NAIROBI, Kenya – The High Court has dismissed an appeal by the Kenya Revenue Authority (KRA) in a Sh1.4 million tax dispute with Sai Pharmaceuticals Limited, ruling that Vitamin E capsules imported by the firm should be classified as medicines rather than food supplements.
Justice Patrick Otieno, delivering judgment virtually on August 29, upheld a 2023 decision by the Tax Appeals Tribunal (TAT) that EVIT 200 and EVIT 400 capsules fall under the medicaments category in customs tariffs.
At the centre of the dispute was whether the products should be taxed as food supplements under HS Code 2106.90.91, which attracts higher duties, or as medicaments under HS Code 3004.50.00, which are taxed at a lower rate.
KRA had reclassified the capsules as food supplements, arguing they only offered general wellness benefits rather than therapeutic or prophylactic effects.
Sai Pharmaceuticals countered that the products had been registered as drugs by the Pharmacy and Poisons Board since 2008 and were widely prescribed by physicians.
The court agreed with Sai, noting that the capsules contained significantly higher doses of Vitamin E—200mg and 400mg compared to the recommended 40–50mg daily allowance—making them therapeutic.
Justice Otieno observed that “the presence of physician prescriptions for these products also supports their therapeutic use as medicine.”
The judge criticised KRA for failing to disclose laboratory test results it claimed to have relied on in reclassifying the imports. Withholding the report, he said, amounted to an “opaque decision-making process” that violated the taxpayer’s right to a fair hearing.
He further faulted the agency for ignoring expert input from the Pharmacy and Poisons Board, whose classification, while not legally binding, carried “substantial persuasive evidentiary weight.”
The dispute dates back to May 2021 when Sai imported a consignment of the capsules, declaring them as medicaments in line with KRA’s earlier tariff rulings.
KRA later shifted its position, demanding additional taxes of Sh1.4 million.
In siding with Sai, the court reaffirmed that customs classifications must be guided by scientific evidence, transparency, and consistency.
The ruling is expected to have broader implications for importers of health products, many of whom face uncertainty due to shifting tariff interpretations.
Justice Otieno dismissed KRA’s appeal in its entirety and ordered the tax agency to pay costs to Sai Pharmaceuticals.
