Wakilii

Shurik Limited v Uganda Revenue Authority [2025] UGTAT 2

Tribunal · 2025 Application Dismissed AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Application challenging customs classification of imported medicaments under the Harmonized System Code
Decision
Application dismissed; Respondent's reclassification and tax 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Respondent was not estopped from reclassifying the Applicant's products following its letter of 1 December 2020, which superseded the earlier 2017 classification advice. Applying the Harmonized System Code and General Interpretative Rules, the Tribunal found that cough drops and lozenges containing menthol as a flavouring agent (despite medicinal properties) fall under HS Code 1704.90.00 (sugar confectionery) attracting 25% duty, not HS Code 3004.90.00 (medicaments) at 0%. The 'no scar' cream was classified under HS Code 3304.99.00 (beauty products) at 25% duty, as scars form after healing and the product does not treat disease or illness. Application dismissed with costs to the Respondent.

Outcome

Application dismissed; Respondent's reclassification and tax assessment upheld

Facts

Shurik Limited imports pharmaceutical products. In November 2017, URA advised the Applicant to classify certain products (cough drops, lozenges, 'no scar' cream) under HS Code 3004.90.00 (medicaments, 0% duty). In December 2020, URA issued a revised classification letter advising reclassification to HS Code 1704.90.00 (sugar confectionery, 25% duty) for cough products and HS Code 3304.99.00 (cosmetics, 25% duty) for the cream. Following a spot audit for January 2021 to May 2022, URA assessed additional tax of UGX 266,209,188 plus penalties and interest, totalling UGX 346,071,944. The Applicant objected, arguing the products were medicaments and that URA was estopped by its 2017 letter and a prior consent settlement in TAT Application No. 101 of 2021.

Issues

  1. Whether the Respondent is estopped by its letter dated 13 November 2017 and 1 December 2020 from imposing an additional tax liability.
  2. Whether the Respondent's reclassification of the Applicant's products is correct.
  3. What remedies are available to the parties.

Orders

  • Application dismissed.
  • Costs awarded to the Respondent.
  • Tax assessment in respect of cough drops and lozenges upheld.
  • Classification of 'no scar' cream as beauty product under HS Code 3304.99.00 upheld.

Rules and key headnotes

Customs Classification — Harmonized System Code — Medicaments versus Sugar Confectionery
Where a cough drop or lozenge consists essentially of sugars and flavouring agents (including substances having medicinal properties such as menthol), it falls under HS Code 1704.90.00 (sugar confectionery) and not HS Code 3004.90.00 (medicaments). Only pastilles or cough drops containing substances with medicinal properties other than flavouring agents fall under Chapter 30, provided the proportion of those substances gives them therapeutic or prophylactic uses.
Customs Classification — Beauty Products versus Medicaments
A product marketed for the treatment of scars, marks, and blemishes is a beauty product or preparation for the care of the skin falling under HS Code 3304.99.00, not a medicament under Chapter 30, where scars form after the body has healed and the product does not treat a disease or illness.
Estoppel and Legitimate Expectation — Change of Position by Revenue Authority
A revenue authority has the right and power to change its position on a particular interpretation of customs classification. When it does so, the new position takes effect from the time it is made and does not render the earlier position illegal or unreliable. No legitimate expectation arises where the authority has clearly communicated a change in position by subsequent written advice.
Consent Settlements — Binding Effect
Unless stated otherwise, consent settlements are entered into on a without prejudice basis and are not binding on the parties in respect of subsequent disputes arising from different audit periods.
Harmonized System Code — General Interpretative Rules
Where goods are prima facie classified under two or more headings, classification shall be effected under the heading which provides the most specific description. Where headings are equally specific, recourse must be had to the explanatory notes to determine the correct classification based on the essential character and composition of the goods.
Evidence — Role of National Drug Authority in Classification Disputes
While the National Drug Authority is not mandated to classify imported goods for customs purposes, its determination that a product is a herbal medicine is relevant evidence in determining whether the product has medicinal, therapeutic, or prophylactic uses. However, such evidence must be specific and supported by details of the product's medicinal qualities and uses.
Preliminary Objections — Scope of Evidence and Pleadings
Where an application for review relates to a taxation objection decision, the applicant is limited to the grounds stated in the taxation objection unless the Tribunal orders otherwise. However, where the dispute concerns misclassification of products, evidence on the contents and composition of the products is not new evidence but is essential to determining the substantive issue and does not constitute a departure from pleadings.

Legislation cited (3)

  • Tax Appeals Tribunal Act s.16(4)
  • National Drug Authority Act Cap 198 s.3
  • Protocol on the Establishment of the East African Customs Union Article 12(4)

Cases cited (6)

  • Republic v Kenya Authority Ex parte Universal Corporation Limited MA 460 of 2013
  • Tata Uganda Limited v Uganda Revenue Authority (TAT Application No. 41 of 2019)
  • Musoke Mike v Kalumba James (High Court Revision Cause No. 09 of 2019)
  • Kasese Cobalt v Uganda Revenue Authority (TAT Application No. 21 of 2020)
  • NSSF v Uganda Revenue Authority (Civil Appeal No. 29 of 2020)
  • Norbook Uganda Limited v Uganda Revenue Authority (TAT Application No. 18 of 2018)

Full judgment

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

Shurik Limited v Uganda Revenue Authority 2025 UGTAT 2 (28 February 2025)
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.