Commissioner of Customs & Border Control v Sai Pharmaceuticals Limited (Customs Tax Appeal E048 of 2023) [2025] KEHC 12267 (KLR) (Commercial and Tax) (29 August 2025) (Judgment)

Key Facts

Tax Type

Issues

• The Court determined whether the Tax Appeals Tribunal erred in law and/or fact in classifying EVIT 200 and EVIT 400 Capsules as medicaments under HS Code 3004.50.00, considering their therapeutic uses, high-dose Vitamin E content, and the Appellant's prior rulings versus subsequent reclassification as food supplements under HS Code 2106.90.91.
• The Court evaluated if the Tribunal's judicial notice of the Neuroforte case (TAT No. 732 of 2022) was legally sound, focusing on the procedural similarity between cases rather than factual equivalence, and whether this approach promoted administrative consistency in customs classifications.
• The Court examined the legal relationship between the Pharmacy and Poisons Board's regulatory classification of EVIT 200/400 as medicaments and the Appellant's customs classification, including whether the Board's expert determination carried persuasive evidentiary weight despite not being strictly binding.
• The Court assessed if the Appellant violated procedural fairness by withholding the laboratory report used to reclassify EVIT 200/400 as food supplements, despite citing it as the basis for their decision, and whether this omission deprived the Respondent of a fair opportunity to challenge the reclassification.

Tax Years

Holdings

• The court agreed with the Tribunal's judicial notice of TAT No. 732 of 2022 (Neuroforte case), emphasizing procedural consistency over product similarity. The Tribunal correctly recognized the Appellant's recurring pattern of reclassification without transparency.
• The court upheld the Tax Appeals Tribunal's decision that EVIT 200 and EVIT 400 Capsules are medicaments classifiable under HS Code 3004.50.00, based on their therapeutic uses, high dosage of Vitamin E, and manufacturer literature. The Appellant's reclassification under HS Code 2106.90.91 as food supplements was set aside.
• The court found the Appellant failed to supply the laboratory analysis report as evidence to the Tax Appeals Tribunal, violating procedural fairness and statutory obligations under Section 223(c) EACCMA, 2004. This omission weakened the Appellant's case and denied the Respondent a fair challenge to the reclassification.
• The court ruled the Appellant is not strictly bound by the Pharmacy and Poisons Board's classification but must give it substantial evidentiary weight. The Appellant failed to provide a robust justification for deviating from the Board's expert determination of the products as medicaments.

Remedies

• The judgment of the Tax Appeals Tribunal in Nairobi TAT No. 731 of 2022 is upheld, setting aside the Commissioner's review decision dated 3rd June 2022 classifying EVIT 200 and EVIT 400 as food supplements.
• The appeal by the Commissioner of Customs & Border Control against the Tax Appeals Tribunal's judgment is hereby dismissed.
• The costs of this Appeal shall be borne by the Appellant and paid to the respondent.

Tax Issue Category

Legal Principles

• The court applied judicial notice of the Neuroforte case's procedural pattern to highlight administrative consistency, a principle not explicitly enumerated in the schema but critical to procedural fairness and taxpayer expectations.
• The court emphasized its appellate role under Section 56(2) of the Tax Procedure Act, deferring to the Tax Appeals Tribunal's factual findings unless they were perverse or legally erroneous, reflecting a Wednesbury reasonableness standard.
• The court acknowledged the distinct mandates of the Pharmacy and Poisons Board (public health regulation) and Kenya Revenue Authority (revenue collection), emphasizing that classifications for different purposes (registration vs. customs) are governed by separate legal frameworks.
• The court held that the Commissioner of Customs had a duty to disclose the laboratory analysis report as evidence under Section 223(c) EACCMA 2004, aligning with the principle that the party initiating a tax dispute must substantiate their claims.

Disputed Tax Amount

Precedent Name

• Republic vs. KRA ex parte Beta Healthcare International Ltd
• Kenya Revenue Authority vs Man Diesel & Turbo Se, Kenya
• Mercy Kirito Mutegi vs Beatrice Nkatha Nyaga & 2 others

Cited Statute

• Part 8 of the Protocol on the establishment of the East African Customs Union
• Tax Procedure Act, 2015
• East African Community Customs Management Act, 2004
• Tax Appeal Tribunal Act, 2013
• Kenya Revenue Authority Act

Judge Name

Passage Text

• The inconsistency in the Appellant's conduct using laboratory reports for initial classification but refusing to provide them for reclassification was never a mere technicality... The onus rested on the Commissioner to justify a change in classification.
• EVIT products are intended for the prevention or treatment of diseases as shown by the manufacturer's literature and high dosage, then by the very terms of these notes, they cannot be classified under 21.06 and must fall under 30.03 or 30.04.
• The determination by the Pharmacy and Poisons Board, as the statutory body responsible for regulating pharmaceutical products in Kenya, that a product is a 'medicine' or 'medicament' remains an expert opinion... may only be disregarded for a valid and plausible reason.