KNTC fails to stop petition on edible oil export duty

The Mombasa Law Courts.

Photo credit: File | Nation Media Group

The High Court in Mombasa has dismissed an application seeking to strike out a petition challenging plans by the government to remove the 35 percent duty on edible oils and substitute it with a 10 percent export and investment promotion levy.

Justice Olga Sewe dismissed the application by the Kenya National Trading Corporation (KNTC) stating that although another case, challenging the importation of duty-free edible oil, by the State agency, had been dismissed in January, the matter was not resolved substantively.

Justice Sewe further said it was clear that the subject matters were distinct as the case dismissed in January touched on the KNTC importation of edible oil duty-free at the expense of local manufacturers, while the case she was handling was based on a letter dated June 20, 2023, which addressed the removal of 35 percent duty on edible oils.

“It is, therefore, clear that the Nairobi suit has not been heard and determined substantively, let alone on the merits of the subject matter,” said Judge Sewe.

Activist Julius Ogogoh challenged the government policy, at the Mombasa court, arguing that it would hurt businesses and that the duty-free importation of refined edible oil should not be limited to the KNTC, but should apply to all importers.

When he proposed the policy, former Investments, Trade and Industry Cabinet Secretary Moses Kuria had stated that the importation of oil into the country, estimated at Sh102 billion, continues to draw back local manufacturing.

Mr Kuria added that the removal of the 35 percent duty and substitution with 10 percent export and investment promotion levy would reverse the trend.

The CS had claimed it would also contribute to the growth of palm, soya and sunflower farming.

LSK suit

A similar case filed by the Law Society of Kenya (LSK) was dismissed by Justice John Chigiti in January after questioning how the documents, granting the waiver were obtained.

The documents included letters written by the Treasury Principal Secretary to the taxman's Commissioner of customs and border control, requesting the facilitation of KNTC to import the oil duty-free for one year and a departmental circular issued on February 14, 2023, granting the tax waiver. 

The corporation wanted the Mombasa case dismissed arguing that another judge had already dealt with the matter, hence the court had no jurisdiction to hear and determine the petition.

But Justice Sewe said the petition by LSK, in Nairobi, revolved around a letter dated January 20, 2023, and the contention was that it was issued in violation of the Constitution by procuring the importation of finished edible oils into the country in secrecy, without floating any international tender or following the fair, equitable, transparent, competitive and cost-effective framework.

The letter had allowed the importation of 125,000 metric tonnes of cooking oil by the KNTC.

The judge said from the earlier ruling, it was clear that the whole question on the importation of edible oils is yet to be determined substantively, noting that the letter at the centre of the dispute was expunged by the court for having been acquired illegally.

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