Moran EA Publishers Limited v Kenya Bureau of Standards (Tribunal Appeal E004 of 2024) [2024] KEST 1629 (KLR) (27 September 2024) (Judgment)
Neutral citation:
[2024] KEST 1629 (KLR)
Republic of Kenya
Tribunal Appeal E004 of 2024
GM Mburu, Chair, MS Makhandia, P Mungai & A Ong’injo, Members
September 27, 2024
Between
Moran EA Publishers Limited
Appellant
and
Kenya Bureau of Standards
Respondent
Judgment
Introduction
1.The Appellant is limited liability Company licensed to carry on publishing business within the Republic of Kenya.
2.The Respondent is a body corporate established under Section 3 of the Standards Act, Cap 496 of the Laws of Kenya (Standards Act) whose functions among others include promoting standardization in Kenya.
SUMMARY OF THE APPEAL
3.The Appellant filed this Appeal on 2nd April 2024 being dissatisfied by the Respondent’s decision to demand Standard Levy arrears and penalty from the Respondent vide their letter dated 16th January 2024. In the said letter, the Respondent demanded from the Appellant a total of Kenya Shillings Fifty Two Million One Hundred and Twenty Five Thousand Nine Hundred and Forty Four ( Ksh. 52,125,944). The arrears are from 2017 to 2023.
4.The Appellant responded to the demand through their lawyers and Kenya Publishers Association and denied being manufacturers. In response thereto, the Respondent insisted that the Appellant was a manufacturer and therefore liable to pay Standard Levy.
5.Aggrieved by this decision the Appellant moved this Tribunal on the grounds that;a.The Appellant does not fall within the category of manufacturers as described in section 2 of the Standards Act.b.The Appellant’s business only relates to the intellectual aspects of development of books while the physical production and printing is undertaken by professional printers/manufactures who are registered with KEBS in accordance with the Standards Act Cap 496.
6.The Respondent in its response dated 13th May 2024 opposed the Appellant’s allegations stating that;a.Section 2 of the Standards Act Cap 496 defines a manufacturer to include a Person/Persons who Produce, Process, treat, test, operate, install and use. By publishing, it produces reading material and uses paper which is within the definition of a manufacturer.b.That being a manufacturer, the Appellant is obligated to pay Standard Levy at 0.2% of monthly turnover excluding Value Added Tax (VAT) and discounts.c.Section 8 of the Standard Levy (Amendment) Order 1999 empowers the Respondent to recover any unpaid sums under the Order as a civil debt.
7.Parties agreed to have the matter dispensed with by way of written submissions. Both parties filed their written submissions together with Authorities. We have considered both the submissions and Authorities filed herein.
8.A preliminary issue as observed by the Tribunal is on propriety of pleadings filed by the Respondents. We have perused the Statement of Response to the Statement of Appeal dated 13th May 2024 and Verifying Affidavit dated 15th May 2024, deponed by one Mr. Mohammed Adan. The Affidavit shows that it was commissioned by Ms. Beatrice Maina.
9.Section 4 (1) prohibits the exercise of power conferred to a Commissioner for Oaths from by a Commissioner in a matter where they are the advocates for the parties or in any way connected to the proceedings.
10.Ms. Beatrice Maina being connected by virtue of being an employee of the Respondent and thereby prohibited from commissioning documents of the Respondent.
11.However, the observation of the Tribunal comes too late in the day, yet there was no Preliminary Objection filed to strike it out. The opportunity to make any order for rectification is lost and any made at this stage would prejudice the proceedings parties considering that the hearing has been concluded and the case closed. We will consider the Statement of Response proper. See Kaiser Investments Limited v Hua Run Company Limited & 3 others [2021] eKLR.
Appellant’s Case
12.The Appellant states that on 16th January 2024 they were served with a demand from the Respondent to pay Ksh. 52,125, 944 being Standard Levy and Penalties from 2017 to 2023. The Appellant contends that the Standard Levy Order does not apply to them because they are not manufactures as defined under section 2 of the Standards Act and therefore the amount claimed is not payable. The Appellant contend that they are Content Creators and not manufacturers. The Appellant claims that their business relates to intellectual aspects of development of books and does not involve the transformation of raw materials into finished products by producing, processing, treating, installing, testing, operating and using any raw materials.
Respondent’s Case
13.The Respondent’s case is anchored on Section 2 of the Standard Act Cap 496 which defines a manufacturer to include a person/persons who produces, processes, treats, tests, operates, installs and uses. They claim that by the Appellant publishing, it produces reading material and uses paper which is within the definition of a manufacturer. That being a manufacturer, the Appellant is under obligation to pay Standard Levy as provided under paragraph 3 of the Standard Levy (Amendment) Order 1999.
ISSUES FOR DETERMINATION
14.This Honourable Tribunal identified the following two issues for determination;
1.Whether the Appellant is a manufacturer within the meaning of section 2 the Standards Act Cap 496.
2.Whether the Appellant is liable to pay Standard Levy.
Whether the Appellant is a manufacturer within the meaning of the Standards Act.
15.The Appellant contends that it is not a manufacturer as described under section 2 the Standards Act. It submits that its business only relates to the intellectual aspects of the development of books and does not involve in transformation of raw materials into finished products. Further, that the Appellant has Agreements with Suppliers who carry out Print production and binding services and thereafter the Appellant publishes the finished product. The Appellant further argues that the actual or physical transformation of raw materials into finished products is undertaken by manufacturers who in this case are Printers. The Appellant relied on the definition of a Publisher as found in the New Shorter Oxford English Dictionary, Volume 2 at page 2405 “A person who makes something generally known, a person who declares or announces something publicly. An author or editor of a published book or literary work. A person who or (esp) a company which prepares and issues books, newspapers music etc for sale to the Public”
16.The Respondent insists that the Appellant is a manufacturer and that it falls under section 2 of the Standards Act. The Respondent also invites us to look at definition of a manufacturer as set out in the Black Law’s Dictionary 6th Edition, West Group Publishers where a manufacturer is described as “one who by labor, art or skill transforms raw material into some kind of a finished product or article of trade, any individual partnership corporation association or other legal relationship which manufactures assembles or produce goods”.
17.The Respondent further argues that publishing involving the product of printed materials is categorized under manufacturing due to transformation process from raw materials. The Respondent has cited two cases in support of its case.
18.The issue before this Tribunal is whether the Appellant is a manufacturer as defined under the Standards Act. The Appellant contends that it is not a manufacturer as defined in the Standards Act. That it invited the Respondent to its Premises on 9th February 2024 where the Respondents representative were taken around in their premises to prove that there was no manufacturing taking place. Further the Appellant through their Association, the Kenya Publishers Association wrote to the Respondent on 5th February 2024, explaining that the Appellant does not fall under Manufacturers as stated in the Standards Act.
19.The Appellant also filed a supplementary List of Documents, dated 27th May 2024. It produced Purchase Orders made by the Appellants to various publishers as enumerated in the List of Documents, showing the direct cost of production of the books, to demonstrate that it is not a manufacturer.
20.The Appellant’s work is to publish finished product while primary work on the said goods is done by Suppliers including printers. The work of the Appellant is therefore secondary. Further the Respondent did not respond to the claim that they visited the Appellant’s premises and that no manufacturing was going on. There was no evidence to show that the Appellant does manufacturing at its premises or elsewhere.
21.In our view, the Respondent has failed to prove that indeed the Appellant is a manufacturer save to rely on section 2 of the Standards Act. We hold that the Respondent has not proved its case as required under section 109 of the Evidence Act Cap 180. In view of the fact that the Appellant does not involve themselves in the transformation of raw materials into finished products, we are convinced to find that the Appellant is not a Manufacturer and therefore not liable to pay the amount claimed. Having found so, issue number (ii) is considered addressed
DATED AND DELIVERED AT NAIROBI THIS 27TH DAY OF SEPTEMBER, 2024GLADYS MUTHONI MBURU(CHAIRPERSON) ……………………..................................…MOSES SANDE MAKHANDIA(MEMBER) ………………………...................................PETER MUNGAI(MEMBER) ………………………...................................ADRIAN ONGINJO ……………………………………………(MEMBER)EVANS LANGAT ……………………………………………(MEMBER)Delivered in the presence of: