Sai Pharmaceuticals Limited v Commissioner of Customs & Border Control [2023] KETAT 976 (KLR)

Sai Pharmaceuticals Limited v Commissioner of Customs & Border Control (Tax Appeal 731 of 2022) [2023] KETAT 976 (KLR) (6 October 2023) (Judgment)

Neutral citation: [2023] KETAT 976 (KLR)

Republic of Kenya

In the Tax Appeal Tribunal

Tax Appeal 731 of 2022

RM Mutuma, Chair, EN Njeru, RO Oluoch & D.K Ngala, Members

October 6, 2023

Between

Sai Pharmaceuticals Limited

Appellant

and

Commissioner of Customs & Border Control

Respondent

Judgment

Background 1. The Appellant is a limited liability company duly incorporated under the Companies Act Cap 486 of the laws of Kenya, and is in the business of pharmaceutical drugs importation, registration, administration, storage, sales and financial accounting.

2. The Respondent is a principal officer appointed under Section 13 of the Kenya Revenue Authority Act and the Kenya Revenue Authority is mandated with the responsibility for the assessment, collection, receipting and accounting for all tax revenue as an agent of the Government of Kenya. The Respondent is also mandated with the responsibility for the administration and enforcement of the statutes set out in the schedule to the said Act.

3. The Appellant imported two health products namely Neuroforte tablets EVIT 200 and EVIT 400 and declared them under tariff code EAC/CET 3004. 50. 00.

4. The Respondent obtained samples of two products from the consignment and presented for examination at its Inspection and Testing Centre (I&TC). Consequently, a tariff classification decision dated 24th June 2023 was prepared and communicated to the Appellant reclassifying the products to the tariff code EAC/CET 2106. 90. 91.

5. The Appellant applied for a review of the decision to classify the product in HS code 2106. 90. 91 stating that the two products were medicaments and were classifiable under HS code 3004. 50. 00 as indicated in its entries.

6. The Respondent called for additional documents and upon review of the application issued its response on 21st October 2021 in which it upheld that the samples of EVIT 200 and EVIT 400 examined were considered dietary supplements based on vitamin E and therefore classifiable under HS code EAC/CET2106. 90. 91.

7. Dissatisfied with the Respondent’s decision the Appellant filed the Appeal herein with the Tribunal.

The Appeal 8. The Appellant filed its Memorandum of Appeal on 14th July 2022 and set out the following grounds of appeal:i)That the Respondent erred in law and fact in the classification of Neuroforte tablets EVIT 200 & EVIT 400 under EAC/CET HS Code 2106. 90. 91. ii)That the Respondent erred in law and fact by making a demand for Kshs 1,427,496 as unpaid taxes on its products.iii)That the Commissioner ‘s decision to classify EVIT 200 and EVIT 400 tablets as food supplements is an infringement of the Appellant’s constitutional right and exposed it to financial hardship.

The Appellant's Case 9. The Appellant has set out its case on the Statement of Facts dated 13th July 2022 and filed on 14th July 2022, the witness statement of Dr. Parshotam Kotecha Bhavesh filed on 7th November 2022, the bundle of documents filed on 14th February 2023 and the written submissions filed on 14th February 2023.

10. The Appellant stated that it is registered by the Pharmacy and Poisons Board with the current certificate of registration and offers the services of drug registration, imports and administration, sales, storage, and financial accounting on LR 3734/1401.

11. The Appellant also stated that it holds the drug retention license for EVIT 200 and EVIT 400 capsules which have been registered as medicines under the Pharmacy and Poisons Act.

12. The Appellant contended that on 22nd July 2016, the Respondent gave a ruling and classified EVIT 200 capsules as a medicament for human consumption consisting of mixed or unmixed products for therapeutic or prophylactic uses, put up in measured doses (including those in the form of transdermal administration systems), or in forms of packages for retail sale which is classifiable in EAC/CET HS Code 3004. 50. 00.

13. The Appellant stated that the Respondent’s rulings of 22nd July 2016 and 3rd August 202016 were respectively based on;i)Laboratory analysis from EVIT 200 and EVIT 400 capsules samples No. 070516 and 07616 respectively;ii)The Martindale 37th Edition, a reference book on drugs; andiii)Correct application of Harmonized Systems Classification of the product which gave classification of the product as a medicament in HS code 3004. 50. 00.

14. The Respondent averred that based on the strength of Respondent’s rulings of 22nd July 2016 and 3rd August 2016, the Appellant imported EVIT 200 and EVIT 400 capsules products under the Heading HS Code 3004. 50. 00, and in a complete turn of events the Respondent made a ruling on 24th June 2021 in respect of EVIT 200 capsules, and on 21st October 2021 in respect of EVIT 400 capsules, and re-classified the said products as dietary supplements under the Tariff HS code EAC/CET 2106. 90. 91.

15. The Appellant further averred that the Respondent stated that upon examining the samples provided found that the products EVIT 200 and EVIT 400 capsules are indicated as strong antioxidants which help maintain healthy circulation, improve the complexion and maintain healthy skin. That it further stated that it considered the Amendment to the Explanatory Notes by the HS Committee’s 64th Session in arriving at the conclusion EVIT 200 and EVIT 400 are considered as dietary supplements to be classified in EAC/CET 2106. 90. 91.

16. The Appellant stated that it applied for a review of the Respondent’s reclassification decision vide its letter of 9th July 2021 where the Appellant supported its appeal with the manufacturer‘s drug license (Geltic Private Ltd), the certificate of pharmaceutical product, the food safety and standards Authority of India guidelines, clinical trials, review papers, international medical journals and publications, prescriptions of EVIT 200 and EVIT 400 capsules and the manufacturer’s literature.

17. The Appellant on 8th November 2021 requested for the laboratory test analysis- on samples taken from entry 21NBOIM404216706.

18. It is further the Appellant’s contention that the Respondent’s demand for additional taxes of Kshs 1,427,496. 00 in Excise duty, Value Added Tax and penalties on 15th March 2022 was based on erroneous rulings of 24th June 2021 and 21st October 2021 for EVIT 200 and EVIT 400 capsules respectively. The Appellant further contended that no laboratory analysis was provided from samples collected from entry No.21NBOIM404216706, and also contends that entry No. 21NBOIM408847511 was never sampled and tested to warrant a demand for additional taxes.

19. It is also the Appellant’s contention that the rulings of 22nd July 2016 and 3rd August 2016 which gave classification of EVIT 200 and EVIT 400 capsules respectively as HS code 3004. 50. 00 have not been withdrawn.

20. The Appellant also stated that on 3rd June 2022, the Respondent made rulings on the Appellant’s appeal and maintained that EVIT200 and EVIT 400 capsules were food supplements classifiable under EAC/CET 2106. 90. 91.

21. It is the Appellant’s contention that EVIT 200 and EVIT 400 exceeds the Recommended Daily Amount (RDA) of 3 to 12 mg for vitamin E, and explained that Vitamin E above 40mg/50mg if taken daily would be toxic and the 200mg and 400mg in the product exceeded the RDA hence has to be dispensed by a physician.

22. The Appellant submitted that the Respondent erred in law and fact in wrongfully classifying EVIT 200 and EVIT 400 capsules under tariff code HS 3004. 50. 00 and averred that the Respondent collected samples of the products and confirmed them to be medicaments consisting of vitamins put up in measured doses for therapeutic or prophylactic use for the treatment of Vitamin E deficiency, in cystic fibrosis or cholestasis, and therefore classifiable in HS code 3004. 50. 00.

23. The Appellant asserted that the Pharmacy and Poisons Board is the authority that determines whether drugs are medicaments and that it was not in dispute that the Appellant was licensed by the said Board to distribute EVIT 200 and EVIT 400, which were registered by the Board as medicaments under certificates no. H2005/337 and H22005/338 in 2008.

24. The Appellant further submitted that the Respondent failed or refused to furnish it with any laboratory analysis report from its laboratory confirming that the product was not a medicament as alleged.

25. The Appellant submitted that the guide to classification of goods is provided for under the East African Community‘s Harmonized Commodity Description and Coding System contained in the EAC/CET, 2017.

26. The Appellant further submitted that the EAC/CET provides for the relevant aid for interpretation together the Explanatory Notes issued by the WCO. The Explanatory Notes give clarification, opinion and guidelines on the interpretation of the Harmonized System.

27. The Appellant cited the case of Republic -vs- Commissioner of Customs exparte Muichand Ramji & sons Ltd (2010) eKLR where the court stated;“... to ascertain what code is applicable to particular goods one has to look at the General Interpretative Rules for the classification of goods which sets out the principles of interpretation in conjunction with the various chapters describing the goods, the duty due.”

28. The Appellant further cited the case of Unga Ltd -vs- Commissioner of Customs and Excise (1978)KLR1 where the court observed that in classifying of goods one had to look at the heading, the notes and then the sub-headings.

29. The Appellant submitted that the Respondent applied Chapter 21 of the HS code under the EAC/CET which gives the Classification of the miscellaneous edible preparations.Heading HS code 21. 06 covers;“food preparations not elsewhere specified or included”,

While Sub-heading HS code 2106. 90. 91 covers“food supplement”

30. The Appellant further submitted that Explanatory Notes show what is required of products that fall under HS code 21. 06; i.e., food preparations not elsewhere specified as 2106. 10 and 2106. 90, and lists food preparations, and further gives examples of products consisting of a mixture of plants or parts of plants (including seeds or fruits) of different species or consisting of plants or parts of plants of a single or of different species mixed with other substances such as one more plant extracts, which are not consumed as such but which are of a kind used for making herbal infusions or herbal teas (e.g. Those having laxative, purgative, diuretic or carminative properties) including products which are claimed to offer relief from ailments or contribute to general health and wellbeing - shown as products that are based on extracts from plants, fruit concentrates, honey, fructose, with indications that they maintain general health and wellbeing.

31. The Appellant further submitted that Heading 21. 06 specifically excludes products that constitute a therapeutic or prophylactic dose of an active ingredient specific at a particular ailment.

32. The Appellant also submitted that it had imported EVIT 200 and EVIT 400 for more than five years and classified the products under EAC/CET code 3050. 00 which provides;“30. 04 Medicaments (excluding goods of heading 30. 62, 30. 18 and 30. 16) consisting of mixed or unmixed products for therapeutic prophylactic uses, put up in measured doses including those in the form of transdermal administration system or in form of packing for retail sale.”

33. It was also a submission of the Appellant that the explanatory notes of HS code 30. 04 cover medicaments (excluding goods of heading No. 30. 02, 30. 05 & 30. 06) consisting of mixed or unmixed products for therapeutic or prophylactic uses, put up in measured doses or form of packing for retail sale, They describe products falling under 3004. 10, 3004. 20, 3004. 31, 3004,32, 3004. 39, 3004. 40, 3004. 50 and 3004,90.

34. The Appellant submitted that the Explanatory Notes gives the requisite ingredients for a product to be classified a medicament in that it has to consist of mixed or unmixed products provided the product is either;a)Put up in measured doses;b)In packings for retail sale for therapeutic or prophylactic use;

35. The Appellant also submitted that it had submitted evidence to show indications by providing the manufacturers literature which provides;“a)Therapeutic indications of EVIT 200 and EVIT 400 to be;-i.Strengthens body defense against muscle damage,ii.Helps prevent formation of cataract, lower the occurrence of muscular degeneration, and improves the effects of retinopathy.iii.Improves glucose tolerance in diabetic and is effective in reducing glycosylation.iv.Helps relieve and shrink fibrocystic breast lumps.v.Helps reduce menopause symptoms and helps ease PMS symptoms relating to breast tenderness.vi.High doses appear to reduce liver damage in adults.vii.Increases fertility, reduces joint deterioration and symptoms of osteoarthritis.viii.Helps to ease the symptoms of rheumatoid arthritis.b.One to two EVIT 200 capsules is to be taken daily and one capsule of EVIT 400 to be taken daily.c.Presentation of EVIT 200 and EVIT 400 mg capsules are available in a dose of 3 x10s in a unit carton.”

36. The Appellant averred that the recommended RDA of Vitamin A is 40/50 mg and that is the reason why EVIT 200 and EVIT 400 capsules are dispensed by pharmacists because Vitamin E 220mg / 400mg are way above the recommended RDA. The Appellant led evidence of prescriptions by physicians who testified that the drugs are only marketed to physicians.

37. The Appellant submitted that the General Interpretation Rules 1 (GIR 1) for the classification of goods shall be governed by the following principles:“The titles of sections, chapters and sub-chapters are provided for ease of reference only; for legal purposes, classification shall be determined according to the terms of the headings and any relative section or chapter notes and provided such headings or notes do not otherwise required according to the following provisions ... ”“GIR 6: “For legal purposes the classification of goods in the subheadings of a heading shall be determined according to the terms of those subheadings and any related subheadings. Notes and mutatis mutandis to the above rules on the understanding that only subheadings at the same level are comparable. For the context otherwise requires...”

38. The Appellant submitted that its products EVIT 200 and EVIT 400are correctly classified under GIR 1 by the terms of the headings relative section or chapter notes and shows that EVIT 200 and EVIT 400 capsules do not apply to GIR Rules 2a, 2b, 3a, 3b and 3c, 4 and 5 which apply to incomplete, unfinished, disassembled, mixtures, or combination of mixtures with other materials or substances, goods that cannot be classified by reference to GIR 1 to 3c, cases and packaging materials.

39. The Appellant cited the case of Kenya Breweries Ltd v Commissioner of Customs and Border Control (2020) eKLR where the court stated that under General Interpretation Rules 1 is the foremost rule of classification.

40. The Appellant invited the Tribunal to consider the position adopted by the Canada Border Services Agency administrative policy for the classification of medicament including natural health products where in its guidelines and general information confirms that a product can be classified as a medicament under heading 30. 03 or 30. 04, if it satisfies the following;i)Meets the terms of heading and any relative explanatory notes;ii)Evidence attests to the product’s therapeutic or prophylactic use;iii)The goods are presented as a therapeutic or prophylactic product.

41. The Appellant also invited the Tribunal to be guided by the interpretation adopted by other jurisdictions, and submitted consideration of the position adopted by Indian Customs which classifies EVIT 200 and EVIT 400 under tariff code 3004. 90. 91.

42. The Appellant further submitted that under Section 2 of the Pharmacy and Poisons Act;“'medicine' means any medicament or curative or preventive substance whether proprietary or in the form of a preparation.”

43. The Appellant also submitted that the manufacturer‘s technical publications and clinical tests support the therapeutic and prophylactic value of EVIT 200 and EVIT 400 as medicaments.

44. The Appellant further submitted that the Respondent’s personnel who analyzed the product in May 2021 are not medical practitioners so as to have the requisite competence to vary the findings of the Pharmacy and Poisons Board.

45. The Appellant concluded by submitting that EVIT 200 & EVIT 400 capsules are made, put up in measured doses in form of capsules and are packed in 3x10s in a unit c of composition of vitamin E200 mg and vitamin 400mg respectively (an amount that is above the recommended daily amount of 15mg) that consisting of mixed or unmixed products for therapeutic or prophylactic uses, put up in measured doses in form of capsules and are packed in 3x10s in a unit carton for retail sale without repackaging and are classifiable under HS 3004. 50. 00 as other medicaments containing vitamins or other products of heading 29. 36 and legally applying classification as provided by the GIR 1 and 6.

Appellant’s Prayers 46. By reason of the submissions aforesaid, the Appellant prayed that the Tribunal do set aside the Respondent’s review decision and allow the Appeal herein.

The Respondent's Case 47. The Respondent has set out its case on its Statement of Facts filed on 12th August 2022, the Written Submissions filed on 22nd February 2022 and the Witness Statement of Stella Mwangi filed on 31st October 2022.

48. The Respondent stated that the Appellant imported two products namely EVIT 200 and EVIT 400 under import entry No. 21NBOIM404216706 which were classified under Tariff code HS EAC/CET 3004. 50. 00.

49. The Respondent averred that it took two samples of the two products from the consignment and presented to its Inspection and Testing Center to facilitate tariff classification.

50. The Respondent stated that a tariff decision was prepared and communicated to the Appellant classifying the products under Tariff ECA/CET 2106. 90. 91.

51. The Respondent stated that the Appellant appealed the decision to classify the product in HS code 2106. 90. 91 stating that the two products were medicaments and would prefer classification in HS code 3004. 50. 00 as entered.

52. The Respondent stated that it reviewed the additional documents provided and rendered a decision and responded to the Appellant on 21st October 2021.

53. The Respondent also stated that it had a further engagement with the Appellant on 30th march 2022 on the classification decision of 21st October 2021 and upheld the classification of the products under Tariff EAC/CET 2106. 90. 91.

54. The Respondent submitted that the Appellant erred in its classification of the neuro-forte EVIT 200 and EVIT 400 capsules as medicaments and therefore classifiable under HS code 3004. 50. 00 instead of HS code 2106. 90. 91

55. The Respondent stated that the International Convention on the Harmonized Commodity Description (HS convention) to which Kenya is a signatory is to facilitate international trade and the collection, comparison and analysis of statics by harmonizing the description, classification and coding of goods in international trade.

56. It stated that Article 3(1) (a) (i) obligates all contracting parties to use all the headings and subheadings of the Harmonized System (HS) without addition or modification, together with their related numerical codes, and further to apply the General Rules for the interpretation of the Harmonized System and all Section, Chapter and subheading notes and not to modify the scope of the Notes.

57. The Respondent submitted that Heading 3004 of the East African Community Common External Tariff provides:-“Medicaments (excluding goods of headings 30. 02, 30. 05 or 30. 06) consisting of mixed or unmixed products for therapeutic or prophylactic uses, put up in measured doses (including those in the form of transdermal administration systems) or in forms or packings for retail sale.”While that of Heading 2106 provides:-“Food preparations not elsewhere specified or included.”

58. The Respondent submitted that the Appellant is wholly misguided in that the Neuroforte tablets are a medicament as opposed to a food supplement, for the following reasons;i)The Respondent’s rulings were arrived at after the Appellant offered samples for testing in order to aid the Respondent in arriving at the correct classification of the tablets and the samples were found to be dietary supplement preparation based on Vitamin E capsules form for human consumption, containing 200mg and 400mg respectively. A reading of the active substances of the drug is clear that the drug does not contain an active substance with a curative or prophylactic effect against a particular ailment or disease.ii)The Explanatory Notes to HS code 21. 06 under item 16 provide;“Preparations often referred to as food supplements based on extracts from plants, fruit concentrates, honey, and fructose etc., and containing vitamins and sometimes minute quantities of iron compounds. These preparations are often put up in packages with indications that they maintain the general health and wellbeing. Similar preparations however, intended for the prevention or treatment of diseases or ailments are excluded under heading 30. 03 or 30. 04. ”A look at the manufacturer’s packaging of the product included a data sheet which clearly stated that the product was a food supplement, and there was no evidence to show that the drug is used to cure any known ailment.iii)Whether the Respondent was bound by the classification of the said product by the Pharmacy and Poisons Board was the subject of the decision in Republic -vs- KRA exparte Beta Healthcare Ltd (Misc. App No. 4 of 2009). The Respondent submitted that the classification of the drugs by the Pharmacy and Poisons Board is for a completely different purpose than that are undertaken by the Respondent and the same cannot be used as guide by the Appellant.

59. The Respondent submitted on the rulings of 22nd July 2016 and 3rd August 2016 that it cannot continue sticking to a position that is legally wrong and cannot be estopped from correcting an erroneous position of law, and that most recent tariff rulings are upheld in case of prior contradicting rulings. The Respondent further submitted that the tariff rulings relied on by the Appellant were overruled by subsequent tariff classification rulings.

60. The Respondent therefore submitted that it was within its powers to review the erroneous ruling previously issued, and stated that Section 67(4) of the TPA provides that a ruling is only in force until its withdrawal, and therefore the issuance of tariff rulings in 2022 therefore withdrew the earlier rulings.

Respondent’s Prayers 61. By reason of the foregoing submissions the Respondent prayed that the Appellant’s Appeal be dismissed with costs.

Issues for Determination 62. The Tribunal having carefully reviewed the pleadings, documents, witness testimony and submissions filed herein is of the considered view that the Appeal distils into one issue for determination, to wit:-Whether the Respondent erred in the reclassification of the Appellant’s product EVIT 200 and EVIT 400 Capsules from tariff code HS 3004. 50. 00 to tariff code HS 2106. 90. 91.

Analysis and Determination 63. The Appellant imported two products known as EVIT 200 and EVIT 400 capsules and classified the same under tariff code HS 3004. 50. 00 being the tariff for medicament products. The Respondent reclassified the product under tariff code HS 2106. 90. 91 for food supplements thus triggering the dispute subject of this Appeal.

64. To the Tribunal the thrust of the classification flowing from the Harmonized Commodity Description and Coding System and the Interpretative Rules is quite clear and straightforward in this matter. However, the underlying stratum of the dispute is whether the products are a medicament or a food supplement which in turn determines the correct classification.

65. The Appellant has submitted to this Tribunal that EVIT 200 and EVIT 400 capsules consist of mixed or unmixed products for the therapeutic or prophylactic uses, put up in measured doses (including those that are in the form of transdermal administration systems) or in the form of or packages for retail sale.

66. The manufacturer’s literature annexed to the Appellant’s Statement of Facts also indicates the two products as having therapeutic indications, that EVIT as an oxidant:-i.Strengthens the body’s defense against muscle damage;ii.Helps prevent formation of cataract, lower the occurrence of muscular degeneration, improve the effects of retinopathy;iii.Improves glucose tolerance in diabetics and is effective in reducing glycosylation;iv.Helps relieve and shrink fibrocystic breast lumps;v.Helps ease the pain of fibromyalgia and can be effective in relieving menorrhagia;vi.Helps to reduce menopause symptoms and helps to ease MPS symptoms relating to breast tenderness;vii.High doses appear to reduce liver damage in adults;viii.Increases fertility, reduces joint deterioration and symptoms of osteoarthritis;ix.Helps to ease the symptoms of rheumatoid arthritis.

67. The Respondent also averred that the two products, EVIT 200 and EVIT 400 are prescribed by physicians and submitted sample prescriptions from different physicians.

68. A perusal of the Registration of Drugs Certificate issued to the Appellant by the Pharmacy and Poisons Board for the two drugs indicate that the active ingredients in the two drugs are, for EVIT 200 – vitamin E 200mg, and for EVIT 400 – vitamin E 400 mg.

69. Based on the Appellant’s witness testimony, Vitamin E is a fat-soluble vitamin which prevents the oxidation of polyunsaturated fatty acids and is used in the treatment of Vitamin E deficiency, in cystic fibrosis or cholestasis and is considered a medicament consisting of vitamins, put up for therapeutic or prophylactic use in the management of cystic fibrosis and is therefore classifiable under HS code 3004. 50. 00.

70. On the other hand, the Respondent maintained that laboratory analysis of the samples tested confirmed EVIT 200 and EVIT 400 capsules to contain Vitamin E and therefore the products are to be classified as a food supplement classifiable under HS code EAC/CET 2106. 90. 91.

71. However, it is noteworthy that the laboratory analysis report was neither shared with the Appellant nor adduced before this Tribunal as the Respondent’s witness testified that the analysis and its report was confidential and could not even be shared with the court. This conduct draws an adverse inference on the part of the Respondent from the Tribunal.

72. In order to find an answer to our question as to whether the products are medicaments or food supplements, the question we need to answer is whether Vitamin E constitutes an active ingredient in the drugs that has a curative and prophylactic effect on particular ailments or disease.

73. An active ingredient in a compound is any ingredient that provides biologically active or other direct effect in the diagnosis, cure, mitigation, treatment or prevention of disease or to affect the structure or any function of the body of humans or animals. An active ingredient in a medicament enables the medicament to act as it is presented to e.g. a paracetamol to relive pain.

74. Evidence has been adduced confirming that the Appellant’s EVIT 200 and EVIT 400 capsules present with Vitamin E at that dosage, has alpha-tocopherol as the active ingredient and is biologically a major anti-oxidant in the human body. The Manufacturer’s information documents annexed to the Appellant’s Statement of Facts has set out the medical conditions that can be prevented, relieved or cured by the drugs as a consequence of the active ingredient in vitamin E as may be prescribed by physicians.

75. This fact of Vitamin’s E curative feature has not be controverted by the Respondent.

76. Flowing from the foregoing, there is no doubt that the Appellant’s two products EVIT 200 and EVIT 400 capsules contain an active ingredient which is indicated for the prevention, cure or relief of certain medical conditions and are therefore put up for therapeutic or prophylactic use as prescribed by physicians.

77. In the case of Beta Health Care International Ltd -vs- Commissioner of Customs Services ( Misc. App. No.4 of 2009) the court stated;“... Having evaluated the opposing positions taken by the Applicant and the Respondent in regard to whether the pharmaceutical products that are subject of this ruling are medicaments or food supplements, I am of the considered opinion that in determining whether the pharmaceutical products are medicines or nutritional supplements, what should be of paramount consideration is the active ingredients that constitute the said pharmaceutical products ... ”

78. The Tribunal having carefully evaluated the evidence presented by the parties, is satisfied that the Appellant’s two capsules drugs qualify for classification as medicaments as their active ingredients are presented and indicated for the prevention, treatment, and relief of ailments or diseases as per the guidelines set out.

79. The Tribunal takes judicial notice that in a similar tax appeal before this Tribunal involving similar drugs import and between the same parties i.e., TAT No. 732 of 2022 – Sai Pharmaceuticals Ltd -vs- Commissioner of Customs and Border Control, the parties reached a settlement by way of a consent in terms:-“... The applicable tariff classification for Neuro-Forte tablets is HS code 3004. 50. 00 for Neuro-Forte tablets are considered to have a therapeutic effect.”

80. The Tribunal notes that the tariff code EAC/CET 3004. 50. 00 provides as follows:-“30. 04 - Medicaments (excluding goods of heading 30. 62, 30. 18, 30. 16) consisting of mixed or unmixed products for therapeutic and prophylactic uses, put up in measured doses (including those in the form of transdermal administration system) or in forms of packing for retail sale “Subheading 3004. 50. 00 describes; other – containing vitamins or other products of heading 29. 36. ;thus, an indication that not all products containing vitamins must be food supplements. While, tariff HS code EAC/CET 2106. 90. 91 provides for “21. 06 – Food preparations not elsewhere specified or included.” and subheading 2106. 90. 91 provides for “Food supplements “.

81. The Tribunal further notes that the Appellant’s products have been duly registered and certified by the Pharmacy and Poisons Board as a pharmaceutical medicament under the Pharmacy and Poisons Act Cap 244 of the Laws of Kenya. It is also noteworthy that this is the body mandated to regulate and control the manufacture, distribution, and sale and dispensing of drugs. The Act further provides for the National Quality Control Laboratories as a corporate body charged with the mandate of analyzing and verifying all drugs manufactured or brought into the country before registration by the Board.

82. The foregoing being the case, the Tribunal arrives at the inescapable conclusion that the Appellant’s imported drugs EVIT 200 and EVIT 400 are classifiable under the tariff code HS 3004. 50. 00.

Final Decision 83. The upshot of the foregoing findings is that the Appeal is merited and the Tribunal accordingly proceeds to make the following Orders:-a)The Appellant‘s Appeal be and is hereby allowed.b)The Respondent’s review decision dated 3rd June 2022 be and is hereby set aside.c)The parties to bear their own costs.

84. It is so ordered.

DATED AND DELIVERED AT NAIROBI THIS 6TH DAY OF OCTOBER, 2023. ROBERT M. MUTUMA...............CHAIRPERSONELISHAH N. NJERU.................MEMBERRODNEY O. OLUOCH............MEMBERDELILAH K.NGALA................MEMBER