Wakilii

Norbrook Uganda Limited v Uganda Revenue Authority (TAT Application No 18 of 2018)

Tribunal · [2020] UGTAT 5 · 2020 Application Partly Allowed AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Application to Tax Appeals Tribunal challenging customs duty assessment on imported veterinary products
Decision
Application partly allowed — assessments vacated for four products; taxes payable on two products

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

The Tribunal held that four of the six disputed veterinary products (Colvasone, Multiject IMM, Calciject 4CM, and Multivitamins) qualified as medicaments under the East African Community Customs Management Act and were properly classified under HS Codes 3004.20 and 3004.50, attracting zero-rated import duty and VAT. However, Alamycin Egg and Alamycin Chick Formula were held to be animal feed supplements rather than medicaments, properly classified under HS Code 2309.90.90, and subject to the assessed taxes. The Tribunal emphasized that products with vitamins must be examined for therapeutic or prophylactic uses rather than automatically classified as supplements.

Outcome

Application partly allowed — assessments vacated for four products; taxes payable on two products

Facts

Norbrook Uganda Limited imported six veterinary products: Alamycin Egg, Alamycin Chick, Colvasone Multiject IMM, Calciject, and Multivitamins Injection, which it classified as medicaments under HS Codes 3004.20 and 3004.50, attracting zero-rated import duty and VAT. Uganda Revenue Authority conducted a post-clearance audit for the period July 2012 to June 2017 and reclassified the products as food supplements, assessing customs duty, VAT, and withholding tax totaling Shs. 3,521,294,144. The applicant objected, arguing the products were medicaments used for treatment and prevention of animal diseases. The National Drug Authority confirmed the products were drugs. The applicant had previously received classification rulings from URA in 2011 classifying some products as medicaments. Similar products were classified as drugs in Kenya and Tanzania.

Issues

  1. Whether the items in contention can be considered as medicaments under the customs laws?
  2. Whether the respondent is bound by the letters issued in respect of the classifications?
  3. Whether there are any remedies available?

Orders

  • The import duty, VAT and WHT assessments in respect of Colvasone, Multiject IMM, Calciject 4CM and Multivitamins be vacated.
  • The applicant pays import duty of Shs. 176,427,344.15 in respect of Alamycin Egg and Alamycin Chick.
  • The applicant pays VAT of Shs. 349,326,141.41 in respect of Alamycin Egg and Alamycin Chick.
  • The applicant pays WHT of Shs. 25,980,920.49 in respect of Alamycin Egg and Alamycin Chick.
  • The respondent pays the applicant 2/3 of the costs of this application.

Rules and key headnotes

Customs Classification — Medicaments versus Food Supplements — Therapeutic or Prophylactic Use Test
For a product to be classified as a medicament under HS Code 30.04 of the East African Community Customs Management Act, it must be for therapeutic or prophylactic uses, meaning it must be used for the healing of disease or for measures intended to prevent disease, and must be put up in measured doses or in forms or packings for retail use.
Customs Classification — Vitamins in Products — Not Determinative of Classification
The presence of vitamins in a product does not automatically classify it as a food supplement rather than a medicament; the product must be examined to determine whether it has therapeutic or prophylactic uses, as vitamins themselves prevent and fight diseases and HS Code 3004.50 specifically covers medicaments containing vitamins.
Customs Classification — Burden of Proof — Revenue Authority Must Disprove Medicament Classification
Where an importer states its case that imported products are medicaments, the burden shifts to the revenue authority to controvert it by adducing evidence to show that the products do not serve the use alleged by the importer or that the ingredients in the product are not as stated; the standard of proof is on a balance of probabilities.
East African Community Customs Union — Harmonized Classification — Spirit of Treaty
In the spirit of the Customs Union as envisaged under Articles 2(2) and 4(2) of the East African Community Treaty, all member states when handling customs issues should act harmoniously, and it would go against the spirit of the Treaty and the East African Community Customs Management Act if each state treated imported products differently.
Legitimate Expectation — Complete Disclosure of Facts Required
For the doctrine of legitimate expectation or estoppel to apply against a statutory body, there must be an assurance or representation made on facts and a complete disclosure of facts; where a representation is made based on misapprehension of facts or misrepresentations, the doctrine does not apply.
Tax Statutes — Harmonized System Codes — Interpretation Against Revenue Authority
The Harmonized System Code should not be interpreted to suit the convenience of the tax collecting authority, especially where it is clear that a product falls in a particular HS code which provides for lower or zero tax.

Legislation cited (10)

Cases cited (12)

  • Akaba Investments Limited v Kenya Revenue Authority [2000] eKLR 5
  • Solar Now Services Ltd v Uganda Revenue Authority (TAT Application No. 13 of 2017)
  • M-Kopa Uganda Ltd v Uganda Revenue Authority (TAT Application No. 15 of 2017)
  • LEK farmacevtska druzba d.d v Republika Slovenija, 1EN [2016] EUVECJ C-700/15
  • Laboratories de Therapeutique modern (LTM) v Fonds d'Intervention et de Regularisation du Marche du Sucre (FIRS) [1997] EUECJ C-201/96
  • Case C-369/88 Delatte [1991] ECR 1-1487
  • Constantion Okwel alias Magendo v Uganda (Supreme Court Criminal Appeal No. 12 of 1990)
  • Tullow Uganda Limited and another v Uganda Revenue Authority (TAT Application No. 4 of 2011)
  • Dabur India limited v Commissioner of Central Excise 2005 (100) ECC 396
  • Tetragon Chemie v CCE Bangalore 2001 (138) ELT 414 (t-LB)
  • Sun Export Corporation v The Collector of Customs, Bombay (7th July 1997)
  • Tetragon Chemie (P) Ltd and others v CCE and others

Full judgment

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

Norbrook Uganda Limited v Uganda Revenue Authority (TAT Application No 18 of 2018) 2020 UGTAT 5 (15 May 2020)
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.