential order of application, that the primary method for customs valuation is defined in Paragraph 2, and that it is only where the customs value cannot be determined under the provisions of Paragraph 2 that the value will be determined by proceeding sequentially through the succeeding paragraphs. 33.The Appellant further relied on the decision of this Tribunal in Wallpaper Kenya v Commissioner of Customs & Border Control, Tax Appeal No. 279 of 2020, which applied the holding of the High Court of Uganda in Testimony Motors Limited v The Commissioner of Customs (Uganda Revenue Authority), 2012 HC Civil Suit No. 212, that: -“...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 duty shall be paid on that value. It does not give any discretionary powers on the Commissioner to rely on alternative methods without following the procedures or directives laid out in the Fourth Schedule. In other words, it is the price paid for the goods by the buyer or importer which forms the basis of assessing the Customs duty payable on the goods.” 34.The Appellant submitted that it provided the Respondent with all the supporting information, including commercial invoices, sales contracts and export documents from the country of origin, audit confirmation, its Transfer Pricing documentation, as well as explanations that it correctly applied the transaction value method, which information the Respondent did not consider in issuing its decision. 35.That the information provided included the cost of raw materials, unit costs, direct labour costs, other factory overheads, Rohto Vietnam’s margins on the products and all other expenses used in the manufacture of the acne products, and that at no time during the review process did the Respondent dispute the credibility of the documents provided. 36.The Appellant posited that the Respondent was required to properly consider the documentation provided and to understand the information, relying on 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...” 37.The Appellant consequently submitted that, having provided documentation and explanations to support its correct use of the transaction value method, it discharged its burden of proof that it paid the correct taxes as per the provisions of the EACCMA, and that, having made a prima facie case, the burden shifted to the Respondent to give reasons for the rejection of the transaction value method, which burden the Respondent failed to discharge. III. The Respondent erred in law and in fact by holding that the relationship between the Appellant and its non-resident related party, Rohto Mentholatum Vietnam Co. Limited, influenced the price of the Products under review 38.The Appellant maintained that its relationship with Rohto Vietnam did not affect the prices of the Products, and placed reliance on Paragraph 2(2)(a)(i) of Part I of the Fourth Schedule to the EACCMA, which stipulates that: -“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 the 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.” 39.The Appellant added that Paragraph 2(2)(b) of Part I of the Fourth Schedule provides tests by which, at the initiative of the importer and for comparative purposes only, the transaction value shall be accepted where it closely approximates the transaction value in sales to unrelated buyers of identical or similar goods, or the customs value of identical or similar goods as determined under the deductive or computed value methods. 40.The Appellant averred that Subparagraph 2(3) of the Interpretative Notes under Part II of the Fourth Schedule prescribes the manner of examining the circumstances surrounding a related-party sale, providing that: -“Where the proper officer is unable to accept the transaction value without further inquiry, it should give the owner an opportunity to supply such further detailed information as may be necessary to enable it to examine the circumstances surrounding the sale. In this context, the proper officer should be prepared to examine relevant aspects of the transaction, including the way in which the buyer and seller organise 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.Where it can be shown that the buyer and seller, although related under the provisions of Paragraph 1, 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.” 41.The Appellant noted that the Interpretative Notes further give examples: that if the price had been settled in a manner consistent with the normal pricing practices of the industry in question, or with the way the seller settles prices for sales to unrelated buyers, this would demonstrate that the price had not been influenced; 42.and that where it is shown that the price is adequate to ensure recovery of all costs plus a profit representative of the firm’s overall profit realised over a representative period of time in sales of goods of the same class or kind, this would equally demonstrate that the price had not been influenced. 43.The Appellant further invoked the World Customs Organisation (“WCO”) Guide to Customs Valuation and Transfer Pricing and WCO Commentary 23.1, which recognise that transfer pricing information may be used in examining the circumstances surrounding a sale, a transfer pricing study being one source of such information. 44.The Appellant stated that, in accordance with the Income Tax (Transfer Pricing) Rules, 2006, it maintains a Transfer Pricing Policy documenting the arm’s length pricing arrangements between the Appellant and its non-resident related parties, including Rohto Vietnam, which policy was annexed to its Statement of Facts. That the policy documents a comprehensive benchmarking analysis of comparable companies involved in the purchase of similar products, which established that the Appellant’s operating margins are within the identified inter-quartile range of operating margins of comparable companies, and hence the pricing of the products purchased from non-resident related parties was at arm’s length. 45.The Appellant explained that, during the review application stage, it demonstrated to the Respondent that the observed price variations were attributable to reduced production costs arising from increased production volumes, themselves driven by higher sales, and that certain product-specific price reductions resulted from both major and minor formulation changes that led to the introduction of new products and the discontinuation of others. 46.By way of illustration, the Acnes Soothing Toner 90ml (item code JZ04A) was discontinued and replaced with the Acnes Blemish Control Toner (item code ABL-CT2), while products such as the Acnes Scar Care 12g and Acnes Sealing Gel 9g underwent minor formulation adjustments. The Appellant supplied the Respondent with confirmation to this effect from Rohto Vietnam, which was not controverted. 47.The Appellant added that, over and above being required to examine the circumstances surrounding the sale, the Respondent was obligated to consider the adjustment elements enumerated in Paragraph 9 of the Fourth Schedule before rejecting the declared values, which it failed to do notwithstanding that the Appellant provided sufficient documents to allow for such adjustment. 48.In support of its position, the Appellant relied on the decision of this Tribunal in GlaxoSmithKline (Kenya) Limited v Commissioner of Customs and Border Control, Tax Appeal No. 340 of 2020, where the Tribunal held that: -“The Tribunal noted that the Appellant made available [to] the Respondent GSK TP documentation and valuation methodology and schedules of prices supporting the same. However, there is no evidence that this information was considered by the Respondent in arriving at its decision. The Respondent did not demonstrate to the Appellant or this Tribunal whether it observed the ‘circumstances of sales test’ provided for [under] Paragraph 2 of the Interpretative Notes to the Fourth Schedule... The Tribunal thus finds the Respondent’s decision was arbitrary and not objective.” 49.The Appellant accordingly submitted that the Respondent erred in law and in fact in holding that the transaction value method was not acceptable because the buyer and seller are related entities and that this relationship influenced the price. IV. 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 I of the Fourth Schedule to the EACCMA 50.The Appellant submitted that Section 122(6) of the EACCMA requires 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 given by the Directorate of the World Trade Organization or the Customs Cooperation Council. 51.That the procedure to be followed before upsetting the transaction value method is enumerated under Paragraph 2(2)(a) of the Fourth Schedule, as anchored under Article 1(2)(a) of the Agreement on Implementation of Article VII of the GATT and reinforced by Decision 6.1 of the WCO Committee on Customs Valuation, which provides in part: -“…Before taking a final decision, the customs administration shall communicate to the importer, in writing if requested, its grounds for doubting the truth or accuracy of the particulars or documents produced and the importer shall be given an opportunity to respond. When a final decision is made, the customs administration shall communicate to the importer in writing its decisions and the grounds therefor…” 52.The Appellant averred that it provided all the information and supporting documentation, including the transactional documents, to justify the acceptability of the transaction value method, 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 indicated that the declared values were low. That the Respondent had the responsibility to investigate the circumstances of the sale before arriving at such a conclusion, and that under customs legislation there is no room for arbitrary or fictitious valuation. 53.The Appellant relied on the decisions of this Tribunal in Auto Express Limited v Commissioner of Customs and Border Control, Tax Appeal No. 119 of 2018, where the Tribunal found that a departure from the transaction value method without according the importer an opportunity to justify the values declared was contrary to the Fourth Schedule, Article 17 of the WTO Customs Valuation Agreement and the fair administrative action provisions; and in Pernod Ricard Kenya Limited v Commissioner of Customs and Border Control, Tax Appeal No. 25 of 2018, where the Tribunal affirmed that: -“Customs valuation requires that customs use the information provided by the importer and [where] Customs has reasons for rejecting that information, to state the reasons why... There is no room for arbitrary or fictitious valuation... The Tribunal thus found fault in the failure of the Respondent to communicate its grounds to the Appellant...” 54.The Appellant further relied on Optimum Lubricants Limited v Commissioner of Customs and Border Control, Tax Appeal No. 7 of 2021, where this Tribunal held that the Respondent erred in law in departing from the transaction value method in the face of sufficient evidence demonstrating the accuracy of the value of the goods as declared, the Respondent having neither given plausible reasons for the deviation nor cast any doubt on the credibility of the documents beyond asserting that other importers were declaring different, higher values. 55.The Appellant maintained that, having provided documentation and explanations to support its correct use of the transaction value method, it discharged its burden of proof that it declared the correct prices and paid the correct taxes, and that the Respondent did not substantiate why the information availed was insufficient. That it was not enough to state that the current declarations were low; the Respondent ought to have gone a step further to understand the circumstances of the sale and demonstrate why the declared values could not be used. V. 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 56.The Appellant noted that at paragraph 10 of the Review Decision the Respondent upheld its decision to value the impugned merchandise using the transaction value of identical goods. 57.The Appellant submitted that, pursuant to Paragraph 3(1)(a) of the Fourth Schedule, the Respondent may resort to the transaction value of identical goods only where: the customs value of the imported goods cannot be determined under Paragraph 2, meaning the transaction value was rejected on lawful grounds; there exists a transaction value of identical goods sold for export to Kenya; and those identical goods were exported at or about the same time as the consignment being valued. 58.The Appellant contended that, as demonstrated under its earlier grounds, the Respondent had not lawfully displaced the transaction value method, and consequently its recourse to the transaction value of identical goods method was equally untenable, since a lawful invocation of Method 2 presupposes a prior and valid determination that Method 1 is inapplicable. 59.The Appellant further submitted that the identical goods method requires the Respondent to demonstrate that there are truly identical goods, that is, goods that are alike in all material respects, including physical characteristics, quality and reputation, exported within a comparable time frame; that Paragraph 3(1)(b) mandates a like-for-like comparison at the same commercial level and in substantially the same quantities; that Paragraph 3(2) requires adjustments to reflect significant differences in transport, insurance and related costs and charges under Paragraph 9(2); 60.and that Paragraph 3(3) requires that where more than one transaction value of identical goods is found, the lowest such value shall be used. 61.The Appellant asserted that the Respondent neither availed to the Appellant the identical goods it identified and relied upon, nor proof that the said goods were exported within a comparable time frame; that it cannot be verified that the Respondent’s comparison aligned with the requirements of Paragraph 3; and that what can be verified is that the Respondent erroneously compared the Appellant’s own previous prices of the Products with the impugned Consignment without considering or factoring in the basis of the price variations, an approach that is untenable under Paragraph 3 of the Fourth Schedule. 62.That this failure, coupled with the omission to furnish the underlying comparable data, deprived the Appellant of the ability to mount a proper and informed defence against the Review Decision. 63.The Appellant submitted that the Respondent, as an administrative body, is bound by reasonableness and should not raise arbitrary assessments, relying on Republic v Kenya Revenue Authority Ex-parte Althaus Management & Consultancy Limited [2017] eKLR, where the High Court held that: -“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...” 64.The Appellant accordingly urged the Tribunal to find that the Respondent erred in law and in fact by relying on the transaction value of identical goods to value the impugned Consignment. Appellant’s Prayers 65.The Appellant prayed that the Tribunal issues orders that:a)The Respondent’s Review Decision contained in the letter dated 30th October 2025 demanding payment of Kshs. 122,689.00 be set aside in its entirety;b)The Appeal be allowed with costs to the Appellant; andc)Any other orders that the Honourable Tribunal may deem fit. Respondent’s Case 66.The Respondent’s case is premised on the following documents filed before the Tribunal:a)The Respondent’s Statement of Facts dated and filed on 27th January 2026, together with the documents attached thereto; andb)The Respondent’s Written Submissions dated 19th April 2026 and filed on even date, together with the authorities attached thereto. 67.The Respondent stated that the dispute arose from the Appellant’s importation of cosmetic products from its related-party supplier in Vietnam, and that, following a post-clearance audit, it determined that the declared values were undervalued and issued a demand for short-levied import duties amounting to Kshs. 122,689.00 on 4th September 2025. That the demand was based on evidence that the relationship between the Appellant and its supplier had influenced the transfer prices, leading to lower declarations compared to previous imports. 68.The Respondent averred that its analysis of historical importation data demonstrated a clear pattern of undervaluation influenced by the related-party relationship: that prior to 2015, the supplier, then known as Rohto Mentholatum Company Limited, supplied identical goods to unrelated third parties at higher prices, which were accepted by customs authorities without issue; that in 2015 the supplier altered its business model to exclusively supply related entities, including the Appellant, leading to a noticeable and consistent reduction in declared values for the same products; 69.and that this change was not accompanied by any market, economic or operational justifications, such as fluctuations in production costs, currency exchange rates or competitive pricing pressures. 70.The Respondent asserted that under Section 223(a) of the EACCMA, the onus of proving the payment of the proper duties lies on the taxpayer, and that the burden of proving the accuracy of the declared values, including that the related-party relationship did not influence the prices, lies squarely with the Appellant, a burden it has not met. The Respondent responded to the grounds of appeal as follows. I. On the Alleged Failure to Furnish Reasons Contrary to Section 229(4) of the EACCMA 71.The Respondent maintained that it fully complied with Section 229(4) of the EACCMA, which requires a timely written decision with sufficient reasons and does not mandate an exhaustive dissertation or disclosure of every internal deliberation. 72.That the Review Decision dated 30th October 2025 was issued well within the 30-day limit from receipt of the application for review on 6th October 2025, and explicitly outlined the grounds for the decision, namely: the rejection of the transaction value due to the related-party influence evidenced by the post-2015 price reductions; the application of the identical goods method; and adherence to WTO Decision 6.1 procedures. 73.The Respondent added that the Review decision referenced the importation data analysis showing lower values compared to previous identical imports, the business model change in 2015, and the persistence of doubts after consultations during the review process; that the decision advised on appeal rights under Section 230 of the EACCMA and on Alternative Dispute Resolution under Section 55 of the Tax Procedures Act, 2015; and that the Appellant never sought further clarification despite contact details being provided in the decision. 74.The Respondent invoked Section 122(4) of the EACCMA, which provides that: -“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.” 75.The Respondent relied on Airtel Networks Kenya Limited v Commissioner of Customs and Border Control (Tax Appeal 851 of 2022) [2025] KETAT 136 (KLR) for the proposition that Section 229(4) is satisfied by timely written notification containing the basis of the decision. The Respondent maintained that this ground is an attempt to elevate a procedural preference into a legal error. II. On the Alleged Disregard of the Transaction Value Method 76.The Respondent submitted that it did not disregard the transaction value method arbitrarily, but rejected it only after establishing that it failed the statutory tests, in full compliance with Section 122(1) of the EACCMA. That while Paragraph 2(1) of Part I of the Fourth Schedule designates the transaction value as the primary method, Paragraph 2(2)(d) qualifies its acceptability where the buyer and seller are related, requiring that the transaction value be acceptable for customs purposes under the provisions of subparagraph (2), which imposes a mandatory examination of the circumstances surrounding the sale. 77.The Respondent argued that the parties are indisputably related as part of the same MNE group, and that its data analysis demonstrated influence: the declared values dropped post-2015 when supply shifted exclusively to related entities, without any external justification provided by the Appellant. That once such influence is established on the evidence, rejection of the transaction value is not optional but mandatory, and the Fourth Schedule directs progression to the next method in the hierarchy. 78.The Respondent stated that it first attempted the transaction value, identified its failure through objective data, and only then moved sequentially, consistent with the holding in Testimony Motors Limited v The Commissioner of Customs (Uganda Revenue Authority), 2012 HC Civil Suit No. 212, that the primary method must first be attempted and it is only upon its failure that alternative methods can be applied. 79.On the burden of proof, the Respondent relied on Giant Furniture Limited v Commissioner of Customs & Border Control (Tax Appeal 1280 of 2022) [2025] KETAT 421 (KLR), where the Tribunal held that in customs valuation disputes the importer bears the legal and evidential burden of demonstrating that the declared transaction value is acceptable, and submitted that the Appellant produced no transfer pricing documentation, no independent valuation report, and no evidence rebutting the data-driven finding of influence. III. On the Finding that the Relationship Influenced the Price 80.The Respondent contended that its finding of influence was purely factual, data-driven and statutorily mandated. That the causal link between the related-party relationship and the low prices is unmistakable: prior to 2015, when the supplier sold identical cosmetic products to unrelated third parties, the declared values were consistently higher and accepted by customs; in 2015 the supplier restricted all sales exclusively to related entities; and from that moment the declared values for the same products fell markedly and consistently, a temporal coincidence which is classic evidence of relationship-influenced pricing. 81.The Respondent asserted that the Appellant never offered any credible, external, market-driven explanation, and that although the Appellant referred in its Statement of Facts to the existence of a Transfer Pricing Policy, it never placed the actual benchmarking analysis or the inter-quartile range before the Respondent during the objection process. That a bare assertion of a policy is not evidence, and vague references to internal policies, without supporting data, are insufficient to rebut a data-driven finding of influence. 82.In this regard, the Respondent relied on Delmonte Kenya Limited v Commissioner Legal Services and Board Co-ordination (Tax Appeal E504 of 2025) [2026] KETAT 2 (KLR), where the Tribunal held that pleadings must be proved and that a taxpayer has the statutorily mandated burden of proof pursuant to Section 56(1) of the Tax Procedures Act and Section 30 of the Tax Appeals Tribunal Act, and that a party which merely makes averments rather than providing relevant documentary evidence fails to discharge that burden. 83.The Respondent maintained that its finding was not an error of law or fact, but the only conclusion open to a reasonable customs officer on the evidence. IV. On the Procedure for Rejecting the Transaction Value 84.The Respondent submitted that it meticulously followed the prescribed procedure under Paragraph 2 of Part I of the Fourth Schedule as read with WTO Decision 6.1, which requires: doubts about the declared value’s truth or accuracy; conveyance of the doubts to the importer; an opportunity for consultation and response; and, if doubts persist, progression to alternative methods. 85.The Respondent stated that doubts arose from the data analysis showing post-2015 reductions; that these were conveyed in the initial demand of 4th September 2025; that the Appellant responded via its application for review dated 3rd October 2025, providing arguments and documents; that the Respondent reviewed these during the review process, constituting consultations; and that, with doubts unresolved due to lack of rebuttal evidence, it proceeded to the identical goods method. That the Appellant had ample opportunity to provide counter-evidence, such as independent valuations, but did not, thereby failing its burden under Section 223 of the EACCMA. V. On the Application of the Transaction Value of Identical Goods Method 86.The Respondent submitted that its recourse to the identical goods method under Paragraph 3 of Part I of the Fourth Schedule was not only lawful but the only permissible next step once the primary transaction value method had been validly rejected, Paragraph 3(1)(a) providing in mandatory terms that where the customs value cannot be determined under Paragraph 2, the customs value shall be the transaction value of identical goods sold for export to the Partner State and exported at or about the same time as the goods being valued. 87.The Respondent averred that every statutory prerequisite was satisfied: it relied exclusively on the Appellant’s own previously accepted imports of the identical cosmetic products from the same supplier, originating from the same country, cleared at the same commercial level and in comparable quantities. That these comparator entries pre-dated the 2015 business-model change and had been accepted by customs at higher values, providing the most direct, reliable and taxpayer-specific benchmark possible; that no complex or impracticable adjustments were required under Paragraph 3(1)(b) or Paragraph 9; and that the resulting uplift of Kshs. 88.122,689.00 was modest, proportionate and mathematically traceable to the Appellant’s own historical declarations. 89.The Respondent relied on Reckitt Benckiser Services (Kenya) Limited v Commissioner of Domestic Taxes [2025] KETAT 234, where the Tribunal upheld the Commissioner’s use of the identical goods method based on a previously accepted transaction value of an identical import from the same seller and same country of origin, and on Giant Furniture Limited (supra), where the Tribunal affirmed that once Method 1 fails, the Commissioner is entitled, and indeed required, to move sequentially to Method 2 using objective, verifiable historical data from the same importer’s prior accepted entries. 90.The Respondent added that the Appellant never suggested that the comparator goods were not identical, not contemporaneous, or not at the same commercial level, and never produced any evidence showing that the pre-2015 accepted values were themselves erroneous or that any adjustment under Paragraph 3(1)(b) was required but not made; and that a bare denial unsupported by factual or legal analysis cannot displace the Respondent’s evidence-based application of Paragraph 3. Respondent’s Prayers 91.The Respondent prayed that the Tribunal:a)Dismisses the Appeal in its entirety;b)Upholds the assessments as confirmed in the Review Decision; andc)Awards costs to the Respondent. Issues for Determination 92.The Tribunal has considered the Parties’ pleadings, the documents filed, and the rival submissions, and is of the considered view that the grounds of appeal and the Parties’ contentions distil into the following issues for determination:A.Whether the Respondent’s Review decision dated 30th October 2025 met the requirements of Section 229(4) of the EACCMA;B.Whether the Respondent lawfully departed from the Transaction Value Method in valuing the Appellant’s imported goods; andC.Whether the Respondent properly applied the Transaction Value of Identical Goods Method under Paragraph 3 of the Fourth Schedule to the EACCMA. Analysis And Findings 93.Having framed the issues for determination, the Tribunal proceeds to analyse them sequentially as hereunder. A. Whether the Respondent’s Review Decision Dated 30th October 2025 Met the Requirements of Section 229(4) of the EACCMA 94.Section 229(4) of the EACCMA provides as follows: -“The Commissioner shall within a period not exceeding thirty days of 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.” 95.The provision imposes two distinct obligations on the Commissioner: an obligation of timeliness, requiring the decision to be communicated within thirty days of receipt of the application for review; and an obligation of substance, requiring the decision to be communicated in writing and to state the reasons for the decision. 96.On timeliness, the record shows that the application for review dated 3rd October 2025 was received by the Respondent on 6th October 2025, and the Review decision was rendered on 30th October 2025, twenty-four days later. The first obligation was therefore discharged, and, indeed, the Appellant took no issue with the timeliness of the decision. 97.On the obligation to state reasons, the Tribunal has examined the Review decision. 98.The decision set out the statutory framework under Section 122(1) and (4) of the EACCMA and the Fourth Schedule; recited, at its paragraph 8, the finding that an analysis of the importation data showed that the declared values were lower when compared to previous identical imports by the same taxpayer accepted by Customs, and that there was a general reduction in declared values when the supplier changed its business model in 2015 and began availing its goods only to a related company; stated the conclusion drawn therefrom, that is, that the relationship between the parties influenced the transfer price; 99.identified the procedural pathway relied upon under WTO Decision 6.1; and communicated the outcome, being the confirmation of the valuation of the Consignment under the transaction value of identical goods method. 100.A review decision states reasons within the meaning of Section 229(4) of the EACCMA if it discloses, with sufficient particularity, the basis upon which the Commissioner arrived at the outcome, such that the taxpayer is able to understand the case it has to meet and to exercise its right of appeal meaningfully. The provision does not demand an exhaustive dissertation; it demands intelligibility. 101.The Tribunal observes that the Appellant was, on the strength of the Review decision, able to formulate five precise grounds of appeal directed at the very basis disclosed in the decision, namely the finding of related-party influence and the resort to the identical goods method. This is a sure indication that the decision disclosed the basis of the outcome. 102.The position taken by this Tribunal in Airtel Networks Kenya Limited v Commissioner of Customs and Border Control (Tax Appeal 851 of 2022) [2025] KETAT 136 (KLR), that Section 229(4) is satisfied by a timely written notification containing the basis of the decision, is apposite. 103.The distinct question of whether the reasons given are good reasons in law, that is, whether the stated basis was legally sufficient to displace the transaction value method, is a question of substance and not of form. It falls to be determined under the second issue, and the invalidity of the reasons, if established, does not retroactively convert an intelligible decision into no decision at all for the purposes of Section 229(4) of the EACCMA. 104.The Appellant also mounted its challenge on Article 47(1) of the Constitution and the Fair Administrative Action Act, 2015. The Tribunal observes that complaints of violation of the right to fair administrative action are, in the first instance, the province of judicial review before the High Court, and this Tribunal, being a creature of statute, confines itself to the statutory question falling within its jurisdiction, that is, whether the Commissioner discharged the mandate conferred by Section 229(4) of the EACCMA. It is unnecessary to venture into the constitutional plane to resolve this issue. 105.The Tribunal accordingly finds that the Review decision dated 30th October 2025 met the formal requirements of Section 229(4) of the EACCMA. This finding, however, does not immunise the substance of the decision from scrutiny, and it is to that substance that the Tribunal now turns. B. Whether the Respondent Lawfully Departed from the Transaction Value Method in Valuing the Appellant’s Imported Goods 106.This issue consolidates the Appellant’s second, third and fourth grounds of appeal, all of which impugn, from different angles, the Respondent’s decision to reject the transaction value method: first, that the primacy of the method was disregarded; secondly, that the finding of related-party influence was erroneous; and thirdly, that the procedure for upsetting the method was not followed. The three grounds rise and fall together, and the Tribunal considers them as a composite whole. 107.The starting point is Section 122(1) of the EACCMA, which provides in mandatory terms that where imported goods are liable to import duty ad valorem, the value of such goods shall be determined in accordance with the Fourth Schedule. The Fourth Schedule prescribes six methods of valuation, to be applied in sequential order: the transaction value method; the transaction value of identical goods; the transaction value of similar goods; the deductive value method; the computed value method; and the fall-back method. 108.The Interpretative Notes in Part II of the Fourth Schedule confirm that Method 1 must be attempted first and that Method 2 can only be considered if the customs value cannot be determined under the first method. The primacy of the transaction value method is settled law in the following case among many others Wallpaper Kenya Ltd v Commissioner of Customs & Border Control, Tax Appeal No. 279 of 2020. Both Parties, proceeded from this common premise. 109.Where the buyer and seller are related, Paragraph 2(2)(a)(i) of Part I of the Fourth Schedule to the EACCMA provides that the relationship shall not in itself be a ground for regarding the transaction value as unacceptable; rather, the circumstances surrounding the sale shall be examined, and the transaction value shall be accepted provided that the relationship did not influence the price. Where the proper officer has grounds for considering that the relationship influenced the price, he shall communicate his grounds to the importer, who shall be given a reasonable opportunity to respond. 110.Subparagraph 2(3) of the Interpretative Notes elaborates the content of this examination, commonly referred to as the circumstances of sale test: the proper officer should examine relevant aspects of the transaction, including the way in which the buyer and seller organise their commercial relations and the way in which the price in question was arrived at. 111.The Notes give two illustrative demonstrations that a price has not been influenced: where the price was settled in a manner consistent with the normal pricing practices of the industry or with the way the seller settles prices with unrelated buyers; and where the price is adequate to ensure recovery of all costs plus a profit representative of the firm’s overall profit realised over a representative period in sales of goods of the same class or kind. 112.The Tribunal acknowledges, as the Respondent correctly submitted, that Section 122(4) of the EACCMA preserves the right of the proper officer to satisfy himself as to the truth or accuracy of any declaration presented for customs valuation purposes. 113.That right is, however, to be exercised within the discipline of the procedure prescribed by Paragraph 2(2)(a) and WTO Decision 6.1, which, as this Tribunal observed in the previous appeal between these very Parties, Rohto Mentholatum (Kenya) Limited v Commissioner of Customs & Border Control, Tax Appeal No. 789 of 2021, enjoins customs administrations, in verifying declared values, not to prejudice the legitimate commercial interests of traders. Verification is an inquiry, not a verdict. 114.Against this framework, the questions the Tribunal seeks to answer are: Did the Respondent examine the circumstances surrounding the sale, and did the material before it sustain the conclusion that the relationship influenced the price? 115.The Respondent’s case rests on a single assertion – that an analysis of historical importation data showed that declared values reduced when the supplier changed its business model in 2015 and began supplying only related entities. From this, the Review decision concluded that it was “irreputable” that the relationship influenced the transfer price. The Respondent characterised this inference as irrefutable and the only conclusion open to a reasonable customs officer. 116.The Tribunal is is not persuaded by the Respondent’s basis of assessment and conclusion, for four reasons, which it analyses as follows: 117.First, the record demonstrates that the Appellant placed before the Respondent a body of material explaining the pricing of the goods in the Consignment, none of which the Review decision engaged. 118.The Appellant supplied the quotation of 12th February 2025; the email correspondence of 17th February 2025 in which Rohto Vietnam explained that remarkable sales increases had enabled the factory to manufacture larger quantities with automated production and thereby decrease the cost of goods sold; the Contract of 3rd July 2025; the commercial invoice, packing list and Import Declaration Form; the confirmation from Rohto Vietnam that certain price movements resulted from formulation changes and product substitution, including the discontinuation of the Acnes Soothing Toner 90ml (item code JZ04A) and its replacement with the Acnes Blemish Control Toner (item code ABL-CT2); and its Transfer Pricing Policy documenting a benchmarking analysis under which the Appellant’s operating margins fall within the inter-quartile range of comparable companies. 119.The Tribunal notes that the Respondent’s averment that no transfer pricing documentation was ever produced is not borne out by the record before the Tribunal, to which the Transfer Pricing Policy is annexed, and the Appellant’s assertion that it supplied its explanations and documentation at the review stage was not controverted by any contemporaneous record. 120.Secondly, the pattern of the 2025 price revision itself is inconsistent with the theory of relationship-driven suppression. The annual review produced movements in both directions: while the prices of the Selsun Anti-Dandruff Shampoo 50ml and 100ml and the Acnes Blemish Control Toner 90ml decreased, the price of the Acnes Creamy Wash 100g remained unchanged, and the price of the Acnes Scar Care 12g increased from USD 0.69 to USD 0.97, an increase of approximately forty per cent. A relationship deployed to suppress transfer prices does not ordinarily raise them. 121.Further, a differentiated, product-specific pattern of this kind called for examination, not dismissal; it is precisely the kind of material the circumstances of sale test exists to interrogate. The Review decision is silent on it. 122.Thirdly, the temporal foundation of the Respondent’s inference is misplaced. The comparison underpinning the Demand notice juxtaposed the 2025 declared values against imports predating the supplier’s 2015 change of business model, a decade removed from the Consignment. More significantly, that very rationale, the reduction in declared values coinciding with the 2015 business model change, was the subject of the previous decided Appeal, Tax Appeal No. 789 of 2021, between these same Parties and in respect of the same products. 123.In its judgment delivered on 26th May 2023, this Tribunal found that the Respondent had not demonstrated that the relationship between the Appellant and its suppliers influenced the valuation, that the Respondent had not observed the circumstances of sale test under Paragraph 2 of the Interpretative Notes, and that its decision was arbitrary and not objective, and it set the Respondent’s review decision aside. 124.While every consignment falls to be valued on its own facts, and the doctrine of res judicata must be applied with circumspection to successive valuation decisions, the Commissioner cannot, consistently with the discipline of the Fourth Schedule, recycle a rationale that this Tribunal has already adjudged insufficient, without confronting the deficiency identified, engaging the taxpayer’s explanations, or placing any new material before the Tribunal. The Respondent did none of these things. 125.Fourthly, the language of the Review decision itself betrays the absence of the mandated examination. To declare influence “irreputable”, by which the Tribunal understands the Respondent to have meant irrefutable, is to announce a conclusion, not to examine circumstances. The circumstances of sale test required the Respondent to consider how the price was arrived at – the group’s annual intercompany price review, the cost-of-goods-sold explanation, the formulation changes, and the benchmarking analysis. 126.As this Tribunal held in GlaxoSmithKline (Kenya) Limited v Commissioner of Customs & Border Control, Tax Appeal No. 340 of 2020, and reiterated in the previous appeal, where the taxpayer makes available its transfer pricing documentation, valuation methodology and supporting schedules, and there is no evidence that this information was considered by the Respondent in arriving at its decision, the decision is arbitrary and not objective. 127.The same reasoning animated the decisions in Pernod Ricard Kenya Limited v Commissioner of Customs and Border Control, Tax Appeal No. 25 of 2018, and Optimum Lubricants Limited v Commissioner of Customs and Border Control, Tax Appeal No. 7 of 2021. There is no room for arbitrary or fictitious valuation, and it is not enough to observe that current declarations are lower than earlier ones; the Commissioner must go the further step of understanding the circumstances of the sale and demonstrating why the declared values cannot be used. 128.The Respondent placed considerable weight on the burden of proof under Section 223(a) of the EACCMA as read with Section 30 of the Tax Appeals Tribunal Act, and on the decisions in Giant Furniture Limited (supra) and Delmonte Kenya Limited (supra). The Tribunal affirms, without qualification, that the burden of demonstrating that the declared transaction value is acceptable rests on the importer. But a burden of proof is discharged by evidence, and the Appellant tendered evidence: the transactional documents, the price revision correspondence, the supplier’s explanations and the Transfer Pricing Policy. 129.As the High Court held in Kenya Revenue Authority v Man Diesel & Turbo Se, Kenya [2021] eKLR, the Commissioner is required to properly consider the documentation provided and to understand the information; it is not sufficient to merely request information, disregard it, and issue an assessment. Once the Appellant laid this prima facie foundation, the evidential burden shifted to the Respondent to controvert it, by engaging the explanations, testing the benchmarking analysis, or identifying why the material was incapable of belief. The Respondent did not controvert the documentation; it ignored it. 130.The distinction between this case and Delmonte Kenya Limited (supra) is precisely that the Appellant here went beyond bare averments and placed its documentary explanations on the record. 131.The Tribunal is further guided by the principle of strict construction of taxing statutes articulated in Cape Brandy Syndicate v The Commissioners of Inland Revenue (1921) 12 TC 358, that in a taxing Act one has to look merely at what is clearly said, there being no room for intendment, and by the caution of the High Court in Export Trading Company Ltd v Kenya Revenue Authority [2018] eKLR that the processes and procedures leading to the collection of taxes must meet the relevant legal thresholds. 132.The clear words of Paragraph 2(2)(a)(i) prohibits rejection of the transaction value on the sole footing of the parties’ relationship; and the process followed here did not meet the threshold the Schedule prescribes. 133.For completeness, the Tribunal has considered the Respondent’s submission that the procedural sequence contemplated by WTO Decision 6.1 was observed, in that doubts were conveyed in the Demand notice of 4th September 2025 and the review process constituted the consultation. Decision 6.1 contemplates that the customs administration will communicate its grounds for doubting the declared value and afford the importer a reasonable opportunity to respond before taking a final decision. The Demand notice of 4th September 2025 was not a communication of doubts inviting explanation; it was a quantified demand for payment. 134.The consultation the Respondent points to, the statutory review, is the taxpayer’s remedy against a decision already made, not the antecedent dialogue Decision 6.1 envisages. and even treating the process as a whole, the Tribunal notes that at no stage, whether at flagging, at demand, or at review, did the Respondent engage with the explanations tendered. Doubts that are never tested against the importer’s answers cannot be said to have “persisted”; they were simply never examined. 135.The Tribunal observes that the Respondent rejected the transaction value method on the sole basis of the parties’ relationship and an untested historical price comparison, without observing the circumstances of sale test, without communicating grounds capable of meaningful response, and without engaging the substantial explanatory material before it. 136.The Tribunal accordingly finds that the Respondent did not lawfully depart from the transaction value method in valuing the Appellant’s imported goods. C. Whether the Respondent properly applied the Transaction Value of Identical Goods Method under Paragraph 3 of the Fourth Schedule to the EACCMA 137.The finding under the second issue is, strictly, dispositive of this issue: Paragraph 3(1)(a) of the Fourth Schedule permits recourse to the transaction value of identical goods only “where the customs value of the imported goods cannot be determined under the provisions of paragraph 2”. A lawful invocation of Method 2 presupposes a prior and valid determination that Method 1 is inapplicable. That determination having been found wanting, the foundation for the identical goods method collapses. 138.The Tribunal nonetheless considers the application of Paragraph 3 on its own terms, because the manner of its application discloses independent and instructive infirmities. 139.Paragraph 3(1)(a) requires that the comparator goods be identical goods sold for export to the Partner State and “exported at or about the same time as the goods being valued”. Paragraph 3(1)(b) mandates comparison at the same commercial level and in substantially the same quantities, with adjustments where differences exist; Paragraph 3(2) requires adjustment for significant differences in the costs and charges referred to in Paragraph 9(2); and Paragraph 3(3) directs that where more than one transaction value of identical goods is found, the lowest such value shall be used. 140.On the Respondent’s own pleadings, the comparator entries were the Appellant’s previous imports which “pre-dated the 2015 business-model change” and had been accepted at higher values. The Consignment under valuation was imported in 2025, under a contract concluded on 3rd July 2025 following a price revision effective 1st May 2025. The Tribunal notes that comparators removed from the goods being valued by approximately a decade cannot, on any tenable construction, satisfy the statutory requirement of exportation "at or about the same time". The Tribunal asserts that temporal proximity is not a technicality; it is the mechanism by which the Schedule ensures that the comparison reflects prevailing market and cost conditions. 141.A decade-old price tells the valuer nothing about the conditions under which the 2025 Consignment was priced, particularly where the intervening record discloses annual intercompany price reviews, volume-driven reductions in the cost of goods sold, and formulation changes resulting in the discontinuation and substitution of products. The last-mentioned point bears also on identity: goods that have undergone formulation changes, or that have replaced discontinued lines, are not shown to be “alike in all respects, including physical characteristics, quality and reputation”. 142.Further, the Respondent did not disclose to the Appellant, nor place before this Tribunal, the particulars of the comparator entries relied upon: the specific entries, their dates, quantities, commercial levels, or the computations by which the uplift of Kshs. 122,689.00 was derived, including any adjustments under Paragraph 3(1)(b), Paragraph 3(2) or Paragraph 9, or the verification, where multiple values existed, that the lowest was adopted as Paragraph 3(3) commands. 143.The Appellant was thereby deprived of the ability to test the comparison, and the Tribunal is deprived of the ability to verify it. An uplift whose derivation cannot be demonstrated offends the principle in Republic v Kenya Revenue Authority Ex-parte Althaus Management & Consultancy Limited [2017] eKLR that 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. 144.The authorities relied upon by the Respondent do not assist it. In Reckitt Benckiser Services (Kenya) Limited (supra) and Giant Furniture Limited (supra), the Commissioner’s recourse to Method 2 followed a valid rejection of Method 1 and employed contemporaneous, disclosed and verifiable comparator entries. Neither decision is authority for the proposition that the Commissioner may reach back a decade to a taxpayer’s own superseded prices, undisclosed in their particulars, as the transaction value of identical goods. 145.The Tribunal accordingly finds that the Respondent did not properly apply the transaction value of identical goods method under Paragraph 3 of the Fourth Schedule to the EACCMA, and that the resultant demand for short-levied import duties of Kshs. 122,689.00 cannot stand. Final Decision 146.The upshot of the foregoing analysis is that the Tribunal finds the Appeal meritorious and accordingly proceeds to issue the following Orders:a)The Appeal be and is hereby allowed;b)The Respondent’s Review decision dated 30th October 2025 demanding payment of Kshs. 122,689.00 be and is hereby set aside in its entirety; andc)Each party to bear its own costs. 147.It is so ordered. DATED AND DELIVERED AT NAIROBI THIS 13TH DAY OF JULY 2026.……………………………ROBERT M. MUTUMACHAIRMAN……………………………… ……GLORIA A. OGAGAMEMBER……………………………DR. TIMOTHY B. VIKIRUMEMBER……………………………JIMMY M. MALLAMEMBER