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Century Bottling Company Limited v Uganda Revenue Authourity (Application No 24 of 2021)

Tribunal · [2022] UGTAT 15 · 2022 Application Partly Allowed AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Application challenging tax assessments arising from customs post clearance audit
Decision
Application partly allowed — first assessment set aside, second assessment upheld

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

The Tribunal held that the respondent was not justified in considering debit notes while disregarding credit notes when determining customs value under the transaction value method. The assessment of Shs. 490,400,451 was set aside. However, the Tribunal held that goods imported from an Export Processing Zone in Kenya are deemed to be imported into Uganda and attract full import duties under the East African Community Customs Management Act and the Protocol on the Establishment of the East African Customs Union. A certificate of origin does not confer preferential treatment for goods exported from an EPZ. The assessment of Shs. 3,593,100,911 was upheld.

Outcome

Application partly allowed — first assessment set aside, second assessment upheld

Facts

The Uganda Revenue Authority conducted a customs post clearance audit on Century Bottling Company Limited for the period January 2015 to December 2018. Two tax assessments remained in dispute. The first, Shs. 490,400,451, arose from the treatment of debit and credit notes on prices paid for importation of concentrates. The applicant imported concentrates from a related company in Eswatini and received quarterly debit and credit notes adjusting the prices. The respondent considered debit notes but not credit notes when assessing additional taxes. The second assessment, Shs. 3,593,100,911, arose from the importation of mango puree produced by All Fruits EPZ Limited and Organic Growers and Packers EPZ Limited in Kenya. The applicant contended it was entitled to preferential treatment under certificates of origin issued by Kenya. The respondent contended that goods imported from an Export Processing Zone in Kenya are deemed to be imported into Uganda and attract full import duties.

Issues

  1. Whether the applicant is liable to pay the tax assessed of Shs. 490,400,451 arising from the treatment of debit notes and credit notes on prices paid for importation of concentrates.
  2. Whether the applicant is liable to pay the tax assessed of Shs. 3,593,100,911 arising from the importation of mango puree produced by companies in an Export Processing Zone in Kenya.
  3. What remedies are available to the parties.

Orders

  • The assessment of Shs. 490,400,451 is set aside.
  • The assessment of Shs. 3,593,100,911 is upheld.
  • The respondent is awarded half the costs of the application.

Rules and key headnotes

Customs Valuation — Transaction Value Method — Treatment of Credit Notes and Debit Notes
Where an importer uses the transaction value method to determine customs value under the East African Community Customs Management Act, and receives credit notes and debit notes adjusting the price of imported goods, both credit notes and debit notes must be considered in ascertaining the customs value. A credit note showing what was not paid or payable should be considered in arriving at the price an importer actually paid or was payable. The customs authority cannot accept debit notes while disregarding credit notes from the same source.
Customs Valuation — Discounts — Recognition in International Trade
A discount is a recognized feature of international trade practice. Where the price paid by an importer consists of a discount which is not disputed, the credit notes issued should be considered in ascertaining the customs value of the imports. A discount is part of the value of the price not actually paid.
Export Processing Zones — Imports from EPZ — Liability to Import Duty
Goods imported into Uganda from an Export Processing Zone in a Partner State of the East African Community are deemed to be imported into Uganda and attract full import duties under the East African Community Customs Management Act s.168 and the Protocol on the Establishment of the East African Customs Union Article 25(2)(b). The preferential treatment granted to imports into an EPZ does not extend to goods exported from the EPZ.
Certificate of Origin — Effect — Preferential Treatment vs Community Tariff Treatment
A certificate of origin for goods produced in an Export Processing Zone is a document showing that goods originate from the mentioned country but does not confer preferential treatment. It confers community tariff treatment. Community tariff treatment is not synonymous with preferential treatment. Community tariff treatment signifies that the holder of the certificate of origin should be treated in the same way as other members of the community in respect of tariffs. The community tariff treatment for goods from an EPZ is that they should pay import duty under the East African Community Customs Management Act and the Protocol.
Export Processing Zones — Specific Legislation — Precedence over General Legislation
Where there is a specific law it takes precedence over a general law. A specific legislation derogates from the general legislation. The law in respect of Export Processing Zones caters for community tariff treatment where the goods imported originate from an EPZ in the Partner States. This overrides any preferential treatment that may arise in respect of the laws conferring origin in the community.
Import Duty — Liability of Importer — Goods from Export Processing Zone
The importer of goods from an Export Processing Zone is required to pay import duties as provided for in the community tariff treatment of goods from an EPZ under the East African Community Customs Management Act s.168. Where imported goods are liable to import duty ad valorem, the value of such goods shall be determined in accordance with the Fourth Schedule and import duty shall be paid on that value.

Legislation cited (19)

  • East African Community Customs Management Act s.122
  • East African Community Customs Management Act s.111
  • East African Community Customs Management Act s.167
  • East African Community Customs Management Act s.168
  • East African Community Customs Management Act Fourth Schedule
  • Protocol on the Establishment of the East African Customs Union Article 14
  • Protocol on the Establishment of the East African Customs Union Article 25
  • Protocol on the Establishment of the East African Customs Union Article 252(b)
  • East African Community Customs Union (Export Processing Zones) Regulations Regulation 14(b)
  • East African Community Customs Union (Export Processing Zones) Regulations Regulation 15(1)
  • East African Community Customs Union (Rules of Origin) Rules Rule 4(a)
  • East African Community Customs Union (Rules of Origin) Rules Rule 10
  • WTO Customs Valuation Agreement Article 1
  • WTO Customs Valuation Agreement Article 8
  • Free Zones Act 2014 s.2
  • Free Zones Act 2014 s.46(2)
  • Kenya Special Economic Zones Act s.4(4)
  • Kenya Special Economic Zones Act s.6(b)
  • Kenya Special Economic Zones Act s.7

Cases cited (8)

  • Eicher Tractors Limited v Commissioner of Customs Mumbai (2000) 4 Suppl. S.C.R. 597
  • Bidco Oil Refineries Limited v Commissioner of Customs Services (Application No. 150 of 2015)
  • Commissioner SARS v Levi Strauss (Pty) Limited (509/2019) [2021] ZASCA 32
  • British American Tobacco Uganda Limited v Uganda Revenue Authority (Application No. 62 of 2019)
  • Jafferali M. Alibhai v The Commissioner of Income Tax [1961] EA 610
  • Mangin v Inland Revenue Commissioner [1971] AC 739
  • Ormond Investment Co. Limited v Betts [1928] AC 143
  • Badenhorst v CIR 1955(2) SA 207 (N) 215

Full judgment

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The original judgment as reported. Read the original PDF before relying on any passage.

Century Bottling Company Limited v Uganda Revenue Authourity (Application No 24 of 2021) 2022 UGTAT 15 (21 October 2022)
Source: this page presents Wakilii’s issue analysis and metadata for a publicly reported Ugandan judgment. Any AI-generated summary is marked as such. Judgment text is sourced from the Uganda Legal Information Institute (ulii.org). Wakilii is not affiliated with ULII.