Collector Of Customs Multan vs Abdul Bari

Stereo. H C J D A-38.

JUDGMENT SHEET

IN THE LAHORE HIGH COURT, MULTAN BENCH,

MULTAN

JUDICIAL DEPARTMENT

Customs Reference No.25 of 2026

The Collector of Customs (Enforcement), Multan

Versus

Abdul Bari

JUDGMENT

Date of hearing: 22.09.2026.

Applicant by: Mr. Moiz Riaz Azam Bopera, Advocate. Respondent by: M/s. Kinza Hashmi and Noreena Ghazal, Advocates.

MUHAMMAD SAJID MEHMOOD SETHI, J.:- Through instant Reference Application under Section 196 of the Customs Act, 1969 (“the Act of 1969”), following question of law, asserted to have arisen out of impugned judgment dated 25.05.2026, passed by learned Customs Appellate Tribunal, Single Bench-II, Lahore (“Appellate Tribunal”), has been pressed and argued for our opinion:- “Whether the Customs Appellate Tribunal acted without lawful authority and in excess of its jurisdiction by ordering the unconditional release of the carrier vehicle utilized for transportation of offending goods in specially designed false cavities, thereby illegally overriding the absolute statutory bar created by SRO 499(I)/2009 as amended by SRO 1619(I)/2024, blatantly ignoring the binding principles enunciated by the Honourable Supreme Court of Pakistan in Bashir Ahmad (2025 SCMR 684) and Muhammad Ishaq (C.P. 2853 / 2025), which mandate the absolute outright confiscation of conveyances under Section 157(2) of the Customs Act, 1969?”

2.Brief facts of the case are that on 06.12.2025, the Anti- Smuggling Organization, D.G. Khan, in a joint operation with Punjab Rangers and local Police at Joint Check Post, Sakhi Sarwar, intercepted Daewoo passenger bus bearing Registration No. BSC-077, New Ittehad, Model 2013. Upon search, 188 outers of foreign-origin

Customs Reference No.25 of 2026

Milano brand cigarettes (UAE) were recovered from a specially designed false cavity constructed beneath the body of the bus. Neither the driver, Akhtar Shah, nor the respondent, who claimed ownership of the vehicle, could produce any document evidencing lawful import or procurement of the recovered cigarettes. The cigarettes were assessed at a CIF value of Rs.351,531/-, whereas the vehicle was assessed at Rs.10,016,080/-. After completion of adjudication proceedings, the learned Additional Collector (Adjudication), Faisalabad, vide Order-in-Original No.223/2026 dated 04.02.2026, ordered outright confiscation of the seized cigarettes as well as the carrier vehicle, inter alia, on account of the specially fabricated false cavity. The respondent's appeal was dismissed by the learned Collector of Customs (Appeals), Lahore, vide Order-in-Appeal No.80/2026 dated 11.05.2026. The learned Appellate Tribunal, however, vide impugned judgment dated 25.05.2026, accepted the respondent's appeal and directed unconditional release of the vehicle, principally on the ground that the value of the recovered cigarettes was below Rs.500,000/-, the threshold prescribed in Section 2(s)(ii) of the Act, and, therefore, the goods could not be treated as “smuggled goods”. Consequently, the learned Appellate Tribunal held that the vehicle was not liable to confiscation, while imposing a penalty of Rs.100,000/- upon the driver. Hence, the instant Reference Application.

3.Learned counsel for the applicant-department contends that the learned Appellate Tribunal fundamentally misconstrued Section 2(s) of the Act by treating the monetary threshold contained in clause (ii) thereof as a universal threshold governing the entire definition of “smuggled goods”. According to him, Section 2(s) comprises distinct statutory categories and the learned Tribunal failed to examine the case in the context of the complete definition, particularly the category contemplated by clause (iii). He further submits that, once the goods are established to be smuggled goods and the vehicle is found carrying them in a specially designed false cavity, the

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conveyance falls within clause (b) of the preamble to S.R.O.499(I)/2009 dated 13.06.2009, as amended, in respect whereof no option of redemption under Section 181 can lawfully be extended. Reliance has been placed upon Bashir Ahmad v. Director, Directorate of Intelligence and Investigation (Customs), FBR, Peshawar and another (2025 SCMR 684) and Director, Intelligence and Investigation (Customs), FBR, Peshawar and others v. Muhammad Ishaq and others (2026 SCMR 885).

4.Conversely, learned counsel for the respondent supports the impugned judgment on the ground that the value of the cigarettes was below Rs.500,000/-, the respondent was a bona fide transporter having no knowledge of the concealed goods, and confiscation of a vehicle valued at approximately Rs.10 million for carrying cigarettes assessed at Rs.351,531/- would be harsh and disproportionate.

5.Arguments heard. Available record perused.

6.The controversy, at its core, involves two distinct legal questions: first, whether the recovered cigarettes fall within the statutory definition of “smuggled goods” under Section 2(s) of the Customs Act, 1969; and, secondly, if so, whether the learned Appellate Tribunal possessed any lawful jurisdiction or discretion to order release of the carrier vehicle, either unconditionally or against the redemption mechanism contemplated by Section 181 of the Act. As regards the first aspect, the approach adopted by the learned Appellate Tribunal in treating the monetary threshold of Rs.500,000/- mentioned in Section 2(s)(ii) as determinative of the entire definition of “smuggled goods” cannot be sustained. Section 2(s) contains distinct statutory categories, each having its own ingredients and operating in its respective field. The condition attached to one particular limb cannot be imported into the other limbs so as to render them ineffective. In particular, clause (iii) covers goods brought into or taken out of Pakistan through a route other than a route declared under Section 9 or Section 10, or from a place other than a customs- station. The ingredients of clause (iii) are therefore materially

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different from those of clause (ii), and the monetary threshold prescribed in clause (ii) cannot be treated as a universal qualification governing the whole definition. Such an interpretation would effectively render the other independent categories contemplated by Section 2(s) redundant.

The record shows that the recovered cigarettes were of foreign origin and were concealed in a specially designed false cavity beneath the body of the passenger bus. Neither the driver nor the respondent produced any document evidencing their lawful import or procurement. These circumstances were considered by the adjudicating authority and the Collector (Appeals), who treated the recovered goods as smuggled goods. The learned Appellate Tribunal, however, did not examine whether the goods otherwise fell within any of the independent categories contemplated by Section 2(s), but proceeded principally on the basis of their value and treated the figure of Rs.500,000/- as conclusive of their legal status. The mere fact that the value of the cigarettes was below the threshold prescribed in clause (ii) could not, by itself, conclude the matter without examination of the remaining statutory ingredients. The finding of the learned Tribunal, therefore, proceeds upon an erroneous construction of Section 2(s) and cannot be sustained.

7.Once the goods are found to be smuggled goods, the status of the conveyance used for their carriage has to be examined in the light of Sections 157(2) and 181 of the Act. Section 157(2) makes a conveyance used for the carriage or transportation of smuggled goods liable to confiscation. Section 181, while generally providing an option of payment of fine in lieu of confiscation, expressly makes such option subject to its first proviso, under which the Federal Board of Revenue is empowered to specify the goods or classes of cases in respect of which no such option shall be given. Thus, the liability of the conveyance under Section 157(2) and the availability of an option in lieu of confiscation under Section 181 operate within distinct but interconnected fields.

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In exercise of the power conferred by the first proviso to Section 181, the Board issued S.R.O.499(I)/2009 dated 13.06.2009. The relevant provision excludes, inter alia, lawfully registered conveyances found carrying smuggled goods in false cavities from the option of release against redemption fine. The fact that a conveyance is lawfully registered does not, therefore, by itself, take it outside the operation of the notification where it is found carrying smuggled goods in the specifically prohibited manner. The subsequent regulatory history also does not support the view that this prohibition was permanently diluted. The limited relaxation introduced through S.R.O.1280(I)/2024 dated 20.08.2024 was subsequently rescinded by S.R.O.1619(I)/2024 dated 03.10.2024, thereby restoring the earlier position.

8.The precise interaction between Sections 157(2) and 181 and the effect of S.R.O.499(I)/2009 now stand authoritatively settled by the Hon’ble Supreme Court in Bashir Ahmad’s case supra, and the position has subsequently been reaffirmed in Muhammad Ishaq’s case supra. In Bashir Ahmad’s case, the Hon’ble Supreme Court held that Sections 157 and 181 operate in distinct spheres and that, once the Board had exercised the power conferred by the first proviso to Section 181 through S.R.O.499(I)/2009, the Customs Appellate Tribunal was bereft of jurisdiction to extend the option of redemption to a conveyance falling within the prohibited category. The Tribunal, being a statutory forum, cannot exercise a power which has been expressly excluded by the governing statutory scheme. The same principle was reiterated in Muhammad Ishaq’s case supra, wherein the view that the expression “liable to confiscation” in Section 157(2) preserved a continuing discretion to release a conveyance in cases covered by the statutory prohibition was found to be misconceived. The effect of the judgments is that where a conveyance falls within a category in respect of which the Board, acting under the first proviso to Section 181, has withheld the option of redemption, neither the adjudicating authority nor the appellate

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forum can revive that option by invoking a general discretion. The question, therefore, is not one of the exercise of equitable discretion by the Tribunal, but of the extent of the jurisdiction conferred upon it by the statute.

9.The above conclusion is not altered by the principle enunciated in Haji Abdul Razzak v. Pakistan through Secretary, Ministry of Finance, Islamabad and another (PLD 1974 Supreme Court 5), wherein the expression “liable to confiscation” occurring in Section 168 of the Sea Customs Act, 1878 was construed as not necessarily importing automatic confiscation and the competent authority was required to exercise its discretion judicially. That judgment was rendered under a different statutory regime. The present matter is governed by the Customs Act, 1969, which contains the specific mechanism under the first proviso to Section 181 authorizing the Board to identify categories of cases in which the option of redemption shall not be available.

The distinction is material. The general principle regarding exercise of discretion under the earlier statutory regime cannot be invoked to confer a power of release which the later statutory scheme, through an express provision and a notification issued thereunder, has excluded in respect of a specified category. More importantly, the subsequent judgments in the cases of Bashir Ahmad and Muhammad Ishaq supra specifically considered Sections 157(2) and 181 read with S.R.O.499(I)/2009, as amended, and settled the effect of the expression “liable to confiscation” in the present statutory context. The principle stated in Haji Abdul Razzak’s case supra, therefore, cannot be applied so as to override the specific statutory prohibition governing the present case.

10.Applying the above principles to the facts of the present case, the vehicle falls within the category contemplated by clause (b) of the preamble to S.R.O.499(I)/2009. The recovered cigarettes were concealed in a specially designed false cavity beneath the body of the bus. Thus, subject to the recovered goods being held to be smuggled

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goods under Section 2(s), the factual condition attracting the prohibition contained in the notification is established. The fact that the bus was a lawfully registered passenger vehicle does not, by itself, exclude it from the operation of the notification, as the relevant consideration is the manner in which the conveyance was found carrying the smuggled goods.

The learned Appellate Tribunal, therefore, could not revive a discretion which had been withheld under the first proviso to Section 181 read with S.R.O.499(I)/2009. Likewise, the disparity between the value of the seized cigarettes, i.e. Rs.351,531/-, and the assessed value of the vehicle, i.e. Rs.10,016,080/-, could not confer jurisdiction upon the Tribunal where the statutory conditions for exclusion of redemption were otherwise satisfied. Nor can the respondent’s plea of being a bona fide carrier or of having no personal knowledge, by itself, confer upon the Tribunal a power of release which the statute does not provide in respect of a conveyance falling within the prohibited category. Such considerations may have relevance to the question of personal liability, but they do not alter the statutory character of the conveyance once the conditions of Section 157(2) read with the applicable notification are established. The learned Appellate Tribunal, therefore, erred in law in directing release of the vehicle.

11.As regards the penalty of Rs.100,000/- imposed by the learned Appellate Tribunal upon the driver, Akhtar Shah, no independent question of law concerning the said penalty has been pressed before this Court. The driver was also not the appellant before the learned Tribunal. Accordingly, no separate opinion is expressed on the legality or otherwise of the said penalty, and the present opinion is confined to the questions of law arising in relation to the status and release of the subject vehicle.

12.In view of the foregoing discussion, the proposed question of law is answered in the affirmative, in favour of the applicant- department and against the respondent. The impugned judgment dated

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25.05.2026, to the extent it directed unconditional release of the carrier vehicle, is not sustainable in law and is accordingly set aside. This Reference Application is accordingly decided against the respondent.

13.Office shall send a copy of this judgment under the seal of the Court to the learned Appellate Tribunal in terms of Section 196(5) of the Act of 1969.

(Sultan Tanvir Ahmad) (Muhammad Sajid Mehmood Sethi) Judge Judge

APPROVED FOR REPORTING

Judge Judge

*A.H.S.*