Vehicles used in transportation of smuggled goods: After SRO 499 FBR can’t grant option of fine in lieu of confiscation: SC

ISLAMABAD: The Supreme Court held that, following the enactment of S.R.O. 499(I)/ 2009, the Federal Board of Revenue (FBR), under the first proviso to Section 181 of the Customs Act, 1969, was divested of the authority to grant the option of a fine in lieu of confiscation for conveyances used in the transportation of smuggled or non-custom-paid goods.

The judgment, authored by Justice Muhammad Shafi Siddiqui, said the SRO, 2009 unequivocally withdrew the discretion of the adjudicating officer by declaring that no such option shall be extended in cases of (a) smuggled goods falling under clause (s) of section 2 of the Act, and (b) lawfully registered conveyances found used wholly or exclusively for the carriage of offending goods in false cavities.

Justice Siddiqui wrote that this statutory embargo remained in force continuously, except for a brief and limited relaxation introduced through S.R.O. 1280(I)/ 2024 dated 20 August 2024, which conditionally permitted the release of certain vehicles not falling within clause (b), seized for the first or second time.

The judgment noted that the said concession; however, stood rescinded by S.R.O. 1619(I)/ 2024 dated 03 September 2024, thereby restoring the original and complete prohibition with insertion/ inclusion of (ba). Consequently, the adjudicating fora, including the FBR itself, have had no lawful competence to order the release of any conveyance used for the transportation of smuggled goods against payment of the fine, and confiscation in such circumstances is mandatory in law.

Justice Siddiqui stated; “In view of the statutory framework and the authoritative pronouncement of the Supreme Court in Bashir Ahmad case, it stands settled that upon the promulgation of SRO, 2009, the Board acting under the first proviso to Section 181 of the Act divested itself of the authority to grant an option of fine in lieu of confiscation in respect of conveyances employed for the transportation of smuggled or non-custom-paid goods.” Therefore, the judgment in the Bashir Ahmad case affirms and reinforces the binding operation of SRO, 2009 in all pending, as well as, future proceedings.

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The Court noted, “Once the Board, in exercise of its powers under Section 181 of the Act, had withdrawn the discretion to grant an option of redemption fine through SRO, 2009 as amended, neither the adjudicating officer nor the appellate fora retained jurisdiction to order release of a vehicle found used wholly or exclusively for the transportation of smuggled goods.”

“By empowering authorities to confiscate, without an option of redemption penalty, all vehicles and conveyances used in the transportation of smuggled goods, the amendment closes a longstanding loophole that previously allowed offenders to reclaim such assets through payment of fines. This measure strengthens the enforcement capacity of the authorities, ensuring that the instruments of smuggling are permanently removed from circulation.”

The judgment maintained that the reasoning adopted by the Customs Appellate Tribunal, Peshawar, treating the words “liable to confiscation” occurring in section 157(2) as a matter of discretion, was misconceived and contrary to the clear mandate of the Act as reinforced by the binding precedent of this Court in Bashir Ahmed (supra).

The Peshawar High Court (PHC), by affirming such a view and construing the amending S.R.O. 1619(I)/ 2024 dated 03.10.2024 as discretionary, overlooked the enduring operation of the amended notification above, thereby falling into error apparent on the face of the record. Their interpretation that the case involved discretionary confiscation under Section 157 (2) is misconceived. The apex court; therefore, set aside the judgments of the Tribunal and the PHC.

A three-judge bench, headed by Chief Justice of Pakistan Yahya Afridi, and comprising Justice Shafi Siddiqui and Justice Miangul Hassan Aurangzeb heard an appeal against the Peshawar High Court (PHC) order in a Customs Reference.

Brief facts of the case are; that on 07 October 2024, (being subsequent to amended SRO dated 03.10.2024), the staff of Field Intelligence Unit, Dera Ismail Khan, acting upon specific information, intercepted a Bedford truck bearing registration No. K-1780-D.I. Khan on Daraban Road, D I Khan. Upon checking, foreign-origin PU-coated fabrics and old/ used tyres were recovered. The driver, Muhammad Ishaq, could not produce any lawful import documents, and, hence, the goods along with the vehicle were seized under Sections 168 and 180 of the Act.

After the completion of proceedings, the Additional Collector of Customs (Adjudication), Islamabad’s Camp Office, Peshawar, passed order-in-original No.367/ 2024 dated 18 December 2024 to confiscate the goods and vehicle. On appeal, the Customs Appellate Tribunal, Peshawar, through a consolidated judgment dated 13 March 2025, modified the order and directed the release of the vehicle against the payment of 40 percent redemption fine on its appraised value. The Department filed Custom Reference No. 84-P/ 2025 before the Peshawar High Court, which was answered in the negative vide judgment dated 20 May 2025, holding that the amendment made on 03 March 2024 was penal in nature and not retrospective.

Copyright Business Recorder, 2025