Bidco Africa Limited v Commissioner of Customs and Border Control (Tax Appeal E179 of 2025) [2026] KETAT 17 (KLR) (9 February 2026) (Judgment)
Neutral citation:
[2026] KETAT 17 (KLR)
Republic of Kenya
Tax Appeal E179 of 2025
CA Muga, Chair, T Vikiru, B Gitari, DK Rono & B Mijungu, Members
February 9, 2026
Between
Bidco Africa Limited
Appellant
and
Commissioner Of Customs And Border Control
Respondent
Judgment
1.The Appellant is a limited liability Company incorporated in Kenya whose principal business activity is in the manufacture of edible oils.
2.The Respondent is a principal officer appointed under Section 13 of the Kenya Revenue Authority Act, CAP 469 of the laws of Kenya (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 & 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 Respondent conducted a Post Clearance Audit (hereinafter “PCA”) on the Appellant and issued a Notice of Demand dated 31st October 2024 for Kshs. 337,729,265.00, based on customs undervaluation of Crude Sunflower Oil, ineligibility for the duty remission benefits of the attendant Gazette Notice, VAT on exports without certificates of exports and undeclared stocks.
4.The Appellant lodged an application for review on 29th November 2024 whereupon the Respondent reassessed the tax liability and revised the initial demand down to Kshs. 33,716,389.00. The review decision was communicated to the Appellant via a letter dated 27th December 2024.
5.The Appellant, being aggrieved by the review decision, filed its Notice of Appeal on 10th February, 2025.
The Appeal
6.The Appeal is as contained in the Memorandum of Appeal dated and filed on 24th February, 2025 is premised on the following grounds:i.That the Respondent acted unfairly by punishing the Appellant for actions of its clearing agent that were outside of the Appellant’s control;ii.That the Respondent acted unreasonably by failing to demonstrate how it arrived at the value of the purportedly undervalued crude sunflower oil;iii.That the Respondent acted unreasonably and unfairly by claiming that the Appellant undervalued its imports despite the Respondent having been present during the importation process, having inspected the goods and having authorised the release of the goods from the port;iv.That the Respondent acted unreasonably by disallowing concessionary rates despite delays occasioned by force majeure;v.That the Respondent acted unreasonably by claiming that the Appellant did not demonstrate export of the goods despite provision of documents and the Respondent’s participation in the export process and the fact that only the Respondent could issue export certificates; andvi.That the Respondent erred in law and in fact by claiming that the Appellant failed to charge VAT on a sale despite the fact that the Appellant charged VAT on the same.
Appellant’s Case
7.The Appellant set out its case in the Statement of Facts dated and filed on 24th February, 2025.
8.The Appellant averred that the Respondent acted unfairly by punishing it for actions of its clearing agent that were outside its control yet it is the law that binds importers to use agents licensed by the Respondent. The Appellant cited Section 146 of the East Africa Community Customs Management Act, 2004 (hereinafter “EACCMA”) which requires an importer to clear goods through an agent licensed by the Respondent.
9.The Appellant averred that the Respondent has structured its Integrated Customs Management System (iCMS) in such a way that importers neither have access nor visibility to the system, it is the licenced clearing agents who have access and visibility to the system. That this constrained the Appellant to rely on the services of a licensed clearing agent.
10.The Appellant propounded that in an ideal agency relationship, the principal is vicariously liable for the actions of the agent as follows:a.The principal has the option to carry out the task on their own or subcontract it;b.The principal has free reign to select their agent; andc.there is information symmetry both the agent and principal have access to the same information.
11.The Appellant stated that its relationship with its clearing agent does not meet these criteria therefore, this is not an ordinary agency relationship for the following reasons:a.The Respondent limited access to the iCMS and Simba systems so as to prevent an importer from clearing their own goods;b.The Respondent restricted access to the import systems to licensed clearing agents; andc.The Respondent structed its systems in a way that ensures an importer has zero visibility of the activities of its clearing agent on the system.
12.The Appellant averred that during the period in question, it imported goods and contracted a clearing agent duly licensed by the Respondent to clear the goods at the port. That it reasonably assumed that the Respondent would only have licenced the agent if they were knowledgeable in the business, diligent and trustworthy.
13.The Appellant stated that for each consignment, it would receive an invoice from the clearing agent that would specify all duties and taxes due and the agency fees for the agent’s services and that it diligently settled the agent’s invoice and trusted that the agent remitted the amount to the Respondent.
14.The Appellant stated that given that the Respondent restricted access to the Simba system to the Respondent’s staff and licensed clearing agents, it did not have access to the system and that accordingly, it had no way of confirming whether the duty payments had reflected on the Simba system or whether the clearing agent had keyed in the correct information.
15.The Appellant averred that it had to trust the following:a.That the release of the goods from a bonded warehouse was under the Commissioner’s absolute supervision;b.That the provision of C17s by the clearing agent was known to the Respondent; andc.That the fact that BAL had fully paid the duties to the clearing agent and that the Respondent released the cargo only after ensuring that they have been paid the duties and taxes as is normally the case.
16.The Appellant averred that there were reasonable assurances that the duties had been fully settled and the Appellant was tax compliant and that it only became aware of this anomaly once the Respondent raised it.The Appellant also averred that Section 147 of the EACCMA provides as follows, in mandatory terms, that a clearing agent shall be liable for payment of duties:
17.The Appellant averred that based on the above, the Respondent has a duty to first hold the agent accountable for any short-levied duties as they are liable for the same but the Respondent failed to do so.
18.The Appellant stated that the Respondent in its objection decision claimed that the Appellant is vicariously liable for the actions of its clearing agent under Section 148 of the EACCMA which states as follows:
19.The Appellant contended that the claim of vicarious liability cannot hold as there is no statutory requirement for blocking the Appellant’s access to iCMS and that while EACCMA generally holds an importer liable for the actions of its clearing agent it neither empowers the Respondent to block the Appellant’s access to iCMS nor does it recommend the imposition of access restriction. Therefore, the Respondent’s access restrictions on iCMS are neither backed by law nor reason.
20.The Appellant averred that the Respondent should not hold the it liable for actions of its clearing agent as the Appellant had done the following:i.Demonstrated that it had no way of detecting any anomalies on iCMS due to access restrictions;ii.Kept all documents required including proof of duty payment to its licenced clearing agent; andiii.Brought the anomalies to the Respondent as soon as it noted the same.
21.The Appellant averred that it was not the first time that a clearing agent has duped a taxpayer and buttressed its position by citing the case of XRX Technologies Limited vs Respondent of Domestic Taxes [TAT 26 of 2015] where the Tribunal held as follows:30.This Honorable Tribunal is persuaded by the Appellant’s contention that it cannot be made to explain the variance in the Respondent’s system on account of lack of access. That variation, taken only, is not proof of alteration or inauthenticity of the Appellant’s records. The Appellant dispensed with its duty by keeping documentary evidence and provided the documents in support of its claims. In this regard, we place reliance on PZ Cussoms East Africa Limited vs Kenya Revenue Authority (2013) eKLR wherein it was held that the Respondent has the responsibility of ensuring the sanctity of its electronic system.31.… Accordingly, it is our considered view that the only reasonable explanation for the variances in the records is an inside job and the Appellant herein is being scapegoated for it. Allowing this would visit unfathomable adversity on the Appellant while the real culprit goes unpunished. To hold otherwise will be tantamount to sanctioning illegal and unlawful taxation of the Appellant. We cannot simply close our eyes to the fraudulent activities taking place in the Respondent’s system and aid it in punishing the wrong individuals…”
22.The Appellant averred that the Respondent’s admission in Republic v Kenya Revenue Authority Ex-Parte: Cosmos Limited [2016] KEHC 4712 (KLR), further supports the Appellant’s position that only a person with access to the Simba system can feed it with incorrect data. In the matter the Respondent submitted thus:
23.The Appellant stated that therefore, where there are inconsistencies between the records held by the Appellant and the data in the Simba or iCMS systems, only the clearing agent would be able to sit with the Respondent to explain the variance.
24.The Appellant averred that pursuant to the following provisions of Section 145(2) of the EACCMA the Respondent is prohibited from licensing a clearing agent unless they are capable of effectively acting on behalf of an importer:
25.That Section 145 of the EACCMA then empowers the Respondent to revoke or suspend a clearing agent’s licence for any reason the Respondent may deem fit. That such reasons would include dishonesty or fraud, therefore the Respondent cannot turn a blind eye to the mischief of a licensed clearing agent.
26.The Appellant averred that it provided bank statement and bank payment confirmation demonstrating that it transferred the duties on the consignments to the clearing agent’s account and that if the Respondent was acting in good faith, it would have simply reached out to the clearing agent and demanded for the monies if the clearing agent had failed to remit the same as claimed by the Respondent.
27.The Appellant stated that instead the Respondent has focused its arguments on vicarious liability and its power to conduct a post-clearance audit. That it has failed to explain why it participated in the release of goods from a bonded warehouse without proof of payment of the appropriate amount of duties.
28.The Appellant implored the Tribunal to hold that it is not liable for the purported undervaluation of the goods and non-payment of duties and further hold that the Respondent and clearing agent are responsible for the under-payments and under-valuations.
29.The Appellant averred that the Respondent acted unreasonably by failing to demonstrate how it arrived at the value of the purportedly undervalued crude sunflower oil and that the Respondent’s claims that the Appellant undervalued its goods and arrived at this conclusion by computing the difference between the CFR values declared during importation to the payments that the Appellant made to its suppliers on the listed consignments despite the Respondent acknowledging that the Appellant was entitled to preferential RDL and IDF rates and factored that into its objection decision.
30.The Appellant averred that the following provisions of Section 122 of the EACCMA stipulate that the valuation of imported goods shall be done in accordance with the Fourth Schedule to the EACCMA:
31.The Appellant averred that it was not related to its suppliers and that therefore the transaction value method was the only appropriate method to Paragraph 2 (1) of the Fourth Schedule which provides as follows with regards to customs value of imported goods shall be the transaction value which is the price actually paid or payable for the goods:
32.The Appellant averred that Paragraph 9(2) of the Fourth Schedule to the EACCMA provides as follows regarding the costs of transport to the port of entry and insurance are to be added to the price payable to arrive as the customs value:
33.In support of the price payable for the goods, the Appellant provided the following documents to the Respondent:a.Commercial invoice;b.C17;c.Import declaration form;d.F147;e.Clearing agent’s invoice;f.Proof of payment of duties to clearing agent;g.Bank statement extract showing proof of payment; andh.Purchase order.
34.The Appellant averred that in particular, the proof of payment it shared demonstrated the amount actually paid to the seller of the goods and that the commercial invoice then demonstrates the price payable for the goods. The Appellant stated that it provided the Respondent with workings to demonstrate how it arrived at its customs value for the consignments in question and that having demonstrated both the amount paid and payable by adducing both spreadsheet workings and supporting documents it discharged the burden of proof on the issue of valuation of its imported goods.
35.The Appellant averred that the burden of proof then shifted to the Respondent who has not provided empirical evidence to demonstrate how it arrived at its customs values for the imports in question and that all the Respondent provided was a spreadsheet indicating the value purportedly posted to the supplier ledger but did not adduce the ledger nor any documentation to support its claim.
36.The Appellant propounded that the essence of a PCA is to verify the correctness of imports that were not inspected or not fully inspected at the time of importation and that the following provisions of Section 235 of the EACCMA provides that the Respondent may require an importer to produce documentation pertaining to an import:a.To produce all books, records and documents relating in any way to the goods; andTo answer any question in relation to the goods; andTo make declaration with respect to the weight, number, measure, strength, value, cost, selling price, origin, destination or place of transshipment of the goods, as the proper officer may deem fit.”
37.The Appellant averred that as detailed in the application for review, the Respondent was an active participant in the importation of each of the affected consignments and that its participation included the following:a.Licensing the bonded warehouse;b.Inspecting the goods;c.Confirming duty payment prior to release of the goods from the bonded warehouse;d.Signing off the C17;e.Supervised the loading of the goods into the trucks; andf.Authorizing release of the goods from the bonded warehouse.
38.The Appellant averred that the Respondent, in its review decision, has not refuted any of the above acts of participation and that whereas as stated above, a PCA is done to verify imports that were not fully verified at the point of importation, in this case, the Respondent fully verified the goods at the point of importation as follows:a.Nature of goods: the Respondent inspected the crude sunflower oil as it was entered into the bonded warehouse and as it was evacuated from the bonded warehouse tanks into lorries for transportation. Therefore, the Respondent audited the nature of the goods at the time of importation.b.Value and quantity of goods: At the point of entry of the goods into the bonded warehouse, the Respondent approved the declared value of the same. at the point of release of the goods from the bonded warehouse tanks, the Respondent verified the quantity of the goods and its corresponding value.c.Proof of duty payment: before loading of the goods from the bonded warehouse, the Respondent confirmed that the Appellant had fully settled duties then authorized the release of the goods.
39.The Appellant averred that the above steps constitute a full audit of the consignments, that if there was any discrepancy pertaining to these consignments, the Respondent had all relevant information and power to have uplifted the duty on the consignments before they left the bonded warehouse and that however, it did not adjust the value of the imports at that time.
40.The Appellant averred that the Respondent acted unreasonably by disallowing concessionary rates despite delays occasioned by force majeure and that Legal Notice number EAC/177/2019 permitted it to import 1,800 metric tonnes of white refined sugar for industrial use for the period 8th October 2019 to 7th October 2020.
41.The Appellant stated that during the DRS window, it commenced the importation of sugar and was able to import a number of consignments in good time but that however, one consignment was procured in good time but did not arrive at the port within the DRS window. The Appellant provided a timeline of the documentation for the consignment under dispute and the related documents to the Respondent in the Application for Review.
42.The Appellant averred that from the above, the Tribunal ought to note that the Maersk import invoice details that the goods were loaded onto the ship on 21st September and the shipping line specified that the estimated time of arrival (“ETA”) was 5th October 2020 which was within the DRS window and that once the goods were loaded onto the ship, the Appellant had no control over the speed of the vessel and restrictions imposed by various governments.
43.The Appellant stated that it commenced the procurement and importation process in July 2020 and due to movement restrictions occasioned by COVID, the shipping line delayed the consignment to a period after the DRS window lapsed. The Appellant submitted that it should not be punished for this for the following reasons:a.It commenced procurement and transportations in good time which would have resulted in the goods arriving at the port within the DRS window:b.It could not have reasonably predicted the road and sea movement restrictions imposed by all countries along the ship’s travel route; andc.There was no other way for the Appellant to import the goods as there were government-imposed movement restrictions and air transport would have been impractical due to the added cost which would have rendered the same commercially unviable.
44.The Appellant contended that the Respondent acted unreasonably by claiming that the Appellant did not demonstrate export of the goods despite provision of documents and the Respondent’s participation in the export process and the fact that only the Respondent could issue export certificates. The Appellant averred that during the period in question it exported some consignments of goods and accordingly treated them as zero-rated.
45.The Appellant contended that the Respondent demanded VAT of Kshs. 2,891,549.76 on account that it did not have the certificates of export for certain exports but that the export certificates that the Respondent referred to are generated on the Respondent’s iCMS or SIMBA systems and can only be generated by the Respondent’s officers. The Appellant averred further that as detailed above, it did not have any access or visibility to these systems hence it was unable to note if the systems did not generate an export certificate for particular consignments.
46.The Appellant averred that given that the certificates can only be generated on the Simba system not accessible to the Appellant, it has no control over the generation of the same. Therefore, it cannot be held liable for the absence of such certificates in the Respondent’s system.
47.The Appellant averred that the Respondent, being the only party that could generate an export certificate and having been in possession of information necessary to confirm the exports, acted unlawfully and unreasonably by failing to issue the certificates of exit and by claiming that the exports did not occur.
48.The Appellant averred that for each of the affected consignments, it adduced copies of the export documents in its possession including:
- Invoices;
- Bills of lading;
- Import documentation from the destination country;
- Certificates of exit;
- Export examination, stuffing and sealing witness form;
- Delivery notes; and
- Purchase orders
49.The Appellant asserted that these documents were sufficient to prove exportation of the goods, that despite being provided with these documents, the Respondent maintained that the exports did not occur. The Appellant therefore submitted that the Respondent acted unreasonably and unlawfully by punishing the Appellant for omissions on the part of the Respondent’s officers.
50.The Appellant averred that the Respondent erred by claiming that the it failed to charge VAT on a sale despite the fact that the Appellant charged VAT on the same and that one of the sales the Respondent claimed was an export and treated as zero-rated was actually a local supply which the Appellant had charged VAT on and adduced a copy of this invoice in its Application for Review.
51.The Appellant averred further that despite providing the Respondent with this information, the Respondent failed to address it in its review decision and by doing so, effectively confirmed its demand for duties on the same without reviewing the documentation provided.
52.The Appellant asserted that it had demonstrated that it maintained all relevant documentation and had no way of detecting any mischief done on the Respondent’s import system; that its import outside the DRS window was due to unforeseen circumstances i.e COVID and its related restrictions and that it provided documents that were sufficient to prove exportation of goods.
Appellant’s Prayers
53.The Appellant made the following prayers to the Tribunal:a.That the Appeal be allowed.b.That the part of the Respondent’s review decision dated 27th December 2024 confirming its demand for Kshs. 33,716,389 be set aside;c.That the Appellant’s Application for review dated 29th November 2024 be upheld.d.That costs of this Appeal are awarded to the Appellant.
Respondent’s Case
54.The Respondent’s case was as set out in its Statement of Facts dated 2nd April 2025 and filed on even date.
55.The Respondent averred that Section 148 of EACCMA espouses the Principle of Vicarious Liability and that it unambiguously provides as follows:
56.The Respondent stated that this section establishes a clear statutory duty on the part of the importer to take responsibility for the actions or omissions of their authorized customs agent and that the liability of the principal, the Appellant herein, is not conditional upon access to customs systems or trust in the agent but stems from the deliberate decision to appoint the agent to act on its behalf. The law does not exempt liability on account of ignorance, good faith, or technological limitations, nor does it condition liability on whether the principal had visibility into customs processing systems.
57.The Respondent averred that the Appellant has the responsibility for proper declaration. That Section 2(2)(a) of the EACCMA,2004 partly provides as follows:
58.The Respondent averred that the aforementioned section places an affirmative duty on the owner and importer to ensure that the declarations submitted to the Respondent reflect the actual transaction value of the goods and that it is the Appellant's responsibility, as the importer and owner, to reconcile supplier invoices, shipping documents, and payment records with the customs declarations submitted.
59.The Respondent posited that there is no legal exemption in the EACCMA absolving an importer from this duty due to delegation to a third party. That the obligation to make an accurate declaration cannot be outsourced-even when an agent is engaged, the ultimate legal responsibility remains with the owner of the goods.
60.The Respondent averred that the Appellant mischaracterizes Section 147 of EACCMA, which provides that an agent shall be deemed the owner for the purposes of liability. That the section does not relieve the actual owner of the goods of liability. It states as follows:
61.The Respondent averred that above reinforces the principle of concurrent liability, where both agent and principal are liable. The Respondent was therefore legally justified in proceeding against the Appellant in recovery efforts. That there is no requirement for the Respondent to pursue the agent first before approaching the principal.
62.The Respondent averred that the Appellant voluntarily appointed a licensed customs agent and opted to channel duty payments through the agent rather than directly to the Respondent. That the fact that this agent was licensed by the Respondent does not make the Respondent vicariously liable for the agent's misconduct. That licensing is a regulatory function and does not equate to a guarantee of performance or integrity.
63.The Respondent stated that moreover, licensing does not relieve the importer of the responsibility to monitor and audit their agent's actions, especially where significant tax exposure is involved. That the Appellant cannot substitute delegation for due diligence.
64.The Respondent argued that the Appellant's claim that access to the iCMS was limited is not legally material. That the customs declaration process is governed by statute, not convenience. That the absence of direct access to iCMS does not alter the statutory responsibilities under Sections 2 (2) (a) and 148 of the EACCMA and that furthermore, iCMS limitations are uniform across all importers and do not absolve any of them from the consequences of under-declaration.
65.The Respondent averred that the Appellant had the option to seek pre-clearance verifications, audit its agent's transactions, or use internal control mechanisms, but failed to do so. That the absence of access to a specific system does not create a statutory waiver.
66.The Respondent stated that Courts and Tribunals have consistently held that importers remain liable for the actions of their agents. That the case of PZ Cussons East Africa Ltd v Kenva Revenue Authority (2013) eKLR emphasized the importer's duty to ensure accurate declaration and compliance, even when the clearing agent is involved. Similarly, in Republic v KRA Ex-parte Cosmos Ltd [2016] eKLR, the court recognized that agents input data, but did not excuse the principal from liability, reiterating the core principle of vicarious responsibility.
67.The Respondent averred that as a public officer, it is bound by the Public Finance Management Act, 2012 and Article 201 of the Constitution of Kenya, 2010 (hereinafter “the Constitution”), which emphasizes transparency, accountability, and responsible taxation. That allowing importers to deflect blame entirely onto agents would incentivize tax evasion by proxy and undermine the customs enforcement system.
68.The Respondent maintained that the Appellant's submission of bank statements proving payment to the agent does not establish duty payment to the Respondent and that the obligation is for actual duty remittance to the Respondent, not just proof of remittance to a third party and further that if the Appellant suspects fraud by the agent, civil remedies exist under contract or tort law, but that does not displace the Respondent's statutory enforcement rights.
69.The Respondent averred that claims by the Appellant of collusion or failure to investigate are speculative and unsupported by evidence. That the Respondent has no legal obligation to disclose internal investigations or enforcement action strategies to the Appellant.
70.The Respondent asserted that its failure to suspend a license does not nullify the importer's statutory duties. That regulatory discretion cannot be used to extinguish legally imposed obligations on an importer.
71.The Respondent averred that the Appellant's claim that the Respondent "connived" with the clearing agent lacks any supporting evidence. That these are unsubstantiated accusations, meant to distract from the Appellant's own failure to oversee and audit its appointed agent. That public confidence in revenue administration cannot be undermined by vague insinuations of corruption without proof.
72.The Respondent averred that following the PCA pursuant to Section 234, 235 and 236 of the EACCMA, it conducted a reconciliation of values declared to customs against supplier payment ledgers and bank payment excerpts submitted by the Appellant. That the audit revealed material discrepancies between the transaction values declared in import documentation (CFR values) and the actual amounts paid to suppliers of crude sunflower oil.
73.The Respondent posited that the Appellant, in its own response during the objection process, admitted the existence of a variance between declared and paid values, although it attempted to justify this variance. That this variance was the cornerstone of the Respondent's determination of undervaluation and that contrary to the Appellant's submission that the Respondent "failed to demonstrate how it arrived at the purportedly undervalued figures," the Respondent based its findings on the following:a.Supplier ledger reconciliations;b.Bank payment confirmations;c.Clearing agent declarations; andd.Import documentation including commercial invoices and forms C17B and C17C.
74.The Respondent averred that while the Appellant invokes Section 122 and the Fourth Schedule of the EACCMA on customs valuation, it failed to demonstrate that the transaction value declared was consistent with the actual amount paid for the crude sunflower oil. That the Fourth Schedule clearly defines the transaction value as the price actually paid or payable, and this must be supported by evidence. That the Respondent's reconciliation showed the declared values were systematically lower than the actual payments, thereby justifying the uplift.
75.The Respondent averred that it is empowered under Section 235 of the EACCMA to conduct PCA and that the law provides a five-year window for the Respondent to review, verify, and assess additional duties in respect to any import transaction. The assertion that physical presence of customs officers at the time of release limits this authority is legally unfounded and contrary to settled principles of customs enforcement.
76.The Respondent averred that verification of physical goods, quantities, and procedural documentation does not equate to an endorsement of the declared value and that customs valuation is based on documentary evidence and financial data, which in many cases only become fully accessible after the event, physical clearance is often based on trust and good faith, but is not the final approval of valuation.
77.The Respondent averred that it issued the assessment after inviting and considering submissions from the Appellant. That the assessment was neither arbitrary nor speculative; it was informed by the actual bank payments and ledgers the Appellant submitted, which it has never disowned. The Respondent asserted that it afforded the Appellant an opportunity to respond, and that a full objection process took place as envisioned under Section 229 of the EACCMA.
78.With regard to the Appellant’s challenge regarding the disallowance of concessionary duty rates on 96 metric tonnes of white refined sugar entered outside the duty remission window under Legal Notice No. EAC/177/2019. The Respondent stated that while the Appellant attributes the delayed arrival to COVID-19-related disruptions, the legal framework governing duty remission is unequivocal and mandates strict compliance with time-bound eligibility criteria.
79.The Respondent stated that Legal Notice No. EAC/177/2019, issued under the East African Community Customs Management (Remissions) Regulations, granted the Appellant approval to import 1,800 metric tonnes of white refined sugar for industrial use under a DRS and that the Legal Notice clearly states that this concession was valid only for goods entered between 8th October 2019 and 7th October 2020. That this window was a strict, gazetted, and non-negotiable condition of the remission.
80.The Respondent averred that the 96 metric tonnes of sugar were entered into customs on 21st October 2020 under Customs Entry No. 2020ICD244436, well after the duty remission scheme had closed on 7th October 2020.
81.The Respondent averred that the legal definition of "entry" for customs purposes under Section 2 of the EACCMA refers to the official act of presenting goods and documentation to customs for clearance. That it is this date not the shipment date, loading date, or estimated time of arrival that determines eligibility under the remission framework.
82.The Respondent propounded that duty remission is not a right; it is a conditional, time-bound fiscal concession. That the Court in Commissioner of Domestic Taxes v Menengai Oil Refineries Ltd [2021] eKLR held that:
83.The Respondent averred that it is bound by the rule of law and cannot, under any circumstances, unilaterally extend or modify a gazetted legal notice. That to do so would be ultra vires and undermine the sanctity of public fiscal administration.
84.The Respondent stated that while it acknowledges the global challenges posed by the pandemic, force majeure is not a recognized ground for exempting compliance with the DRS timelines under either the EACCMA or Legal Notice No. EAC/177/2019.
85.The Respondent averred that allowing the Appellant's appeal would set a precedent that undermines the predictability and integrity of the remission framework. That if exceptions were permitted on the basis of logistical or external challenges, this would lead to the following:a.Invite inconsistent application of the law;b.Erode public confidence in regulatory enforcement; andc.Create uncertainty for other importers who adhered to the timelines.
86.The Respondent averred that its denial of remission for the 96 tonnes was not punitive, but a lawful and necessary enforcement of a clear statutory framework and that the Appellant is not being punished for delays, but rather held to the same legal standard as all other participants in the DRS.
87.The Respondent stated that the fact that the Appellant initiated the procurement process in early July 2020 and that shipment was loaded within the DRS window is appreciated-but ultimately, it is the entry date that governs duty remission eligibility, and entry occurred after 7th October 2020.
88.On the Appellant's claims regarding VAT assessments issued on goods that were allegedly exported but lacked official Certificates of Export and the claim that VAT was levied on a local supply already taxed, the Respondent averred that its actions are grounded in statute, procedure, and judicial precedent, specifically under the Value Added Tax Act, CAP 476 of the Laws of Kenya (hereinafter “VATA”) and EACCMA and relevant decisions from Kenyan courts.
89.The Respondent averred that the Certificate of Export is an essential document in confirming the actual exit of goods from Kenya. It is automatically generated by the Simba or iCMS systems once goods are verified by customs officers and recorded as exported. That while the Appellant argues that only the Respondent can generate these certificates, the exporter bears the primary responsibility to ensure all required documents are properly processed, collected, and retained, this principle was upheld in the case of Republic v Kenya Revenue Authority Ex Parle Export Trading C01npany Limited [2017] eKLR, where the High Court stated as followed:
90.The Respondent maintained that failure to secure and submit export certificates amounts to non-compliance with both VAT and customs laws, irrespective of the exporter's internal challenges or reliance on its officers.
91.The Respondent posited that while the Appellant presented delivery notes, invoices, purchase orders, and even import documentation from recipient countries, these do not override the legal requirement for the Certificate of Export and that as held in Unilever Kenya Ltd v Commissioner of Domestic Taxes [2019] eKLR, the court emphasized as follows:
92.The Respondent asserted that accordingly, it was justified in rejecting the zero-rating of the listed supplies for which export certificates were missing.
93.The Respondent averred that the Appellant's claim that its role in inspecting, sealing, and tracking goods implies legal liability for missing certificates is misplaced. That it plays a regulatory and facilitative role, not a custodial one.
94.The Respondent relied on the case of Commissioner of Customs v Doshi Ironmongers Ltd [2015] eKLR, where the Court of Appeal noted as follows:
95.The Respondent acknowledged that the VAT rate applied during part of 2020 was indeed 14% and not 16% and that upon review of the additional documents submitted by the Appellant, the Respondent revised the assessment accordingly from Kshs. 2,891,549.76 to KES 2,089,741.00, reflecting the correct rate and eliminating any overlap on the local supply mistakenly treated as an export. That this revision demonstrates the Respondent's willingness to objectively assess the evidence and act fairly, while remaining within the limits of the law.
96.The Appellant stated that on the issue of a local supply allegedly double-taxed, it reviewed the invoice presented and removed the duplicated VAT component from the final assessment, that therefore, the risk of double taxation had already been cured through administrative review.
97.The Respondent submitted that the exporters bear the legal burden of ensuring compliance with VAT zero-rating requirements, including obtaining and presenting certificates of export and that supplementary documents, while helpful, do not substitute the official evidence required under statute.
98.The Respondent maintained that it acted lawfully and reasonably in assessing VAT on exports where such evidence was missing. That the revised assessment addressed valid concerns raised by the appellant, including rate corrections and removal of any duplicative VAT charges.
Respondent’s Prayers
99.The Respondent sought the following reliefs:a.That the Tribunal upholds and affirm its Review Decision dated 27th December 2024; andb.That the appeal is dismissed with costs to the Respondent.
Submissions By The Parties
100.Parties’ submissions dated and filed on 25th November, 2025 were adopted by the Tribunal during the hearing on 10th December, 2025.
Appellant’s Submissions
101.The Appellant identified six issues for determination as shown below:a.Whether the Respondent acted unfairly by punishing the Appellant for actions of its clearing agent that were outside of the Appellant's control;b.Whether the Respondent acted unreasonably by failing to demonstrate how it arrived at the value of the purportedly undervalued crude sunflower oil;c.Whether the Respondent acted unreasonably and unfairly by claiming that the Appellant undervalued its imports despite the Respondent having been present during the importation process, having inspected the goods and having authorised the release of the goods from the port;d.Whether the Respondent acted unreasonably by disallowing concessionary rates despite delays occasioned by force majeure;e.Whether the Respondent acted unreasonably by claiming that the Appellant did not demonstrate export of the goods despite provision of documents and the Respondent's participation in the export process and the fact that only the Respondent could issue export certificates; andf.Whether the Respondent erred in law and in fact by claiming that the Appellant failed to charge VAT on a sale despite the fact that the Appellant charged VAT on the same.
102.The Tribunal observed that in analysing the issues raised for determination in the Appellant’s submissions, it rehashed its statement of facts and hence the same were not reiterated in this Judgement.
Respondent’s Submissions
103.The Respondent identified three issues for determination namely:i.Whether the Appellant is liable for the actions and omissions of its agent under the principle of Vicarious Liability under Section 148 of EACCMA.ii.Whether the Appellant has discharged its burden of proof.iii.Whether the Respondent lawfully raised the demand for short levied taxes.
104.The Tribunal noted that in analysing the issues it identified for determination in its submissions, the Respondent rehashed its statement of facts and the same have not been reproduced by the Tribunal.
Issues For Determination
105.The Tribunal having carefully considered the parties’ pleadings, documentation and submissions finds that the singular issue that call for its determination is as follows:Whether the Respondent was justified in demanding short levied taxes from the Appellant.
Analysis And Findings
106.The Tribunal having determined the issue that falls for its determination proceeded to analyse the same as here below:Whether the Respondent was justified in demanding short levied taxes from the Appellant.
107.The Tribunal noted that the short-levied taxes in dispute relate to undervaluation of crude sunflower oils, importation of white refined sugar outside the DRS window and the claim for VAT on exports without proof of exit. The Tribunal analysed each item as follows:a.Undervaluation of Crude Sunflower Oil1.In the Tribunal’s analysis, the point of contention on valuation of crude sunflower oil revolved around the two issues, namely the valuation method and liability for the said undervaluation.i.Valuation Method
109.The Tribunal notes the Appellant’s contention that the Respondent did not disclose how it arrived at the figures used to determine that there was an undervaluation and further that the Respondent ought to have used the transactional value method as prescribed in Section 122(1) of EACCMA before resorting to any other valuation method. The Respondent on its part stated that it identified the undervaluation by comparing the values recorded in the company’s foreign suppliers ledgers as bills and payments for the crude sunflower oil and those declared to customs.
110.The Tribunal also notes that the Appellant’s position that it provided the Respondent with workings and documentation in support of its declared values for customs, that on the contrary the Respondent only provided a spreadsheet indicating values purportedly posted to the ledger but did not adduce the ledger nor any documentation to support it’s the source of its customs values.
111.The Tribunal must as a first step in resolving the valuation dispute take note of the parties stated custom values, provide a basis for the valuation and justification of how they arrived at the said custom values as this would then enable inquisition of whether the choice of valuation method and the process of valuation complied with the provisions of Section 122 of EACCMA and the Fourth Schedule to the EACCMA.
112.In the instant appeal, the Tribunal notes the Appellant’s averment that that it arrived at the declared customs value in accordance with Section 122(1) of EACCMA and provided documents to show that the declared value was indeed the transaction value. The Tribunal also notes the Respondent’s averment that it relied on values as captured in the sales ledger of the Appellant’s suppliers and compared the same with the declared customs values but that however the Respondent neither provided support for its averments, nor did it attach the supplier ledgers or demonstrate to the Tribunal the source / basis of the custom values that gave rise to variance.
113.It is trite that the burden of proof in tax matters rests with a taxpayer until it makes out a prima facie case then the burden shifts to the Commissioner to rebut the prima facie case. In the instant appeal, the Appellant demonstrated through workings and documentation on how it arrived at its customs value of the consignment in question, though the Respondent presented a different set of cost and freight (CFR) values with a variance analysis, it failed to support the said values by either providing the sales ledgers of the Appellant’s suppliers, the reasons of departure from the Transactional value method or a computation of how it arrived at the CFR values that gave rise to the impugned variance.
114.The Tribunal is of the view that it follows that without a proper basis of identification of the custom value giving rise to the impugned variances, the Respondent failed to justify its actions in demanding for short levied taxes on account of unsubstantiated variances.
115.The Tribunal cites the case of Kenya Revenue Authority v Man Diesel & Turbo Se. Kenya{20211 KEHC 13347(KLR), where the High Court at Paragraph 39 held as follows:
116.The Tribunal finds that the Respondent produced a worksheet indicating variances between the prices declared by the Appellant and those it claimed to have obtained from the Appellant’s suppliers ledgers. The Respondent failed to corroborate the evidence with the source of the said variances. The Respondent therefore failed to controvert the position that the Appellant had not undervalued crude sunflower oil.
117.The Tribunal finds and holds that the demand for short levied taxes based on unsubstantiated computations unsustainable in law and therefore the Respondent was not justified in demanding short levied taxes on undervaluation of crude sunflower oil.ii.Liability for undervaluation
118.Having determined as above, the issue of who bears liability for the undervaluation of crude sunflower oil has been rendered moot.b.Importation of white refined sugar outside the DRS window
119.The Tribunal noted that the Appellant was granted duty remission vide Legal Notice number EAC/17712019 which permitted it to import 1,800 metric tonnes of white refined sugar for industrial for the period 8th October 2019 to 7th October 2020. The impugned consignment however entered into customs on 26th October 2020 under customs Entry No. 2020ICD244436 approximately 3 weeks after close of the DRS window.
120.The Tribunal observes that the terms of Legal Notice number EAC/17712019 were not in dispute, it also observes that it was neither in dispute that the impugned consignment entered the country after the DRS period had lapsed. The parties herein differed on whether the circumstances that led to the delay in entry of goods warranted extension of or exception on DRS timelines.
121.The Tribunal notes in this regard, the Appellant’s averment that during the DRS window, it commenced the importation of sugar and was able to import a number of consignments in good time. That one consignment was procured in good time but did not arrive at the port within the DRS window.
122.The Tribunal also notes that the Appellant provided a timeline of the documentation for the consignment in dispute indicating that the goods were loaded onto the ship on 21st September, 2020 with an estimated arrival time of 5th October, 2020 within the DRS timeline, however due to COVID 19 movement restrictions, the shipping line delayed the consignment to a period after the DRS window had lapsed that this was beyond the Appellant’s control. It was the Appellant’s contention that the Respondent acted unreasonably by disallowing concessionary rates despite the delay having been occasioned by force majeure.
123.The Tribunal notes that on its part, the Respondent asserted that the Legal Notice does not contain a force majeure clause, nor does it provide a mechanism for extensions or exceptions and further that importers bear the risk of logistical delays, and it is incumbent upon them to manage importation timelines, including allowing for unforeseen events. That the entry of goods into the customs territory and the triggering of DRS eligibility are based solely on statutorily defined timelines, not equitable considerations.
124.The Tribunal notes that whilst Section 140 of EACCMA provides as follows:1.The Council may grant remission of duty on goods imported for the manufacture of goods in a Partner State.2.The Council may prescribe regulations on the general administration of the duty remission under this section.3.The manufacturer, and the approved quantity, of the goods with respect to which remission is granted under this section shall be published by the Council in the Gazette.”
125.Regulation 6 of EACCMA (Duty Remission) Regulations 2008 stipulates as follows:1.Remission of duty granted under these Regulations shall be valid for a period of twelve months from the date of the publication of the grant in the Gazette.2.The Council, may on the application by a manufacturer, grant remission on such further quantity of goods to be imported by the manufacturer under these Regulations.3.The Council may, on application by a manufacturer, extend the period referred to in sub regulation (1) for a further period of six months.”
126.The terms of regulation 6 of EACCMA are couched in mandatory terms that the remission of duty shall be valid for 12 months and that extension may be sought in accordance with regulation 6(3) for a further period of 6 months.
127.Further, Section 2(1) of EACMMA defines the term import as meaning:Section 120 (1) of EACMMA provides as follows:‘Subject to subsection (3) and section 94, import duty shall be paid at the rate in force at the time when the goods liable to such duty are entered for home consumption:Provided that it the case of goods imported overland the time of entry of such goods for home consumption shall be deemed to be the time when the import duty on the goods is paid.”
128.The Tribunal asserts its holding in Highlands Drinks Limited v Commissioner of Customs & Border Control (Appeal 1364 of 2022) [2023] KETAT 935 (KLR) (Commercial and Tax) (20 December 2023) where it held as follows:
129.The Tribunal further finds that pursuant to Section 120 of EACCMA, the time of entry of the goods determines the rate of duty applicable. The consignments arrived on 26th October, 2020 when the DRS period had lapsed.
130.The Tribunal notes that under the terms of exemption the Appellant had the option of applying for extension of the Duty Remission period having been fully aware that movement restrictions had been enforced due to COVID and that the arrival date of the consignment had become uncertain, it failed or neglected to do so. The reasons for the delay notwithstanding, the consignment entered customs outside the DRS window and without an approval for extension, the Appellant cannot benefit from the DRS scheme.
131.The Tribunal therefore finds that the Respondent was justified in demanding for short levied taxes on the consignment imported out of the DRS window.b.Claim for VAT on exports without proof of exit
132.The Tribunal notes that the Appellant exported some consignments of goods which it treated goods as zero-rated, the Respondent disputed the exports on the basis that the Appellant had not produced the certificates of export and demanded VAT on the same. The Appellant contended that export certificates are generated on the Respondent’s iCMS or SIMBA systems and can only be generated by the Respondent’s officers, that it did not have any access or visibility to these systems and therefore was unable to note if the systems did not generate an export certificate for particular consignments.
133.To support its case that the disputed consignments were exported the Appellant adduced copies of the export documents in its possession of the consignments including: invoices, bills of lading, import documentation from the destination country, certificates of exit, export examination, stuffing and sealing witness form, delivery notes and Purchase orders.The Appellant submitted that the documents were sufficient to prove exportation of the goods.
134.The Tribunal noted that the Respondent maintained the position that it was the Appellant’s duty to prove export and that the Certificate of Export is an essential document in confirming the actual exit of goods from Kenya.
135.The Respondent, despite concurring that the certificate is automatically generated by the Simba or iCMS systems once goods are verified by customs officers and recorded as exported insisted that the exporter bears the primary responsibility to ensure all required documents are properly processed, collected, and retained. It relied on the case of Republic v Kenya Revenue Authority Ex Parte Export Trading Company Limited [2017] eKLR, where the High Court stated:
136.The Tribunal notes that inspite of the Appellant producing the above-mentioned documentation, the Respondent maintained that failure to secure and submit export certificates amounts to non-compliance with both VAT and customs laws, irrespective of the exporter's internal challenges or reliance on Respondent’ officers and that the supplementary documents adduced by the Appellant do not replace official export evidence. The Respondent cited Unilever Kenya Ltd v Commissioner of Domestic Taxes [2019] eKLR, where the court emphasized that:
137.Section 223 of the EACCMA, 2004 spells out as follows on burden of proof;
138.The Tribunal further notes that the further Section 223 (b) of the EACCMA affirms that “the averment by the Commissioner on any matter or document shall be prima facie evidence of such fact;”
139.The Tribunal is guided by the High Court’s holding in Commissioner for Investigations and Enforcement vs Menengai oils limited Tax appeal no 40 of 2020 where the court held as follows:
140.Accordingly, the Respondent was justified in charging VAT on supplies for which export certificates were missing as the statutory requisite evidence to prove their export was not provided by the Appellant. It was the Appellant’s role at all times to collect, keep and produce prove that the goods in question had indeed been exported. The Tribunal notes that the commissioner’s role is facilitative and therefore does not replace the Appellant’s legal duty.
141.The Tribunal observes that Appellant's claim that the Respondent's role in inspecting, sealing, and tracking goods implies legal liability for missing certificates is misplaced. The Respondent plays a regulatory and facilitative role and not a custodial one.
142.The Tribunal therefore finds that the Respondent was justified in its demand for short levied taxes on account of goods said to have been exported but whose prove of export was not established by the Appellant.
Final Decision
143.The upshot of the foregoing is that the Appeal is partially succeeds and the Tribunal accordingly proceeds to make the following Orders:a.The Appeal be and is hereby partially allowed.b.The Respondent’s review decision dated 27th December, 2024 be and is hereby varied as follows:i.The assessment relating to undervaluation of crude oil is set aside;ii.The assessment relating to short levied taxes on importation of white sugar outside the DRS period is upheld; andiii.The assessment on VAT for goods without proof of export is hereby upheld.c.Each party to bear its own costs.It is so Ordered.
DATED AND DELIVERED AT NAIROBI ON THIS 9TH DAY OF FEBRUARY, 2026.…………………………………. CHRISTINE A. MUGA CHAIRPERSON………………………….. …………….…………….. DR. TIMOTHY VIKIRU BERNADETTE GITARI MEMBER MEMBER…………………………. ……….…………………… DOMINIC K. RONO BILLY MIJUNGU MEMBER MEMBER