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Kuku Foods Uganda Limited v Uganda Revenue Authority (Application 71 of 2021)

Tribunal · [2023] UGTAT 36 · 2023 Application Granted AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Application challenging customs valuation method applied by Uganda Revenue Authority following post-clearance audit
Decision
Assessment set aside; transaction value method confirmed as correct valuation method

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

The Tribunal held that Uganda Revenue Authority was not justified in rejecting the transaction value method for customs valuation of imported tomato ketchup. The applicant established that the declared FOB price of US$ 7.85 per carton was the price actually paid. URA failed to prove that the customs value could not be determined under the transaction method as required by the East African Community Customs Management Act Fourth Schedule. The sequential application of valuation methods is mandatory, and alternative methods may only be applied upon proof of failure of the primary transaction method.

Outcome

Assessment set aside; transaction value method confirmed as correct valuation method

Facts

Kuku Foods Uganda Limited, a KFC franchisee, imported tomato ketchup from AATCO Industries of Oman at FOB price of US$ 7.85 per carton (US$ 0.98/kg). Under the franchise agreement, the applicant was required to purchase from suppliers approved by the franchisor. AATCO was an approved supplier. In August 2018, Uganda Revenue Authority commenced a post-clearance audit and rejected the declared value, applying Method 3 (value of identical goods) and issuing an assessment of Shs. 153,762,680. URA's grounds for rejection included alleged influence of the price by the relationship between supplier and applicant, and that the declared value was lower than the cost of tomato paste. The applicant provided commercial invoices, packing lists, certificates of health, and proof of payment showing the price actually paid. The applicant's objection was disallowed, leading to this application.

Issues

  1. Whether the applicant is liable to pay the tax assessed by the respondent.
  2. Whether the respondent was justified in rejecting the transaction value declared by the applicant and applying Method 3 (value of identical goods) for customs valuation.
  3. What remedies are available to the parties.

Orders

  • Application allowed with costs.
  • The application by the respondent of the identical goods method in determining the value of the tomato sauce is hereby set aside.
  • The correct valuation method for the purpose of determining the value of the goods in question is the transaction method.
  • The applicant is awarded the costs of the application.

Rules and key headnotes

Customs Valuation — Sequential Application of Valuation Methods — Transaction Value as Primary Method
Under the East African Community Customs Management Act Fourth Schedule, customs valuation methods must be applied sequentially. The transaction value method is the primary method and must be attempted first. Alternative methods may only be applied upon proof that the customs value cannot be determined under the transaction method.
Customs Valuation — Transaction Value — Burden of Proof
Where an importer adduces evidence of the price actually paid for imported goods through commercial invoices, packing lists, and payment receipts, the onus falls on the revenue authority to prove that the customs value could not be determined under the transaction method before applying alternative valuation methods.
Revenue Authority Powers — Mandatory Statutory Procedures
Section 122 of the East African Community Customs Management Act is couched in mandatory terms and does not confer discretionary powers on the Commissioner to rely on alternative valuation methods without following the procedure laid out in the Fourth Schedule.
Customs Valuation — Rejection of Transaction Value — Insufficient Grounds
A revenue authority's rejection of the transaction value method is not justified where the grounds advanced are contradictory, irrelevant to the application of the transaction method, or unsupported by evidence that the customs value could not be determined under that method.

Legislation cited (10)

  • East African Community Customs Management Act s.122
  • East African Community Customs Management Act Fourth Schedule Paragraph 1(1)
  • East African Community Customs Management Act Fourth Schedule Paragraph 2(1)
  • East African Community Customs Management Act Fourth Schedule Paragraph 3
  • East African Community Customs Management Act Fourth Schedule Paragraph 4
  • East African Community Customs Management Act Fourth Schedule Paragraph 5
  • East African Community Customs Management Act Fourth Schedule Paragraph 6
  • East African Community Customs Management Act Fourth Schedule Paragraph 7
  • East African Community Customs Management Act Fourth Schedule Paragraph 8
  • East African Community Customs Management Act Fourth Schedule Paragraph 9

Cases cited (2)

  • Testimony Motors Ltd v Commissioner of Customs Uganda Revenue Authority (Civil Suit No. 212 of 2012)
  • Agaba Henry v Uganda Revenue Authority (Application No. 83 of 2021)

Full judgment

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

Kuku Foods Uganda Limited v Uganda Revenue Authority (Application 71 of 2021) 2023 UGTAT 36 (31 January 2023)
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.