Tax Attraction Tribunal orders KRA to refund Kenafric Industries US$79K in excise obligation | Meals Enterprise Africa

KENYA – The Tax Attraction Tribunal (TAT) has directed the Kenya Income Authority (KRA) to refund KES10.28 million (US$79,637.56) in excise obligation to Kenafric Industries, following a dispute over levies paid on preforms utilized in manufacturing plastic bottles.  

The ruling marks a big victory for the buyer items agency, which had argued that the imported packaging bottles had been uncooked supplies important for the manufacturing of its bottled merchandise. 

In its ruling, the TAT decided that the bottles in query qualify as uncooked supplies below Part 14 of the Excise Obligation Act, permitting Kenafric Industries to offset the excise obligation paid on these supplies towards the overall tax payable on the ultimate product.  

The tribunal discovered that the KRA’s resolution to disallow Kenafric’s declare of excise obligation on the imported preforms for making plastic bottles was inaccurate. 

“It’s subsequently the tribunal’s discovering that the respondent (Commissioner of Home Taxes) erred in disallowing the appellant’s declare of excise obligation in respect of imported preforms for making plastic bottles for packaging its bottled merchandise below Part 14 of the Excise Obligation Act,” the TAT said. 

This ruling has been welcomed by non-beverage producers who use plastic bottles to package deal their merchandise, particularly those that opposed the latest proposal within the Finance Invoice 2024 to delete Part 14 of the Excise Obligation Act.  

The proposed deletion, which has been shelved, would have elevated their enter prices by eradicating the availability that permits for claims on excise obligation paid on uncooked supplies utilized in manufacturing excisable merchandise. 

The KRA had contended that preforms are completed merchandise, arguing that uncooked supplies ought to be integral to the ultimate product, such because the liquid content material, slightly than merely serving as packaging.  

Nevertheless, the tribunal sided with Kenafric Industries, agreeing that the beverage couldn’t be bought with out its packaging, which is crucial for the product’s marketability. 

“This place is supported by the provisions of Part 12 of the Excise Obligation Act which specifies bottled of equally packaged waters and different non-alcoholic drinks, not together with fruit or vegetable juice as a category of excisable items that can not be bought of their state apart from accompanied by a sort of packaging , within the appellant’s case being bottles,” stated the tribunal. 

Kenafric Industries ltd is without doubt one of the largest producers of confectionery, meals, footwear, and stationery merchandise in Kenya