Premier Foods loses KSh180.9m duty fight over sugar imported under its parent’s quota

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Premier Foods Limited must pay KSh180.88 million in import duty and VAT on three shipments of industrial sugar after the Tax Appeals Tribunal ruled that a duty waiver granted to its parent company did not cover it.

The tribunal dismissed the manufacturer’s appeal in a judgment dated October 9, upholding a Kenya Revenue Authority (KRA) review decision of April 21, 2026. The judgment, in Appeal E634 of 2026, is now on Kenya Law.

A waiver in another company’s name

Premier Foods processes and makes sauces, squashes, syrups, jams, juices and canned products for the Kenyan market and for export. It is wholly owned by Premier Food Industries Limited (PFIL), which transferred its manufacturing business, trademarks and equipment to the subsidiary under an agreement dated December 31, 2020.

On July 6, 2022, the East African Community Council of Ministers approved a remission of import duty on 4,000 tonnes of white refined sugar for industrial use for Kenya. The gazette notice named PFIL as the manufacturer.

Between August and December 2022, three sugar consignments of 500,000kg, 520,000kg and 650,000kg were imported and declared in Premier Foods’ name. A KRA post-clearance audit covering May 2020 to April 2025 picked up the mismatch, and on February 25, 2026, the authority demanded KSh135.21 million in import duty and KSh45.67 million in VAT.

“A single discrepancy of identity”

The company argued that the two firms were one business under common ownership, that the sugar was used only for the approved products, and that the government lost no revenue. It blamed the mismatch on the difference between the EAC’s July-to-June approval cycle and its own January-to-December financial year. In the alternative, it said the right response was a penalty capped at US$5,000 rather than full duty.

The panel, chaired by Robert Mutuma, rejected each argument. It said the law lets the Council grant remission to a named manufacturer, and “it confers that benefit upon a named person and upon no other.”

It found that all three shipments were bought and entered while the 2022 notice was valid. “What the record discloses is not a timing problem at all, but a single discrepancy of identity,” the judgment says.

The tribunal also pointed out that the company had fixed the problem for later years. KRA accepted Premier Foods’ sugar entries for 2023, 2024 and 2025 under later notices, and the EAC gazette of July 27, 2024, lists the company in its own name as an approved manufacturer for 4,000 tonnes.

“A taxpayer that demonstrates its familiarity with a procedure cannot afterwards characterise its omission to follow that procedure as an unavoidable technicality,” the panel said.

No room for a fine instead of duty

On the claim that no revenue was lost, the tribunal said a remission is conditional relief from duty that would otherwise be payable. “Where the condition fails, the full duty falls due, and the difference between what was collected and what ought to have been collected is, by definition, the loss to the revenue,” it said.

It found that KRA had properly used its power to recover short-levied duty, since the demand came well within five years of the first entry on August 19, 2022. It also ruled that the general penalty of up to US$5,000 could not replace a duty lawfully assessed, and that the VAT component followed the duty because import VAT is charged on a base that includes it.

The panel noted that parts of KRA’s own pleadings referred to dialyzers and appeared to have been carried over from an unrelated case, and said it had disregarded them. It also found that, contrary to KRA’s claim, Premier Foods had supplied documents, but that the company had not discharged its burden of persuasion.

Each side will bear its own costs. The ruling comes as importers prepare for KRA’s new requirement for digital marine cargo insurance from November 1.