Director Directorate of Intelligence & Investigation-Customs Vs Customs Appellate Tribunal etc.

Stereo. H C J D A 38.

Judgment Sheet

IN THE LAHORE HIGH COURT LAHORE

JUDICIAL DEPARTMENT

Customs Reference No. 70795/2023

Director Directorate of Versus The Customs Appellate Intelligence and Tribunal, etc.

Investigation Customs

JUDGMENT

Date of hearing 16.09.2026 Applicant by Mr. Asad Saleem Goraya, Advocate Respondent Mr. Hassan Raza Shakir, Advocate No.2 by:

Muhammad Ajmal Zahid, J.—Through the instant Customs Reference filed under Section 196 of the Customs Act, 1969 (“the Act”), the Director Directorate of Intelligence and Investigation (“applicant-department”) has assailed the judgment dated 26.07.2023 passed by the learned Customs Appellate Tribunal, Bench-II, Lahore (“the learned Tribunal”) in Appeal No.138/L/2023 (“the impugned judgment”).

2.Briefly stated, the facts giving rise to the instant Reference are that, acting upon credible information, the Customs authorities intercepted a Mazda Truck bearing Registration No. LZJ-7735 near Sharaqpur Interchange on M-3 Multan Motorway, Lahore. The vehicle was allegedly found carrying non-duty-paid velvet parda cloth. Upon demand, the driver failed to produce any lawful import or purchase documents evidencing the legitimate acquisition or transportation of the goods. Consequently, the

goods, along with the vehicle used for their transportation, were seized under Section 168 of the Act.

3.Respondent No.2 challenged the seizure proceedings before the learned Collector of Customs (Adjudication), Lahore. After adjudication, the learned Collector, vide Order-in-Original No.39/2023 dated 03.02.2023, ordered confiscation of the seized goods as well as the transporting vehicle. Feeling aggrieved, respondent No.2 preferred an appeal before the learned Tribunal, which accepted the appeal vide the impugned judgment dated

4.The applicant-department has proposed the following questions of law for determination by this Court:— “Whether the learned Appellate Tribunal was justified in allowing the appeal on the ground that respondent No.2 did not claim the seized goods at the adjudication stage and that another person, namely Abdul Shakor, had claimed the same goods in writing?

Whether the learned Appellate Tribunal was justified in allowing the appeal on the ground that the auction documents produced related to parda cloth/window blinds, 20% damaged, of China origin, whereas the seized goods consisted of velvet parda cloth in rolls and were without damage?

Whether the learned Appellate Tribunal was justified in allowing the appeal on the basis of photocopy of Bilty No.1000 dated 04.11.2022, which pertained to Truck No.P-0008, whereas the seized goods were recovered from Truck No.LZJ-7735?”

5.Learned counsel for the applicant-department submits that the learned Tribunal failed to properly appreciate material documentary evidence available on the record. Particular emphasis has been placed upon the discrepancy between the vehicle registration number appearing on bilty No.1000 dated 04.11.2022 and the registration number of the vehicle from which the goods

were actually recovered. It is contended that the route mentioned in the transportation document also does not correspond with the place and direction of recovery. According to learned counsel, these material discrepancies were neither properly considered nor addressed by the learned Tribunal and, therefore, the impugned judgment suffers from material misreading and non-reading of evidence, giving rise to questions of law within the scope of Section 196 of the Act.

6.Conversely, learned counsel appearing for respondent No.2 supports the impugned judgment and submits that the learned Tribunal is the final forum for determination of questions of fact. According to him, the learned Tribunal examined the material available on record and arrived at a conclusion which cannot be interfered with by this Court in its reference jurisdiction, particularly when no independent question of law arises for consideration.

7.We have heard learned counsel for the parties at considerable length and have carefully examined the record with their able assistance.

8.Before examining the controversy, it would be appropriate to notice the scope of jurisdiction conferred upon this Court under Section 196 of the Act. The relevant provision reads as follows:- “196. Reference to High Court.—(1) Within thirty days of the order of the Appellate Tribunal under sub- section (3) of section 194B, the aggrieved person or any officer of Customs not below the rank of Deputy Collector or Deputy Director, authorized by the Collector or Director in writing, may file a reference, in the prescribed form, along with a statement of the case, before the High Court, stating any question of law or a mixed question of law and fact arising out of such order.” (emphasis supplied)

9.A plain reading of the above provision makes it clear that Section 196 confers a statutory reference jurisdiction upon the High Court in respect of an order passed by the learned Tribunal. The jurisdiction is attracted where a question of law, or a mixed question of law and fact, arises from such order. The High Court, while exercising this jurisdiction, does not ordinarily undertake a fresh appraisal of evidence merely because another view on the facts may be possible. At the same time, the finality ordinarily attached to factual findings of the learned Tribunal is not absolute. Where such findings are shown to have been recorded on account of material misreading or non-reading of evidence, or are otherwise perverse or unsupported by the record, the resulting legal infirmity may give rise to a question of law amenable to the jurisdiction of the High Court under Section 196.

10.The above principle is well settled. In Pakistan Match Industries (Pvt.) Ltd. v. Assistant Collector, Sales Tax (2019 SCMR 906), the august Supreme Court held, inter alia, that although the Tribunal is the final fact-finding authority, findings based upon material misreading or non-reading of evidence may be examined by the High Court in its reference jurisdiction.

11.The same principle has been reiterated in National Logistics Cell v. Collector of Customs (2023 SCMR 1325), wherein the august Supreme Court recognized that findings of fact recorded by the Tribunal may be interfered with where they are perverse, contrary to the material available on record, or based upon surmises and conjectures. Likewise, in Commissioner Inland Revenue v. Sargodha Spinning Mills (Pvt.) Ltd. (2022 SCMR 1082), the august Supreme Court reaffirmed that, notwithstanding the Tribunal's status as the final fact-finding authority, its findings are not immune from scrutiny where a duly framed question of law

arises from perversity, material misreading or non-reading of evidence.

12.It is equally settled that every judicial or quasi-judicial determination must disclose application of mind to the material issues arising for determination. A speaking order is one which, on its face, demonstrates consideration of the relevant questions and the material evidence bearing upon them. The Hon’ble Larger Bench of the Supreme Court of Pakistan in Mollah Ejahar Ali v. Government of East Pakistan and others (PLD 1970 SC 173) emphasized the importance of reasons in a judicial determination. The requirement of a reasoned order is not a matter of formality; rather, it enables the parties and the superior forum to ascertain whether the relevant issues were consciously considered and determined.

13.In the present case, the learned Collector, while passing the Order-in-Original, recorded a categorical finding that respondent No.2 had failed to establish lawful ownership of the seized goods. The learned Collector also noticed that the persons who subsequently claimed the goods during adjudication were different from those who had initially claimed them before the seizing agency and that no legally satisfactory documentary evidence establishing ownership had been produced. On that basis, confiscation of the goods as well as the vehicle was ordered under the relevant provisions of the Act.

14.The principal issue which requires consideration is whether the learned Tribunal, while reversing the adjudication order, properly examined the material documentary evidence bearing upon the alleged lawful acquisition and transportation of the seized goods. In this regard, a significant discrepancy is apparent from the record concerning bilty No.1000 dated 04.11.2022. The said

document, as relied upon by the respondent, pertains to Truck Registration No. P-0008, whereas the goods in question were admittedly recovered from Truck Registration No. LZJ-7735. The record also indicates an apparent discrepancy between the route mentioned in the said transportation document and the place and direction of recovery recorded by the Customs authorities.

15.These discrepancies were not peripheral in nature. They directly related to the respondent's claim regarding the lawful transportation and provenance of the seized goods. Consequently, they required specific and reasoned consideration by the learned Tribunal. However, the impugned judgment does not appear to contain a satisfactory examination of these material aspects of the record or an adequate explanation as to how the documentary discrepancies were reconciled.

16.We are conscious that this Court, in exercise of reference jurisdiction, is not required to substitute its own appreciation of evidence for that of the learned Tribunal. Reliance is placed on Commissioner Inland Revenue, (Special Zone For Builders And Developers) Regional Tax Office, Islamabad v. Messrs Khudadad Heights, Islamabad (2025 SCMR 716), The Collector Of Sales Tax And Central Excise, Lahore v. Messrs Qadbros Engineering (Pvt.) Ltd., Lahore (2023 SCMR 939), Messrs Squibb Pakistan Pvt. Ltd. and another v. Commissioner Of Income Tax and another (2017 SCMR 1006), Messrs Pakistan Television Corporation Limited v. Commissioner Inland Revenue (Legal), LTU, Islamabad and others (2017 SCMR 1136), Messrs F.M.Y. Industries Ltd. v. Deputy Commissioner Income Tax and another (2014 SCMR 907), Messrs Irum Ghee Mills Limited v. Income-Tax Appellate Tribunal and others (2000 SCMR 1871), Haji Ibrahim Ishaq Johri v. The Commissioner Of Income Tax (West), Karachi

(1993 SCMR 287), Commissioner of Income-Tax, Central Zone `B' v. Messrs Farrokh Chemical Industries (1992 SCMR 523), The Commissioner of Income Tax v. M/s. Smith, Kline & French of Pakistan Ltd. and others (1991 SCMR 2374), Messrs Mohammad Akbar Mohammad Afzal v. Income-Tax Appellate Tribunal (1972 SCMR 409), Messrs Shah Nawaz Khan & Co., Multan v. The Commissioner Of Income Tax, North Zone, West Pakistan, Lahore (1969 SCMR 123) and S.M. Ilyas & Sons v. Commissioner Of Income Tax, Lahore Zone [(1982) 46 Tax 113 (S.C. Pak.)]. Nevertheless, where material evidence having a direct bearing upon the controversy is not considered, or where a finding is recorded contrary to such evidence without assigning reasons, the matter travels beyond a mere disagreement on appreciation of facts. Such an omission may constitute material non-reading or misreading of evidence and, consequently, give rise to a question of law within the contemplation of Section 196 of the Act.

17.In the circumstances, we are of the considered view that the learned Tribunal did not adequately address the material documentary discrepancies concerning the vehicle registration number appearing in the bilty, the transportation documents and the route of movement of the goods. The impugned judgment, therefore, does not reflect a proper and reasoned consideration of material evidence which was relevant to the determination of the controversy. The resulting infirmity warrants interference in the exercise of the reference jurisdiction of this Court.

18.For what has been discussed above, the questions of law proposed by the applicant-department are answered in the affirmative, to the extent indicated hereinabove. Consequently, the instant Customs Reference is accepted. The judgment dated 26.07.2023 passed by the learned Tribunal in Appeal

No.138/L/2023 is set aside, and the matter is remanded to the learned Tribunal for decision afresh in accordance with law.

19.The learned Tribunal shall afford adequate opportunity of hearing to all concerned and shall independently examine the entire documentary and oral evidence available on the record, particularly the discrepancies relating to the transportation documents, vehicle registration number, route of transportation and the respective claims of ownership, and thereafter pass a speaking and reasoned order under the law. Nothing contained in this judgment shall be construed as an expression of opinion on the ultimate merits of the controversy.

20.The Office is directed to transmit a copy of this judgment, under the seal of the Court, to the learned Customs Appellate Tribunal in terms of Section 196(5) of the Act for information and necessary compliance.

(Hassan Nawaz Makhdoom) (Muhammad Ajmal Zahid) Judge Judge

APPROVED FOR REPORTING

Judge Judge M. Tahir*