Sugar imported under Comesa is being held at the port of Mombasa after Kenya Revenue Authority (KRA) demanded full payment of taxes before goods are released.
The move has left importers in a bind as it comes before the Comesa importation deadline of February 2021 expires.
The importers said they had been cleared by all relevant departments, and the Agriculture and Food Authority (AFA) confirmed that they were within the quota.
"Before we imported sugar, we met all the requirements, including obtaining sugar from qualified Comesa member states or EAC member countries. We even produced a letter issued by the factory producing the sugar to confirm that the sugar under inquiry was produced by themselves," said one of the importers.
He added, "All the consignments were accompanied by valid Comesa Certificates of Origin."
Rules of origin are required to reconcile the imports against the allocated quota and ensure that it is not overdrawn.
Full payment of duties and fees
According to documents seen by The EastAfrican, KRA is demanding full payment of duty and fees from a number of importers who had already brought in the sugar under the framework.
"You are required to pay full taxes as Comesa quota is exhausted, and kindly seek Comesa rates for approval," states communication sent by KRA.
The business community is now raising queries about the demand considering that any importation of sugar under Comesa is cleared by AFA after reconciliation of imports against the allocated quota and ensure that it is not overdrawn.
According to a December 24, 2020 circular, Customs and border control commissioner Pamela Ahago notified KRA deputy commissioners and staff that they should tell accredited importers to take advantage of the Comesa window to import more sugar.
Ms Ahago said a review of the adopted 41st Comesa Council Report dated November 26, 2020 showed that the Quota Safeguards covers the period March 1, 2020 to February 28, 2021 and indicated that just 192,527 tonnes of the allocated quota of 250,000 tonnes of sugar imports from March 2020 to October 2020 had been made.
KRA also banned 10 companies with a total volume of 10,000 tonnes in various container freight stations in Mombasa from importing any more sugar under Comesa.
The companies are Big Two Commodities, Commodix, Fixate Commodities, Niate Commodities, Ifox Commodities, Pacematt Commodities, Option Two Ltd, Niang Commodities Ltd, Pillarmat Ltd and Pricematt.
In November last year, Comesa Council of Ministers granted Kenya a two-year extension of the sugar safeguard, from March 2021 to February 2023. In its 41st meeting conducted virtually on November 26, 2020, the Council urged Kenya to share the modalities used in calculating the projected sugar deficit with other member states by November 30, 2020.
Kenya had made a presentation of the sugar safeguard implementation progress through the Comesa technical committees and requested for a two-year extension after the current one lapses in February 2021.
In its decision, the Council urged Kenya to give priority to Comesa originating sugar noting that the region produces enough to meet the deficit. The country will be allowed flexibility on the sugar safeguard allocated quota implementation during importation from Comesa member states.
Kenya informed the meeting that all its factories are currently on production hence it expects an increase in available sugar for domestic consumption.
Other conditions given to Kenya were to provide a detailed roadmap on how to enhance the sugar sector competitiveness during the extended safeguard period, ensure the import permit issuance process is transparent, fast and efficient; and provide the projected deficit in January of each year based on production and consumption data from ISO.
The council urged Kenya to disaggregate the World Customs Organisation Harmonised System (HS Codes) for refined white sugar and mill white/brown sugar. The safeguard should only be applicable to mill white/brown sugar.
The council directed that any unavoidable full or partial suspension of Comesa quotas or of the East African Community import tariff for sugar, or interruption of preferential access established under this agreement, be preceded by prior consultation with affected parties. This should be done through the Kenya Safeguard Sub-Committee and includes a reasonable notice period of at least three months.