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Shurik Limited v Uganda Revenue Authority (Application 101 of 2021)

Tribunal · [2023] UGTAT 58 · 2023 Application Dismissed AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Application challenging customs classification of imported pharmaceutical product following post-clearance audit and objection disallowance
Decision
Application dismissed; applicant liable for assessed tax of UGX 41,183,200 arising from customs classification of Ketomac Shampoo under HSC 3305.10.00

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Holding

The Tribunal held that Ketomac Dandruff Treatment Shampoo, despite containing therapeutic ingredient Ketoconazole 2% and being registered with the National Drug Authority as a scheduled drug, must be classified under HSC 3305.10.00 as a shampoo rather than as a pharmaceutical product under Chapter 30. Chapter Note 1(e) to Chapter 30 of the Harmonized System expressly excludes preparations of headings 33.03 to 33.07 even if they have therapeutic or prophylactic properties. The National Drug Authority has no statutory power to determine customs classification. Application dismissed.

Outcome

Application dismissed; applicant liable for assessed tax of UGX 41,183,200 arising from customs classification of Ketomac Shampoo under HSC 3305.10.00

Facts

Shurik Limited, a dealer in medicaments and medical equipment, imported Ketomac Dandruff Treatment Shampoo containing Ketoconazole 2%, a therapeutic ingredient for treating fungal infections. The product was registered with the National Drug Authority as a scheduled drug sold under prescription. Uganda Revenue Authority conducted a post-clearance audit and assessed tax liability of UGX 41,183,200, classifying Ketomac as a cosmetic shampoo under HSC 3305.10.00 attracting 25% duty rather than as a pharmaceutical product under HSC 30.04 which would be zero-rated. The applicant objected, arguing the product's therapeutic properties and NDA registration required classification as a pharmaceutical. The respondent disallowed the objection. The applicant challenged the classification before the Tax Appeals Tribunal.

Issues

  1. Whether the applicant is liable to pay the taxes as assessed by the respondent for alleged misclassification of Ketomac Dandruff Treatment Shampoo.
  2. Whether Ketomac Shampoo should be classified as a pharmaceutical product under HSC 30.04 or as a cosmetic preparation under HSC 3305.10.00.
  3. What role, if any, the National Drug Authority has in determining customs classification of pharmaceutical products.

Orders

  • Application dismissed.
  • Costs awarded to the respondent.

Rules and key headnotes

Customs Classification — Harmonized System — Primacy of Chapter Notes over Product Characteristics
In customs classification under the Harmonized Commodity Description and Coding System, classification is determined according to the terms of the headings and any relative Section or Chapter Notes pursuant to General Interpretative Rule 1, and express exclusions in Chapter Notes take precedence over the therapeutic or prophylactic properties of a product.
Customs Classification — Pharmaceutical Products — Exclusion of Shampoos with Therapeutic Properties
Shampoos are expressly excluded from classification as pharmaceutical products under Chapter 30 of the Harmonized System by virtue of Chapter Note 1(e), which excludes preparations of headings 33.03 to 33.07 even if they have therapeutic or prophylactic properties, and must be classified under heading 3305.10.00 regardless of medicinal content.
Statutory Powers — National Drug Authority — Limits of Jurisdiction
The National Drug Authority, established under the National Drug Policy and Authority Act with powers under sections 5(d) and 44 to control importation and licensing of pharmaceutical products, has no statutory power to determine the customs classification of pharmaceutical products for purposes of import duty assessment.
Customs Classification — Expert Evidence — Relevance and Weight
Expert evidence on the pharmacological properties and therapeutic uses of a product, while relevant to establishing its medicinal character, does not determine customs classification where the witness has no qualification or expertise in customs classification and the classification is governed by express provisions of the Harmonized System.

Legislation cited (7)

Cases cited (1)

  • Commissioner of Customs and Excise v Smithkline Beecham Plc Case 206/03

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 (Application 101 of 2021) 2023 UGTAT 58 (14 June 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.