' Introduction
1. By a judgment delivered on 20th September 2024, the Tax Appeals Tribunal upheld the decision of the Respondent, the Commissioner of Customs and Border Control, to reclassify certain goods imported by the Appellant and to demand additional taxes amounting to Kshs. 2,945,740. The Appellant, being aggrieved by that decision, has lodged the present appeal.
2. The background is that in the years 2018 and 2019, the Appellant, Novixa International Limited , imported four products which it declared under the tariff headings indicated below: -
i. Potassium Nitrate - imported under entry No.2019ICD107423, classified under HS Code 3105.90.00.
ii. Oligo Gold Iron EDDHA 6 percent - imported under entry No.2019ICD10438, and classified under HS Code 3101.00.00.
iii. Oligo Bronze Iron EDDHA 4 percent - imported under entry No.2019MSA6745563, classified under HS Code 3101.00.00.
iv. OSA Veg Plus. & OSA Flower Plus – imported under entry No.2019ICD119924, classified under HS Code 3101.00.00.
3. Following a Post-Clearance Audit (“PCA”) under Sections 235 and 236 of the East African Community Customs Management Act (EACCMA), the Commissioner concluded that the products had not been correctly classified for customs purposes. In her view, Potassium Nitrate is a separate chemically defined compound classifiable under HS Code 2834.21.00, while the other products are micronutrient preparations classifiable under HS Code 3824.99.00. The reclassification resulted in a tax demand in the sum of Kshs. 2,945,740.
4. Dissatisfied with the decision, the Appellant, by a letter dated 1st December 2023, applied for a review under the EACCMA. It contended that the products had been correctly classified as fertilizers under Chapter 31 of the East African Community Common External Tariff (EAC CET), in line with the Explanatory Notes thereto and the General Rules for the Interpretation of the Harmonized System (“GIRs”).
5. On 18th December 2023, the Commissioner issued her Review Decision upholding the reclassification, thereby confirming the tax demand. The Appellant thereafter lodged an appeal before the Tribunal, which, by its judgment delivered on 20th September 2024, dismissed the appeal. The present appeal is against that judgment.
The Appeal
6. Aggrieved by the Tribunal’s decision, the Appellant lodged the present appeal, raising thirteen (13) grounds in its Memorandum of Appeal dated 15th October 2024. In essence, the Appellant contends that the Tribunal erred in law and in fact in upholding the Commissioner’s reclassification of its products.
7. The Respondent opposed the appeal through a Statement of Facts dated 30th April 2025. In summary, the Respondent maintains that the Tribunal reached the correct decision and that the Commissioner’s classification of the goods was well-founded, reasonable, and consistent with the East African Community Common External Tariff (CET), the General Rules for the Interpretation of the Harmonized System (GIRs), and the World Customs Organization’s Harmonized System Explanatory Notes (ENS).
8. The appeal was canvassed by way of written submissions. The Appellant, represented by the firm of MKAN & Company Advocates, filed submissions dated 19th June 2025, while the Respondent, represented by Ms. Lydia Nganga, filed submissions dated 13th June 2025.
Appellant’s Submissions
9. The Appellant, in its submissions, urged this Court to find that the Tribunal erred both in law and in fact in upholding the Respondent’s decision to reclassify its fertilizer products.
10. The Appellant’s case is that it had correctly classified Potassium Nitrate under HS Code 3105.90.00, and OSA Veg Plus, OSA Flower Plus, Oligo Gold Iron EDDHA 6%, and Oligo Bronze Iron EDDHA 4% under HS Code 3101.00.00. The Respondent, however, reclassified these products under HS Codes 2834.21.00 and 3824.99.90, thereby raising an additional tax demand of Kshs. 2,945,740, as contained in the demand letter of 28th March 2023 and subsequently confirmed in the review decision of 18th December 2023.
11. The Appellant submitted that the said reclassification was erroneous, unlawful, and contrary to the Harmonized System (HS), the East African Community Common External Tariff (EAC-CET) 2017, and the General Interpretative Rules (GIRs) for classification of goods. It was contended that fertilizers are expressly covered and are classifiable under Chapter 31 of the EAC CET. The Appellant maintained that the products contain essential fertilizing elements of nitrogen, phosphorus, and potassium, and properly fall within headings 3101 and 3105.
12. The Appellant further argued that the Respondent misapplied Note 1(b) to Chapter 31 by purporting to exclude the Appellant’s goods from Chapter 31 of the EAC CET and misinterpreted Note 5 to Chapter 31. In the Appellant’s view, a proper reading of the Chapter Notes and Explanatory Notes demonstrates that the products in issue were fertilizers, not micronutrient preparations, and ought to have been classified under Chapter 31.
13. In support of this position, the Appellant relied on importation documents including bills of lading, commercial invoices, packing lists, certificates of conformity from the Kenya Bureau of Standards, certificates of analysis, and data safety sheets from the suppliers. These documents, it was submitted, consistently described the products as fertilizers and not micronutrients.
14. The Appellant emphasized that the Respondent’s own verification officers, valuation officers, and tariff officers physically examined the goods, confirmed them as fertilizers, approved their classification under the stated tariff headings, and released them without objection. It was argued that the Tribunal wrongly endorsed the Respondent’s misclassification by adopting an unduly narrow interpretation of the GIRs and ignoring the clear text of Chapter 31 and its notes.
15. The Appellant also disputed the Respondent’s reliance on previous import entries, which had allegedly classified past OSA products under HS Code 3824.99.90. It maintained that the cited entries related to entirely different products, such as Nutrifight and OSA Tuber, and not the fertilizer products under appeal. In the Appellant’s view, the Respondent deliberately misrepresented this evidence to sustain an otherwise untenable position.
16. Regarding Chapters 28 and 38 of the HS Code, the Appellant submitted that these Chapters cover inorganic chemicals and miscellaneous chemical products respectively, and that neither is intended to cover fertilizers of the subject of these proceedings. The Appellant therefore maintained that reclassification to headings 2834.21.00 and 3824.99.90 was inconsistent with the legal Notes to those Chapters and contrary to the explicit provisions of Chapter 31.
17. In conclusion, the Appellant maintained that the correct classification for its products is HS Code 3105.90.00 for Potassium Nitrate, and HS Code 3101.00.00 for the other products. It therefore prayed that this Court set aside the Tribunal’s decision, vacate the Respondent’s reclassification letters and demand, and award it the costs of the appeal.
Respondent’s Submissions
18. The Respondent opposed the appeal and urged the Court to uphold the judgment of the Tribunal. Its case is that the Appellant had misclassified the subject goods, namely potassium nitrate, iron chelate, and OSA micronutrients, and that the Tribunal was correct in affirming the Respondent’s reclassification.
19. The Respondent submitted that potassium nitrate is properly classifiable under subheading 2834.21.00, which specifically provides for nitrates of potassium, and not under heading 3105.90.00 as declared by the Appellant. It was contended that the Appellant relied only on the wording of the heading in Chapter 31, but failed to apply the General Interpretation Rules, particularly Rules 1 and 6, together with the relevant Section and Chapter Notes.
20. The Respondent emphasized that Chapter 31 expressly excludes separate chemically defined compounds, save for those specifically listed in Notes 2(a), 3(a), 4(a), or 5, and that the Appellant’s goods did not fall within the limited list provided therein. In support, the Respondent cited the Explanatory Notes, which clarify that potassium nitrate and potassium phosphate are excluded from heading 31.05 and instead fall under headings 28.34 and 28.35, respectively.
21. With respect to Oligo Gold Iron EDDHA 6 percent, Bronze Iron EDDHA 4 percent, OSA Veg, and OSA Flower, the Respondent argued that these are micronutrient preparations intended to correct deficiencies in soil or enhance plant growth. Relying on the Explanatory Notes to Chapter 31, the Respondent maintained that such micronutrient preparations are expressly excluded from being classified as fertilizers of Chapter 31 and are instead classifiable under Heading 38.24.
22. It was further the Respondent’s submission that the Appellant had previously been guided through numerous tariff rulings, issued as early as 2017, which consistently classified these very products under heading 38.24. The Respondent referred Court to the said tariff rulings and asserted that the Appellant, being a regular importer of the goods, could not feign ignorance of the correct classification. That, further, the Appellant had been complying, only to disingenuously change its position in the current assignments.
23. The Respondent therefore maintained that the tax demanded was as a result of misclassification of the subject goods by the Appellant, and was therefore due and payable as per Section 135(1) of the East African Community Customs Management Act, which requires that duty short-levied be recovered upon demand.
24. Relying on, among others, the decisions in Republic v Kenya Revenue Authority; Proto Energy Limited (Ex parte) [2022], where the Court affirmed that a presumption of correctness attaches to the Commissioner’s assessment, and Commissioner of Investigations & Enforcement v Dr. Evans Kidero [2022] eKLR, where the Court emphasized the duty of taxpayers to maintain proper records and to make full disclosure, the Respondent maintained that the Appellant has not put forth sufficient material to dispute the tax as demanded.
25. The Respondent therefore prayed that the appeal be dismissed with costs and the Tribunal’s judgment of 20th September 2024 be upheld in its entirety.
Analysis and Determination
26. I have carefully considered the memorandum and record of appeal, the parties’ submissions, and the applicable law. In my view, the two issues for determination are: -
i. Whether the Tribunal erred in upholding the Respondent’s reclassification of the Appellant’s goods.
ii. Whether the resulting tax demand was due and payable.
Whether the Tribunal erred in upholding the Respondent’s reclassification
27. The Appellant contended that the goods in dispute - (Potassium Nitrate, OSA VegPlus, OSA FlowerPlus, Oligo Gold Iron EDDHA & Oligo Bronze Iron- are fertilizers properly classifiable under Chapter 31 of the EAC CET. It argues that the Tribunal failed to correctly apply the General Interpretation Rules (GIRs), particularly Rule 1 thereof, which provides that in the classification of goods, the “Terms of the Heading” must be the guiding factor.
28. The Respondent, in contrast, maintains that the Appellant misapplied the GIRs. According to the Respondent, GIR 1 expressly provides that the titles of Sections and Chapters are for ease of reference only, and have no legal bearing on classification. The Respondent asserts that binding classification must be determined by the terms of the headings and any relevant Section or Chapter Notes.
29. The GIRs establish a hierarchy of classification principles that ensure goods are consistently and appropriately classified within the Harmonized System. They are the starting point for any classification exercise.
30. GIR 1 provides that:
“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 require, according to the following provisions.”
31. GIR 6 further directs that:
“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 Subheading Notes and, mutatis mutandis, to the above Rules, on the understanding that only subheadings at the same level are comparable. For the purposes of this Rule the relative Section and Chapter Notes also apply, unless the context otherwise requires.”
32. Taken together, GIR 1 and GIR 6 establish that the starting point in classification is the wording of the headings and the Chapter Notes. Only where those provisions do not resolve the matter does one turn to subsequent rules.
33. In this case, it is undisputed that Chapter 31 covers fertilizers. What is disputed is whether the Notes to Chapter 31 and the corresponding Explanatory Notes exclude the Appellant’s products from that Chapter. The Appellant asserts that because the goods were described in commercial documents as fertilizers, they ought to fall within Chapter 31. The Respondent counters that this is overly simplistic and ignores the controlling effect of the Chapter Notes.
Classification of Potassium Nitrate
34. Chapter Note 1 to Chapter 31 provides as follows: -
“1.- This Chapter does not cover:
(a) Animal blood of heading 05.11;
(b) Separate chemically defined compounds (other than those answering to the descriptions in Note 2 (a), 3 (a), 4 (a) or 5 below); or
(c) Cultured potassium chloride crystals (other than optical elements) weighing not less than 2.5 g each, of heading 38.24; optical elements of potassium chloride (heading 90.01). {Emphasis
35. From a reading of the Chapter Notes, particularly Chapter Note 1(b), it is clear that the only “separately defined compounds” classifiable under Chapter 31 of the EAC CET are those specifically “answering to the descriptions in Note 2(a), 3(a), 4(a) or 5.”
36. Separately defined compounds which are classifiable under Chapter 31, as specified under Chapter Note 1(b), are those answering to the following descriptions: -
2a. (i) Sodium nitrate, whether or not pure; (ii) Ammonium nitrate, whether or not pure; (iii) Double salts, whether or not pure, of ammonium sulphate and ammonium nitrate; (iv) Ammonium sulphate, whether or not pure; (v) Double salts (whether or not pure) or mixtures of calcium nitrate and ammonium nitrate; (vi) Double salts (whether or not pure) or mixtures of calcium nitrate and magnesium nitrate; (vii) Calcium cyanamide, whether or not pure or treated with oil; (viii) Urea, whether or not pure.
3a. (i) Basic slag; (ii) Natural phosphates of heading 25.10, calcined or further heat-treated than for the removal of impurities; (iii) Superphosphates (single, double or triple); (iv) Calcium hydrogenorthophosphate containing not less than 0.2 % by weight of fluorine calculated on the dry anhydrous product.
4a. (i) Crude natural potassium salts (for example, carnallite, kainite and sylvite); (ii) Potassium chloride, whether or not pure, except as provided in Note 1 (c) above; (iii) Potassium sulphate, whether or not pure; (iv) Magnesium potassium sulphate, whether or not pure.
5.- Ammonium dihydrogenorthophosphate (monoammonium phosphate) and diammonium hydrogen orthophosphate (diammonium phosphate), whether or not pure, and intermixtures thereof, are to be classified in heading 31.05.
37. The inevitable conclusion is that only the enumerated “separately defined compounds” in Notes 2(a), 3(a), 4(a), and 5 qualify as fertilizers under Chapter 31. All other chemically separately defined compounds, even if they may ordinarily be defined and used as fertilizers, fall outside the Chapter.
38. Potassium Nitrate is not listed among the compounds specified under Notes 2(a), 3(a), 4(a), or 5. Accordingly, notwithstanding its use or description as a ‘fertilizer’, it does not, for customs purposes, qualify for classification under Chapter 31.
39. This position is reinforced by the Explanatory Notes to Heading 31.05, which explicitly exclude “other chemically defined compounds not specified in headings 31.02 to 31.04, even if they can be used as fertilizers.
40. Conversely, Chapter 28 expressly covers “separate chemical elements and separate chemically defined compounds.” Heading 28.34 specifically provides for nitrates, and subheading 2834.21.00 for nitrates of potassium. Note 1 to Chapter 28 of the EAC CET states that “chemical elements and separate chemically defined compounds”, whether or not containing impurities, are to be classified under Chapter 28. The Note provides as follows: -
“1. Except where the context otherwise requires, the headings of this Chapter apply only to:
(a) Separate chemical elements and separate chemically defined compounds, whether or not containing impurities ;
(b) The products mentioned in (a) above dissolved in water;
(c) The products mentioned in (a) above dissolved in other solvents provided that the solution constitutes a normal and necessary method of putting up these products adopted solely for reasons of safety or for transport and that the solvent does not render the product particularly suitable for specific use rather than for general use;
(d) The products mentioned in (a), (b) or (c) above with an added stabiliser (including an anti-caking agent) necessary for their preservation or transport;
(e) The products mentioned in (a), (b), (c) or (d) above with an added anti-dusting agent or a colouring substance added to facilitate their identification or for safety reasons, provided that the additions do not render the product particularly suitable for specific use rather than for general use. {Emphasis added].
41. A perusal of Chapter 28 reveals that Heading 28.34 specifically provides for classification of nitrates and nitrites. Subheading 2834.21.00 thereof covers classification of nitrates of potassium , which is the heading that the Respondent reclassified the Appellant’s Potassium nitrate.
42. Accordingly, I agree with the Tribunal’s finding upholding the Respondent’s position that the correct HS Code for the Potassium Nitrate product is HS 2834.21.00, and not HS 3105.90.00 used by the Appellant. The Appeal, therefore, fails on this head.
43. It must be emphasized that for customs purposes, classification is determined by the CET and Explanatory Notes. The description provided by a supplier, though useful, cannot override the legal framework. The supplier’s description of potassium nitrate as “fertilizer” was therefore not determinative.
Classification of Oligo Gold Iron EDDHA, Oligo Bronze Iron EDDHA, OSA Veg Plus & OSA Flower Plus
44. The Appellant classified these products under HS Code 3101.00.00, arguing that they, just like the Potassium Nitrate, they are fertilizers and therefore fall within Chapter 31 of the EAC CET.
45. The Respondent, on the other hand, contends they are micronutrient preparations classifiable under 3824.99.00, which covers miscellaneous chemical products. According to the Respondent, these products are for the prevention and correction of deficiencies in soil and are specifically excluded from Chapter 31 by the Explanatory Notes, which state that the chapter does not cover micronutrient preparations.
46. This Court agrees with the Respondent. As pointed out in the preceding paragraphs in this judgment, by relying solely on the terms of the heading while ignoring the relevant Notes, the Appellant misapplied GIR 1.
47. Further, this Court notes that the Tribunal, in its judgment, established as a matter of fact that the Respondent had, through various Tariff Rulings issued on 20th December 2017 and 14th February 2018, communicated to the Appellant the appropriate tariff headings applicable to the subject products. The Tribunal observed that the Appellant had not challenged those rulings. At paragraphs 53–56 of its judgment, the Tribunal stated as follows: –
“53. The Tribunal has perused through the documentation and has sighted the following Tariff Rulings that were issued by the Respondent for the products that the Appellant has been importing over time……..
54. The Tribunal noted that the Appellant never disputed the Respondent’s Tariff Rulings and continued to import its products under the HS Code 3824.99.00 as evidenced in the following customs entries for imports that were done between years 2018 to 2021;
55. Having continued to declare its imports as per the Respondent''s Rulings and in the absence of proof of change in the character of the Appellant''s product, there is no proper justification to change the classification to Chapter 31.”
48. Upon perusal of the record of appeal (pages 30-46), this Court notes that the question whether the subject products fall within Chapter 31, as alleged by the Appellant, or within Chapter 38, as maintained by the Respondent, had already been the subject of the following Tariff Rulings:
i. 2017/CUSV&T/TARI/RUL/481 of 20/12/2017-OSA Tuber micronutrient preparation to enhance root development classifiable under subheading 3824.99.00
ii. 2017/CUS/V&T/TARI/RUL/483 of 20/12/2017- OSA Vegetable micronutrient preparation to enhance root development classifiable under subheading 3824.99.00
iii. 2017/CUS/V&T/TARI/RUL/483 of 20/12/2017- OSA wheat micronutrient preparation to enhance root development classifiable under subheading 3824.99.00
iv. 2018/CUS/V&T/TARI/RUL/044 of 14/2/2018 - Iron EDDHA 6%micronutrient preparations for prevention and correction of chlorosis in soil classifiable under subheading 3824.99.90.
49. Although the Appellant denied having been served with the above Tariff Rulings, this Court finds that assertion unconvincing, particularly in light of the Appellant’s own admission in submissions before the Tribunal that they were aware that samples had been taken by the Respondent for purposes of tariff determination.
50. The Appellant’s position is further undermined by the evidence on record showing that, subsequent to the Tariff Rulings, it complied with the same and, between 2018 and 2021, made several import declarations under HS Code 3824.99.90 in respect of entries including 2018ICD65129; 2018MSA6966947; 2018MSA688872; 2020ICD244978; 2021ICD244978; 2021ICD320119; and 2021ICD286651.
51. In the circumstances, this Court is of the view that the Appellant, having complied with the said Rulings and consistently declared its previous imports under Chapter 38, cannot, in the absence of evidence of any change in the character of the subject products, justify a departure from the classification prescribed in those Tariff Rulings. Again, the appeal fails under this heading.
Whether the Respondent was justified in demanding short-levied duties
52. Having found that the Respondent correctly reclassified the Appellant’s products under HS Codes 2834.21.00 and 3824.99.90, it follows that the additional tax demand of Kshs. 2,945,740 was lawfully due and payable in line with Section 135(1) of the EAC CMA, 2004 which provides that: -
“Where any duty has been short levied or erroneously refunded, then the person who should have paid the amount short levied or to whom the refund has erroneously been made shall, on demand by the proper officer, pay the amount short levied or repay the amount erroneously refunded, as the case may be; and any such amount may be recovered as if it were duty to which the goods in relation to which the amount was short levied or erroneously refunded, as the case may be, were liable. “
Disposition
53. For the foregoing reasons, the Court finds no merit in the appeal, and it is hereby dismissed, and the judgment of the Tribunal dated 20th September 2024 is accordingly upheld in its entirety.
54. The Respondent shall have the costs of the Appeal.
55. It is so ordered
SIGNED, DATED, and DELIVERED IN VIRTUAL COURT THIS
11TH SEPTEMBER 2025
ADO MOSES
JUDGE
In the presence of: -
C/A – Moses
Mkan………………………............for the Appellant
Lemiso h/b for Lydia Nganga…..... for the Respondent
'
1. By a judgment delivered on 20th September 2024, the Tax Appeals Tribunal upheld the decision of the Respondent, the Commissioner of Customs and Border Control, to reclassify certain goods imported by the Appellant and to demand additional taxes amounting to Kshs. 2,945,740. The Appellant, being aggrieved by that decision, has lodged the present appeal.
2. The background is that in the years 2018 and 2019, the Appellant, Novixa International Limited , imported four products which it declared under the tariff headings indicated below: -
i. Potassium Nitrate - imported under entry No.2019ICD107423, classified under HS Code 3105.90.00.
ii. Oligo Gold Iron EDDHA 6 percent - imported under entry No.2019ICD10438, and classified under HS Code 3101.00.00.
iii. Oligo Bronze Iron EDDHA 4 percent - imported under entry No.2019MSA6745563, classified under HS Code 3101.00.00.
iv. OSA Veg Plus. & OSA Flower Plus – imported under entry No.2019ICD119924, classified under HS Code 3101.00.00.
3. Following a Post-Clearance Audit (“PCA”) under Sections 235 and 236 of the East African Community Customs Management Act (EACCMA), the Commissioner concluded that the products had not been correctly classified for customs purposes. In her view, Potassium Nitrate is a separate chemically defined compound classifiable under HS Code 2834.21.00, while the other products are micronutrient preparations classifiable under HS Code 3824.99.00. The reclassification resulted in a tax demand in the sum of Kshs. 2,945,740.
4. Dissatisfied with the decision, the Appellant, by a letter dated 1st December 2023, applied for a review under the EACCMA. It contended that the products had been correctly classified as fertilizers under Chapter 31 of the East African Community Common External Tariff (EAC CET), in line with the Explanatory Notes thereto and the General Rules for the Interpretation of the Harmonized System (“GIRs”).
5. On 18th December 2023, the Commissioner issued her Review Decision upholding the reclassification, thereby confirming the tax demand. The Appellant thereafter lodged an appeal before the Tribunal, which, by its judgment delivered on 20th September 2024, dismissed the appeal. The present appeal is against that judgment.
The Appeal
6. Aggrieved by the Tribunal’s decision, the Appellant lodged the present appeal, raising thirteen (13) grounds in its Memorandum of Appeal dated 15th October 2024. In essence, the Appellant contends that the Tribunal erred in law and in fact in upholding the Commissioner’s reclassification of its products.
7. The Respondent opposed the appeal through a Statement of Facts dated 30th April 2025. In summary, the Respondent maintains that the Tribunal reached the correct decision and that the Commissioner’s classification of the goods was well-founded, reasonable, and consistent with the East African Community Common External Tariff (CET), the General Rules for the Interpretation of the Harmonized System (GIRs), and the World Customs Organization’s Harmonized System Explanatory Notes (ENS).
8. The appeal was canvassed by way of written submissions. The Appellant, represented by the firm of MKAN & Company Advocates, filed submissions dated 19th June 2025, while the Respondent, represented by Ms. Lydia Nganga, filed submissions dated 13th June 2025.
Appellant’s Submissions
9. The Appellant, in its submissions, urged this Court to find that the Tribunal erred both in law and in fact in upholding the Respondent’s decision to reclassify its fertilizer products.
10. The Appellant’s case is that it had correctly classified Potassium Nitrate under HS Code 3105.90.00, and OSA Veg Plus, OSA Flower Plus, Oligo Gold Iron EDDHA 6%, and Oligo Bronze Iron EDDHA 4% under HS Code 3101.00.00. The Respondent, however, reclassified these products under HS Codes 2834.21.00 and 3824.99.90, thereby raising an additional tax demand of Kshs. 2,945,740, as contained in the demand letter of 28th March 2023 and subsequently confirmed in the review decision of 18th December 2023.
11. The Appellant submitted that the said reclassification was erroneous, unlawful, and contrary to the Harmonized System (HS), the East African Community Common External Tariff (EAC-CET) 2017, and the General Interpretative Rules (GIRs) for classification of goods. It was contended that fertilizers are expressly covered and are classifiable under Chapter 31 of the EAC CET. The Appellant maintained that the products contain essential fertilizing elements of nitrogen, phosphorus, and potassium, and properly fall within headings 3101 and 3105.
12. The Appellant further argued that the Respondent misapplied Note 1(b) to Chapter 31 by purporting to exclude the Appellant’s goods from Chapter 31 of the EAC CET and misinterpreted Note 5 to Chapter 31. In the Appellant’s view, a proper reading of the Chapter Notes and Explanatory Notes demonstrates that the products in issue were fertilizers, not micronutrient preparations, and ought to have been classified under Chapter 31.
13. In support of this position, the Appellant relied on importation documents including bills of lading, commercial invoices, packing lists, certificates of conformity from the Kenya Bureau of Standards, certificates of analysis, and data safety sheets from the suppliers. These documents, it was submitted, consistently described the products as fertilizers and not micronutrients.
14. The Appellant emphasized that the Respondent’s own verification officers, valuation officers, and tariff officers physically examined the goods, confirmed them as fertilizers, approved their classification under the stated tariff headings, and released them without objection. It was argued that the Tribunal wrongly endorsed the Respondent’s misclassification by adopting an unduly narrow interpretation of the GIRs and ignoring the clear text of Chapter 31 and its notes.
15. The Appellant also disputed the Respondent’s reliance on previous import entries, which had allegedly classified past OSA products under HS Code 3824.99.90. It maintained that the cited entries related to entirely different products, such as Nutrifight and OSA Tuber, and not the fertilizer products under appeal. In the Appellant’s view, the Respondent deliberately misrepresented this evidence to sustain an otherwise untenable position.
16. Regarding Chapters 28 and 38 of the HS Code, the Appellant submitted that these Chapters cover inorganic chemicals and miscellaneous chemical products respectively, and that neither is intended to cover fertilizers of the subject of these proceedings. The Appellant therefore maintained that reclassification to headings 2834.21.00 and 3824.99.90 was inconsistent with the legal Notes to those Chapters and contrary to the explicit provisions of Chapter 31.
17. In conclusion, the Appellant maintained that the correct classification for its products is HS Code 3105.90.00 for Potassium Nitrate, and HS Code 3101.00.00 for the other products. It therefore prayed that this Court set aside the Tribunal’s decision, vacate the Respondent’s reclassification letters and demand, and award it the costs of the appeal.
Respondent’s Submissions
18. The Respondent opposed the appeal and urged the Court to uphold the judgment of the Tribunal. Its case is that the Appellant had misclassified the subject goods, namely potassium nitrate, iron chelate, and OSA micronutrients, and that the Tribunal was correct in affirming the Respondent’s reclassification.
19. The Respondent submitted that potassium nitrate is properly classifiable under subheading 2834.21.00, which specifically provides for nitrates of potassium, and not under heading 3105.90.00 as declared by the Appellant. It was contended that the Appellant relied only on the wording of the heading in Chapter 31, but failed to apply the General Interpretation Rules, particularly Rules 1 and 6, together with the relevant Section and Chapter Notes.
20. The Respondent emphasized that Chapter 31 expressly excludes separate chemically defined compounds, save for those specifically listed in Notes 2(a), 3(a), 4(a), or 5, and that the Appellant’s goods did not fall within the limited list provided therein. In support, the Respondent cited the Explanatory Notes, which clarify that potassium nitrate and potassium phosphate are excluded from heading 31.05 and instead fall under headings 28.34 and 28.35, respectively.
21. With respect to Oligo Gold Iron EDDHA 6 percent, Bronze Iron EDDHA 4 percent, OSA Veg, and OSA Flower, the Respondent argued that these are micronutrient preparations intended to correct deficiencies in soil or enhance plant growth. Relying on the Explanatory Notes to Chapter 31, the Respondent maintained that such micronutrient preparations are expressly excluded from being classified as fertilizers of Chapter 31 and are instead classifiable under Heading 38.24.
22. It was further the Respondent’s submission that the Appellant had previously been guided through numerous tariff rulings, issued as early as 2017, which consistently classified these very products under heading 38.24. The Respondent referred Court to the said tariff rulings and asserted that the Appellant, being a regular importer of the goods, could not feign ignorance of the correct classification. That, further, the Appellant had been complying, only to disingenuously change its position in the current assignments.
23. The Respondent therefore maintained that the tax demanded was as a result of misclassification of the subject goods by the Appellant, and was therefore due and payable as per Section 135(1) of the East African Community Customs Management Act, which requires that duty short-levied be recovered upon demand.
24. Relying on, among others, the decisions in Republic v Kenya Revenue Authority; Proto Energy Limited (Ex parte) [2022], where the Court affirmed that a presumption of correctness attaches to the Commissioner’s assessment, and Commissioner of Investigations & Enforcement v Dr. Evans Kidero [2022] eKLR, where the Court emphasized the duty of taxpayers to maintain proper records and to make full disclosure, the Respondent maintained that the Appellant has not put forth sufficient material to dispute the tax as demanded.
25. The Respondent therefore prayed that the appeal be dismissed with costs and the Tribunal’s judgment of 20th September 2024 be upheld in its entirety.
Analysis and Determination
26. I have carefully considered the memorandum and record of appeal, the parties’ submissions, and the applicable law. In my view, the two issues for determination are: -
i. Whether the Tribunal erred in upholding the Respondent’s reclassification of the Appellant’s goods.
ii. Whether the resulting tax demand was due and payable.
Whether the Tribunal erred in upholding the Respondent’s reclassification
27. The Appellant contended that the goods in dispute - (Potassium Nitrate, OSA VegPlus, OSA FlowerPlus, Oligo Gold Iron EDDHA & Oligo Bronze Iron- are fertilizers properly classifiable under Chapter 31 of the EAC CET. It argues that the Tribunal failed to correctly apply the General Interpretation Rules (GIRs), particularly Rule 1 thereof, which provides that in the classification of goods, the “Terms of the Heading” must be the guiding factor.
28. The Respondent, in contrast, maintains that the Appellant misapplied the GIRs. According to the Respondent, GIR 1 expressly provides that the titles of Sections and Chapters are for ease of reference only, and have no legal bearing on classification. The Respondent asserts that binding classification must be determined by the terms of the headings and any relevant Section or Chapter Notes.
29. The GIRs establish a hierarchy of classification principles that ensure goods are consistently and appropriately classified within the Harmonized System. They are the starting point for any classification exercise.
30. GIR 1 provides that:
“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 require, according to the following provisions.”
31. GIR 6 further directs that:
“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 Subheading Notes and, mutatis mutandis, to the above Rules, on the understanding that only subheadings at the same level are comparable. For the purposes of this Rule the relative Section and Chapter Notes also apply, unless the context otherwise requires.”
32. Taken together, GIR 1 and GIR 6 establish that the starting point in classification is the wording of the headings and the Chapter Notes. Only where those provisions do not resolve the matter does one turn to subsequent rules.
33. In this case, it is undisputed that Chapter 31 covers fertilizers. What is disputed is whether the Notes to Chapter 31 and the corresponding Explanatory Notes exclude the Appellant’s products from that Chapter. The Appellant asserts that because the goods were described in commercial documents as fertilizers, they ought to fall within Chapter 31. The Respondent counters that this is overly simplistic and ignores the controlling effect of the Chapter Notes.
Classification of Potassium Nitrate
34. Chapter Note 1 to Chapter 31 provides as follows: -
“1.- This Chapter does not cover:
(a) Animal blood of heading 05.11;
(b) Separate chemically defined compounds (other than those answering to the descriptions in Note 2 (a), 3 (a), 4 (a) or 5 below); or
(c) Cultured potassium chloride crystals (other than optical elements) weighing not less than 2.5 g each, of heading 38.24; optical elements of potassium chloride (heading 90.01). {Emphasis
35. From a reading of the Chapter Notes, particularly Chapter Note 1(b), it is clear that the only “separately defined compounds” classifiable under Chapter 31 of the EAC CET are those specifically “answering to the descriptions in Note 2(a), 3(a), 4(a) or 5.”
36. Separately defined compounds which are classifiable under Chapter 31, as specified under Chapter Note 1(b), are those answering to the following descriptions: -
2a. (i) Sodium nitrate, whether or not pure; (ii) Ammonium nitrate, whether or not pure; (iii) Double salts, whether or not pure, of ammonium sulphate and ammonium nitrate; (iv) Ammonium sulphate, whether or not pure; (v) Double salts (whether or not pure) or mixtures of calcium nitrate and ammonium nitrate; (vi) Double salts (whether or not pure) or mixtures of calcium nitrate and magnesium nitrate; (vii) Calcium cyanamide, whether or not pure or treated with oil; (viii) Urea, whether or not pure.
3a. (i) Basic slag; (ii) Natural phosphates of heading 25.10, calcined or further heat-treated than for the removal of impurities; (iii) Superphosphates (single, double or triple); (iv) Calcium hydrogenorthophosphate containing not less than 0.2 % by weight of fluorine calculated on the dry anhydrous product.
4a. (i) Crude natural potassium salts (for example, carnallite, kainite and sylvite); (ii) Potassium chloride, whether or not pure, except as provided in Note 1 (c) above; (iii) Potassium sulphate, whether or not pure; (iv) Magnesium potassium sulphate, whether or not pure.
5.- Ammonium dihydrogenorthophosphate (monoammonium phosphate) and diammonium hydrogen orthophosphate (diammonium phosphate), whether or not pure, and intermixtures thereof, are to be classified in heading 31.05.
37. The inevitable conclusion is that only the enumerated “separately defined compounds” in Notes 2(a), 3(a), 4(a), and 5 qualify as fertilizers under Chapter 31. All other chemically separately defined compounds, even if they may ordinarily be defined and used as fertilizers, fall outside the Chapter.
38. Potassium Nitrate is not listed among the compounds specified under Notes 2(a), 3(a), 4(a), or 5. Accordingly, notwithstanding its use or description as a ‘fertilizer’, it does not, for customs purposes, qualify for classification under Chapter 31.
39. This position is reinforced by the Explanatory Notes to Heading 31.05, which explicitly exclude “other chemically defined compounds not specified in headings 31.02 to 31.04, even if they can be used as fertilizers.
40. Conversely, Chapter 28 expressly covers “separate chemical elements and separate chemically defined compounds.” Heading 28.34 specifically provides for nitrates, and subheading 2834.21.00 for nitrates of potassium. Note 1 to Chapter 28 of the EAC CET states that “chemical elements and separate chemically defined compounds”, whether or not containing impurities, are to be classified under Chapter 28. The Note provides as follows: -
“1. Except where the context otherwise requires, the headings of this Chapter apply only to:
(a) Separate chemical elements and separate chemically defined compounds, whether or not containing impurities ;
(b) The products mentioned in (a) above dissolved in water;
(c) The products mentioned in (a) above dissolved in other solvents provided that the solution constitutes a normal and necessary method of putting up these products adopted solely for reasons of safety or for transport and that the solvent does not render the product particularly suitable for specific use rather than for general use;
(d) The products mentioned in (a), (b) or (c) above with an added stabiliser (including an anti-caking agent) necessary for their preservation or transport;
(e) The products mentioned in (a), (b), (c) or (d) above with an added anti-dusting agent or a colouring substance added to facilitate their identification or for safety reasons, provided that the additions do not render the product particularly suitable for specific use rather than for general use. {Emphasis added].
41. A perusal of Chapter 28 reveals that Heading 28.34 specifically provides for classification of nitrates and nitrites. Subheading 2834.21.00 thereof covers classification of nitrates of potassium , which is the heading that the Respondent reclassified the Appellant’s Potassium nitrate.
42. Accordingly, I agree with the Tribunal’s finding upholding the Respondent’s position that the correct HS Code for the Potassium Nitrate product is HS 2834.21.00, and not HS 3105.90.00 used by the Appellant. The Appeal, therefore, fails on this head.
43. It must be emphasized that for customs purposes, classification is determined by the CET and Explanatory Notes. The description provided by a supplier, though useful, cannot override the legal framework. The supplier’s description of potassium nitrate as “fertilizer” was therefore not determinative.
Classification of Oligo Gold Iron EDDHA, Oligo Bronze Iron EDDHA, OSA Veg Plus & OSA Flower Plus
44. The Appellant classified these products under HS Code 3101.00.00, arguing that they, just like the Potassium Nitrate, they are fertilizers and therefore fall within Chapter 31 of the EAC CET.
45. The Respondent, on the other hand, contends they are micronutrient preparations classifiable under 3824.99.00, which covers miscellaneous chemical products. According to the Respondent, these products are for the prevention and correction of deficiencies in soil and are specifically excluded from Chapter 31 by the Explanatory Notes, which state that the chapter does not cover micronutrient preparations.
46. This Court agrees with the Respondent. As pointed out in the preceding paragraphs in this judgment, by relying solely on the terms of the heading while ignoring the relevant Notes, the Appellant misapplied GIR 1.
47. Further, this Court notes that the Tribunal, in its judgment, established as a matter of fact that the Respondent had, through various Tariff Rulings issued on 20th December 2017 and 14th February 2018, communicated to the Appellant the appropriate tariff headings applicable to the subject products. The Tribunal observed that the Appellant had not challenged those rulings. At paragraphs 53–56 of its judgment, the Tribunal stated as follows: –
“53. The Tribunal has perused through the documentation and has sighted the following Tariff Rulings that were issued by the Respondent for the products that the Appellant has been importing over time……..
54. The Tribunal noted that the Appellant never disputed the Respondent’s Tariff Rulings and continued to import its products under the HS Code 3824.99.00 as evidenced in the following customs entries for imports that were done between years 2018 to 2021;
55. Having continued to declare its imports as per the Respondent''s Rulings and in the absence of proof of change in the character of the Appellant''s product, there is no proper justification to change the classification to Chapter 31.”
48. Upon perusal of the record of appeal (pages 30-46), this Court notes that the question whether the subject products fall within Chapter 31, as alleged by the Appellant, or within Chapter 38, as maintained by the Respondent, had already been the subject of the following Tariff Rulings:
i. 2017/CUSV&T/TARI/RUL/481 of 20/12/2017-OSA Tuber micronutrient preparation to enhance root development classifiable under subheading 3824.99.00
ii. 2017/CUS/V&T/TARI/RUL/483 of 20/12/2017- OSA Vegetable micronutrient preparation to enhance root development classifiable under subheading 3824.99.00
iii. 2017/CUS/V&T/TARI/RUL/483 of 20/12/2017- OSA wheat micronutrient preparation to enhance root development classifiable under subheading 3824.99.00
iv. 2018/CUS/V&T/TARI/RUL/044 of 14/2/2018 - Iron EDDHA 6%micronutrient preparations for prevention and correction of chlorosis in soil classifiable under subheading 3824.99.90.
49. Although the Appellant denied having been served with the above Tariff Rulings, this Court finds that assertion unconvincing, particularly in light of the Appellant’s own admission in submissions before the Tribunal that they were aware that samples had been taken by the Respondent for purposes of tariff determination.
50. The Appellant’s position is further undermined by the evidence on record showing that, subsequent to the Tariff Rulings, it complied with the same and, between 2018 and 2021, made several import declarations under HS Code 3824.99.90 in respect of entries including 2018ICD65129; 2018MSA6966947; 2018MSA688872; 2020ICD244978; 2021ICD244978; 2021ICD320119; and 2021ICD286651.
51. In the circumstances, this Court is of the view that the Appellant, having complied with the said Rulings and consistently declared its previous imports under Chapter 38, cannot, in the absence of evidence of any change in the character of the subject products, justify a departure from the classification prescribed in those Tariff Rulings. Again, the appeal fails under this heading.
Whether the Respondent was justified in demanding short-levied duties
52. Having found that the Respondent correctly reclassified the Appellant’s products under HS Codes 2834.21.00 and 3824.99.90, it follows that the additional tax demand of Kshs. 2,945,740 was lawfully due and payable in line with Section 135(1) of the EAC CMA, 2004 which provides that: -
“Where any duty has been short levied or erroneously refunded, then the person who should have paid the amount short levied or to whom the refund has erroneously been made shall, on demand by the proper officer, pay the amount short levied or repay the amount erroneously refunded, as the case may be; and any such amount may be recovered as if it were duty to which the goods in relation to which the amount was short levied or erroneously refunded, as the case may be, were liable. “
Disposition
53. For the foregoing reasons, the Court finds no merit in the appeal, and it is hereby dismissed, and the judgment of the Tribunal dated 20th September 2024 is accordingly upheld in its entirety.
54. The Respondent shall have the costs of the Appeal.
55. It is so ordered
SIGNED, DATED, and DELIVERED IN VIRTUAL COURT THIS
11TH SEPTEMBER 2025
ADO MOSES
JUDGE
In the presence of: -
C/A – Moses
Mkan………………………............for the Appellant
Lemiso h/b for Lydia Nganga…..... for the Respondent
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