Wakilii

Century Bottling Company Limited v Uganda Revenue Authority and Another (Civil Appeal No. 51 of 2022; Civil Appeal No. 64 of 2022)

High Court · [2025] UGCOMMC 161 · 2025 Appeals Dismissed AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Consolidated appeals from the Tax Appeals Tribunal ruling in TAT Application No. 24 of 2021 rendered on 21 October 2022
Decision
Both appeals dismissed; Tax Appeals Tribunal decision affirmed

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

The High Court dismissed both consolidated appeals. Held: a certificate of origin is prima facie evidence of origin but does not automatically confer preferential treatment; goods manufactured in an Export Processing Zone and sold within the EAC customs territory attract full duties under the Common External Tariff; the consignee is liable to pay import duties to the customs authority of the territory of consumption; post-importation debit and credit notes reflecting commercially justifiable price adjustments should be considered in determining the transaction value for customs purposes where supported by objective and quantifiable data.

Outcome

Both appeals dismissed; Tax Appeals Tribunal decision affirmed

Facts

Century Bottling Company Limited imported mango puree from Kenya through a triangular transaction involving Coca Cola Midi as intermediary and manufacturers located in Export Processing Zones. URA assessed additional tax of UGX 3,593,100,911 on the basis that goods from EPZs sold within the EAC customs territory do not qualify for preferential treatment. Separately, URA assessed additional tax of UGX 490,400,451 arising from post-importation debit and credit notes issued by Century's supplier of beverage base concentrate from Eswatini. Century appealed to the Tax Appeals Tribunal, which ruled partially in its favour on the credit notes issue. Both parties cross-appealed to the High Court.

Issues

  1. Whether a certificate of origin issued by Kenya Revenue Authority for mango puree imported from Kenya conferred preferential treatment.
  2. Whether Section 168 of the EACCMA and Article 25 of the Protocol impose tax on removal of goods from an export processing zone on the appellant where the mango puree was purchased from Coca Cola Midi.
  3. Whether taxes imposed under Section 168 of the EACCMA and Article 25 of the Protocol on goods removed from an export processing zone in Kenya are payable to the Uganda Revenue Authority.
  4. Whether the appellant discharged the burden that it should not pay taxes for importing mango concentrates from an Export Processing Zone.
  5. Whether the Tax Appeals Tribunal erred in holding that the appellant was not liable to pay taxes arising from the treatment of debit and credit notes for the importation of concentrates.

Orders

  • Civil Appeal 51 of 2022 is dismissed.
  • Civil Appeal 64 of 2022 is dismissed.
  • The judgment of the Tax Appeals Tribunal is affirmed.
  • Each party to bear its costs in the consolidated appeals.

Rules and key headnotes

Customs Valuation — Certificate of Origin — Evidentiary Value
A certificate of origin issued by a competent authority constitutes prima facie evidence that goods satisfy the origin criteria for preferential treatment under the EAC Rules of Origin, but does not automatically confer preferential treatment; customs authorities retain the right to verify or challenge the certificate in exceptional circumstances.
Export Processing Zones — Goods Sold Within EAC Customs Territory — Duty Liability
Under Article 25(2)(b) of the EAC Customs Union Protocol, goods manufactured in an Export Processing Zone that are sold in the customs territory attract full duties, levies and charges under the Common External Tariff; such goods are deemed imported into the customs territory even though physically originating within a Partner State.
Customs Duty — Liability of Consignee — Definition of Owner
Under Section 2(1)(b) of the EACCMA, the consignee of imported goods is deemed the owner for customs purposes and is liable to pay import duties to the customs authority of the territory of consumption, regardless of commercial arrangements between purchaser and seller.
Customs Valuation — Transaction Value Method — Post-Importation Adjustments
Post-importation debit and credit notes that reflect commercially justifiable price adjustments based on terms agreed at the time of sale should be considered in determining the transaction value for customs purposes, provided they are supported by objective and quantifiable data directly related to the price of the imported goods.
Tax Assessment — Duty to Act on Reasonable Grounds
Where customs authorities reject statements, documents or declarations presented for valuation purposes, such rejection must be based on sound reasons, credible evidence and sound logic; authorities cannot reject evidence on whims or unreasonable grounds, particularly where they accept some documents from a source while rejecting others without basis.
Tax Statutes — Modern Approach to Interpretation
The modern approach to interpretation of tax statutes is holistic, seeking to ascertain the objective intention of the legislation while utilizing canons of construction; courts no longer apply strict literal interpretation but employ purposive and harmonious rules, resolving ambiguities in favour of the taxpayer only where meaning cannot be discerned through reasonably simple inquiry.

Legislation cited (28)

  • East African Community Customs Management Act s.168
  • East African Community Customs Management Act s.122
  • East African Community Customs Management Act s.130
  • East African Community Customs Management Act s.111
  • East African Community Customs Management Act s.2(1)(b)
  • East African Community Customs Management Act s.5
  • Protocol on the Establishment of the East African Customs Union Article 25
  • Protocol on the Establishment of the East African Customs Union Article 14(1)
  • Protocol on the Establishment of the East African Customs Union Article 29(2)
  • Protocol on the Establishment of the East African Customs Union Article 1
  • Protocol on the Establishment of the East African Customs Union Article 4
  • EAC Customs Union (Rules of Origin) Rules Rule 4
  • EAC Customs Union (Rules of Origin) Rules Rule 10
  • EAC Customs Union (Rules of Origin) Rules Rule 24
  • EAC Customs Union (Rules of Origin) Rules Rule 12(1)
  • EAC Customs Union (Rules of Origin) Rules Rule 12(3)
  • EAC Customs Union (Export Processing Zones) Regulations Regulation 14(b)
  • EAC Customs Union (Export Processing Zones) Regulations Regulation 15(1)
  • Tax Appeals Tribunal Act s.27(2)
  • Tax Appeals Tribunal Act s.18
  • Free Zones Act s.46(2)
  • Export Processing Zones Act (Kenya) Cap 517 s.24
  • WTO Agreement on Customs Valuation Article 1
  • WTO Agreement on Customs Valuation Article 8
  • WTO Agreement on Customs Valuation Article 17
  • WTO Agreement on Customs Valuation Article 13
  • WTO Agreement on Customs Valuation Article 7(2)(C)
  • GATT 1994 Article VII

Cases cited (47)

  • Cape Brandy Syndicate v IRC (1921) K.B 64
  • Uganda Revenue Authority v Siraje Hassan Kajura (Supreme Court Civil Appeal No. 9 of 2015)
  • Chestnut Uganda Limited v Uganda Revenue Authority (TAT Application No. 94 of 2019)
  • Uganda Revenue Authority v COWI A/S (High Court Civil Appeal No. 34 of 2020)
  • Russell v Scott [1948] AC 422
  • Macpherson v Hall (1969-1973) 48 TC 210
  • Fleming v Associated Newspapers Ltd (1970) 48 TC 382
  • Pepper v Hart [1993] 1 All ER 42
  • Davis v Johnson [1978] 1 All ER 841
  • Metropolitan Life Limited v Commissioner for the South African Revenue Services [2008] 4 All SA 558 (C)
  • Mangin v Inland Revenue Commissioner (1971) 1 All ER 179
  • Uganda Revenue Authority v Patrick Nabiryo & Others (Court of Appeal Civil Appeal No. 45 of 2013)
  • Stanbic Bank Uganda Ltd & 7 Others v Uganda Revenue Authority (High Court Civil Appeal No. 170 of 2007)
  • Informer No. TCI/002/07/05-06 v Uganda Revenue Authority (High Court Civil Suit No. 579 of 2007)
  • Engineering Industry Training Board v Samuel Talbot [1969] 1 All ER 480
  • Roche Transport and Logistics Services v Uganda Revenue Authority (High Court Civil Appeal No. 20 of 2021)
  • Lubanga Jamada v Ddumba Edward (Court of Appeal Civil Appeal No. 11 of 2016)
  • Celtel Uganda Limited v Karungi Susan (Court of Appeal Civil Appeal No. 73 of 2013)
  • Uganda Revenue Authority v Tembo Steel Mills (High Court Civil Appeal No. 9 of 2005)
  • Kuku Foods v Uganda Revenue Authority (High Court Civil Appeal No. 36 of 2021)
  • Royal Electronics Assembling Group Limited v Uganda Revenue Authority (TAT Application No. 37 of 2017)
  • Commissioner SARS v Levi Strauss SA Pty Ltd (2021) ZASCA 32
  • BAT v Uganda Revenue Authority (TAT Application No. 62 of 2019)
  • Corrpro Companies Inc v United States 433 F3d 1360 (Fed Cir 2006)
  • HMRC v Marco Trading Company Limited (2013) UKUT 0450 (TCC)
  • Jafferali Alibhai v Commissioner of Income Tax (1961) EA 610
  • Mangin v Inland Revenue Authority (1971) AC 738
  • Ormond Investment Co Ltd v Betts [1922] AC 143
  • Badenhorst v CIR 1995 (2) SA 207 (N)
  • Republic v Kenya Revenue Authority Ex Parte EPZ Limited (Nairobi Civil Appeal No. 116 of 2013)
  • Kisembo Peter and Kasozi Adnan v Commissioner Customs Uganda Revenue Authority (Civil Suit No. 269 of 2012)
  • Testimony Motors v Uganda Revenue Authority (Civil Suit No. 212 of 2012)
  • Redington Kenya EPZ Limited v Kenya Revenue Authority & Another (Constitutional Petition No. 499 of 2014)
  • Ricardo EPZ International Limited v Kenya Revenue Authority (High Court Petition No. 447 of 2012)
  • Republic v Kenya Revenue Authority Ex Parte Altex EPZ Limited (High Court Miscellaneous Application No. 709 of 2008)
  • Armco Steel Corporation v Stans 303 F Supp 262 (SDNY 1969)
  • RJ Reynolds Tobacco v Durham County 479 US 130 (1986)
  • Delta Paper Mills v Collector of Central Excise 1995 (1) ALT 288
  • Mothey Gangaraju & Sons v State of Andhra Pradesh (1965) 16 SCT 250 (AP)
  • Flint v Stone Tracy Co 220 US 107 (1911)
  • Louisville & Nashville Railroad Co v Central Iron Co 265 US 59 (1924)
  • Pittsburgh Railway Co v Fink 250 US 577
  • DT Dobie & Company (Uganda) Ltd v Customs and Excise (1970) EA 504
  • BIDCO Oil Refineries Limited v Commissioner of Customs Services (TAT Appeal No. 150 of 2015)
  • Eicher Tractors Limited v Commissioner of Customs Mumbai (2000) 4 Suppl SCR 597
  • British United Shoe Machinery Co Ltd (1977) 1 BVC 062
  • Infectious Diseases Institute v Uganda Revenue Authority (High Court Civil Appeal No. 6 of 2022)

Full judgment

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Century Bottling Company Limited v Uganda Revenue Authority and Another (Civil Appeal No. 51 of 2022; Civil Appeal No. 64 of 2022) [2025] UGCommC 161 (22 May 2025)
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