It was supposed to be a straightforward duty remission to help revive local sugar manufacturing.
Instead, the 27,000-tonne sugar shipment has left MPs trying to piece together a puzzle whose pieces don't seem to come from the same box.
An investigation into the tax-exempt sugar imports has exposed inconsistencies over the origin of the sugar consignment.
Fresh details have emerged in what appears like government agencies approved one shipment while a different consignment entered the country.
Industry Principal Secretary Juma Mukhwana came under sustained questioning from members of the National Assembly Committee on Trade, Industry and Cooperatives after he produced documents suggesting that sugar granted duty remission was an import from Brazil.
Yet the documents before the committee showed that inspection and origin details indicated Durban, South Africa, as the source of the sugar imports.
Committee chairman Bernard Shinali pressed the PS to explain how the government approved imports from Brazil while documents before the committee appeared to trace the shipment to South Africa.
At the centre of the inquiry is Mombasa Sugar Refinery, which was granted permission to import raw sugar duty-free for refining into industrial sugar used by manufacturers such as beverage and pharmaceutical companies.
The State Department for Industry told MPs the East African Community duty remission scheme had approved imports of up to 165,000 metric tonnes of raw sugar from Brazil, with the first consignment comprising about 27,000 metric tonnes.
However, lawmakers said the paperwork accompanying the consignment painted a different picture.
The committee deputy chair Maryann Kittany cited committee documents showing that while the ministry approved "shipment of raw sugar from Brazil", the inspection certificate was issued by SGS in South Africa, while the certificate of origin and manufacturer documents also pointed to South Africa.
"Sugar cannot be manufactured in two countries. Was this sugar approved from Brazil or from South Africa? Goods transiting through another country ordinarily retain their original country of origin,” asked Kittany.
Funyula Wilberforce Oundo questioned why the ministry had not flagged the discrepancy if officials on the multi-agency verification team were receiving documentation indicating South Africa as the origin despite approval having been granted for Brazilian sugar.
"If we approved sugar from Brazil and sugar from South Africa came, then somebody should have stopped the process until the correct sugar was approved," he said.
The questioning exposed uncertainty within government over the documentation used to clear the imports.
KRA had last week maintained that the sugar was produced from South Africa and had not been transshipped.
Mukhwana maintained that the ministry's approval related strictly to Brazilian sugar but conceded he could not immediately explain why the documents before MPs referenced South Africa.
"The sugar that the ministry approved, together with the rest of the multi-agency team, was sugar from Brazil. I am now learning that there is something from South Africa, which I promise to investigate further so that we can give a more comprehensive reply on that issue," the PS told the committee
He suggested the importer should explain the documentation relating to the certificate of origin.
The country-of-origin questions emerged alongside another dispute over whether the imported sugar qualified as raw sugar eligible for duty remission or refined table sugar liable to taxes.
The PS defended the government's decision to overturn an earlier Kenya Revenue Authority classification that had treated the consignment as table sugar, saying laboratory analyses by SGS, the Kenya Bureau of Standards and KRA showed similar technical results but differed only in interpretation.
According to Mukhwana, KRA initially classified the shipment as table sugar and assessed about Sh300 million in taxes before later reclassifying it following discussions among government agencies.
Lawmakers, however, questioned why minutes of an inter-agency meeting reflected disagreements over the classification before duty remission was upheld.
The committee also challenged the ministry over whether enough safeguards existed to prevent duty-free raw sugar from being diverted into the retail market instead of being refined into industrial sugar.
Mukhwana said future imports would depend on reports showing how much of the initial consignment had been transported to the refinery and processed into industrial sugar, blaming logistical difficulties in moving the cargo from Mombasa to the Kibos plant for delays.
But MPs questioned why a fresh duty remission request had already been approved before the ministry had received complete production and sales reports for the first shipment.
