In the case of Kuku Foods Uganda Ltd v. Uganda Revenue Authority (Civil Suit No. 0036 of 2021), the High Court of Uganda has addressed issues related to preferential tariff treatment under the COMESA Treaty and the implications of an exporter not signing a certificate of origin.
What is the background?
Kuku Foods Uganda Ltd, a franchisee of KFC, imports French fries for its business in Uganda. The Uganda Revenue Authority (URA) had previously granted the company preferential tariff treatment under the COMESA Treaty. However, in May 2018, a post-audit review by URA found that 7 certificates of origin, which allowed for this preferential treatment, had not been duly signed by the exporter. URA declared these certificates invalid and assessed import duties against Kuku Foods.
Kuku Foods objected to this assessment, but URA upheld its decision. Kuku Foods then appealed to the Tax Appeals Tribunal, which ruled in favour of URA, leading the company to further appeal to the High Court.
What was the issue for determination?
The question for determination was whether or not the omission by an exporter to sign a certificate of origin invariably invalidates that certificate and automatically disentitles all the goods to which that certificate relates to preferential tariff treatment under the COMESA Rules of Origin.
What was the decision of the court?
The court held that;
- Documentary Evidence is Required: Only a properly completed certificate of origin qualifies for COMESA preferential tariff treatment. Entitlement cannot be proved through conjecture or argument. It cannot also be proved through evidence of inferences of whatever nature.
- For an importer to be accorded preferential tariff treatment in Uganda for goods imported from a COMESA member state, those goods must always be accompanied by a valid certificate of origin that is filled out and authenticated in the prescribed form. That form bears 12 boxes which all ought to be filed out.
- Signatures of the Exporter are mandatory: Even with authentication by authorities, a certificate of origin must bear the original signature of the exporter. This requirement cannot be bypassed.
- The exporter's original signature and the designated authority's authentication are both mandatory. One cannot substitute for the other; both must be present for the certificate to be valid.
- Prior Verification by Authorities: The designated authority must ensure the certificate is fully and accurately completed before endorsing it.
- An exporter’s omission to sign, or errors in key details like country of origin, the exporter's name, or the certificate’s declaration, critically undermine the certificate’s validity.
- No Errors Allowed: A certificate of origin must be free from errors, especially in key areas such as exporter and importer names, country of origin, and the required declarations.
- URA’s Discretion: URA is not obliged to verify questionable certificates. It can immediately reject a flawed certificate, requiring the importer to pay the necessary tax or obtain a valid certificate.
Conclusion
This decision emphasises the importance of strict adherence to the rules governing preferential tariff treatment under the COMESA Treaty. It clarifies that a valid certificate of origin, complete with all necessary signatures and authentications, is non-negotiable. Importers must ensure full compliance with these requirements, as any deviation, specifically with the important areas mentioned above may lead to the loss of tariff benefits and additional tax liabilities. It also serves as a critical reminder to businesses engaged in cross-border trade within COMESA to always verify their documentation.
Author
DISCLAIMER: This article is for general information only and it reflects the position at the date of publication. It does not constitute legal advice. For any further information or advice relating to this article, please contact us.
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