The Tax Appeals Tribunal has faulted the Kenya Revenue Authority (KRA) for classifying a cake-making additive imported by a local company, Palsgaard Kenya Ltd, without laboratory testing.
The Tribunal overturned KRA’s tariff decision, saying the authority could not sustain a different classification after acknowledging that its laboratory could not accurately analyse the product.
While allowing the company’s appeal, the Tribunal said KRA relied on the product’s use as an emulsifier and stabiliser in cake production to classify it as a food preparation, without producing contrary chemical or technical evidence.
The dispute concerned two consignments of the cake-making additive the company imported. KRA partially verified the consignments and found their quantities and value satisfactory, but did not verify their tariff classification before issuing its rulings on August 14, 2025.
Palsgaard declared the product under a customs classification code covering organic surface-active agents.
KRA instead classified it under a code covering preparations used in manufacturing beverages and food. It subsequently issued its tariff rulings and upheld the same after Palsgaard sought a review.
Palsgaard appealed after KRA rejected its objection. The company said the product was potassium stearate in glycerol, used in small quantities as an emulsifier and stabiliser to provide stable cake gel, improve whipping performance and extend shelf life.
Palsgaard said the product was not itself a food preparation. It asked the Tribunal to set aside KRA’s decision and classify the product as an organic surface-active agent or as a chemical preparation not elsewhere specified.
KRA relied on the supplier’s technical datasheet and argued that the product was a food additive and key ingredient in cake production.
The authority also argued that glycerol had nutritional value and contained calories, supporting its treatment of the product as a food preparation. However, KRA acknowledged that its laboratory equipment was insufficient to analyse the product accurately.
The Tribunal found that the evidence showed the product was neither cake gel nor a finished or semi-finished food preparation. It said there was no evidence that it contained flour, sugar, milk or another foodstuff.
“A chemical preparation used by a food manufacturer does not necessarily become a food preparation under heading 21.06,” the Tribunal said.
It added: “The words ‘used in the making of’ in the explanatory material to heading 21.06 cannot be read so broadly as to absorb every chemical additive employed in food manufacture.”
The Tribunal also found that Palsgaard had produced evidence on the product’s composition, physical character and technical function, while KRA had not produced contrary chemical or technical evidence.
In addition, the Tribunal said the evidential burden therefore shifted to KRA to explain why the product belonged under the food-preparation heading. It found that the authority failed to do so.
“The respondent should have conducted lab tests on the product,” the Tribunal said, noting that Chapter 34 of the Harmonized System (HS) customs classification contains specific tests for determining whether a product is an organic surface-active agent.
It held that KRA had wrongly classified the imports as food preparations used in manufacturing food and beverages instead of organic surface-active agents. It allowed Palsgaard’s appeal and set aside the KRA’s September 22 review decision.
