DIRECTOR, INTELLIGENCE AND INVESTIGATION (CUSTOMS), FBR, PESHAWAR vs MUHAMMAD ISHAQ

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DIRECTOR, INTELLIGENCE AND INVESTIGATION (CUSTOMS), FBR, PESHAWAR VS MUHAMMAD ISHAQ. Ss.2(s), 157(2) & 181, first proviso---S.R.O.499(I)/2009 dated 13.06.2009---S.R.O.1280(I)/2024 dated 20.08.2024---S.R.O.1619(I)/2024 dated 03.10.2024---Smuggled goods, recovery of---Conveyance used for transportation, confiscation of---Release against payment of redemption fine---Option, exercising of---Scope. Order-in-Original was passed to confiscate the goods and vehicle outright. Customs Appellate Tribunal ('Tribunal') modified the Order-in-Original, and directed release of the vehicle against payment of 40% redemption fine on its appraised value. Validity. Section 157(2) of the Customs Act, 1969 ('the Act 1969') renders every conveyance used in the movement of smuggled goods liable to confiscation. Section 181 of the Act 1969 empowers the adjudicating officer to offer the owner an option to pay fine in lieu of confiscation, subject to the first proviso, whereby the Board may issue orders specifying classes of goods for which such option shall not be given. In exercise of said power, the Board issued Notification S.R.O.499(I)/2009 dated 13.06.2009 ('the SRO 2009') the operative portion whereof prohibits such release for, (a) smuggled goods falling under Section 2(s) and, (b) lawfully registered conveyance including packages and containers found carrying smuggled goods in false cavities or being used exclusively or wholly for transportation of offending goods under clause (s) of section 2 of the Act, 1969. The issuance of the SRO 2009 creates a statutory bar, leaving no discretion with the adjudicating officer or the Tribunal to grant release on redemption fine if it had fallen within frame of (a) and (b) of the SRO 2009. Subsequent amendment introduced on 03.10.2024 did not dilute the earlier prohibition rather includes vehicles with container as well. Upon the promulgation of the SRO 2009, the Board acting under the first proviso to section 181 of the Act 1969 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. 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. Said statutory embargo remained in force continuously, except for a brief and limited relaxation introduced through S.R.O.1280(I)/2024 dated 20.08.2024, which conditionally permitted release of certain vehicles not falling within clause (b), seized for the first or second time. The said concession, however, stood rescinded by S.R.O.1619(I)/2024 dated 03.10.2024, thereby restoring the original and complete prohibition with insertion/inclusion of (ba). Consequently, the adjudicating fora, including the Board itself, had no lawful competence to order release of any conveyance used for the transportation of smuggled goods against payment of fine and confiscation in such circumstances. Applying the said understanding of law to the case at hand, it was manifest that the Customs Appellate Tribunal as well as the High Court failed to appreciate the legal effect of the aforesaid statutory bar. Once the Board, in exercise of its powers under section 181 of the Act 1969, 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 transportation of smuggled goods. In the circumstances, the confiscation of the vehicle was the only course permissible under the law. By empowering authorities to confiscate, without option of redemption fine, all vehicles and conveyances used in the transportation of smuggled goods, the amendment closed a longstanding loophole that previously allowed offenders to reclaim such assets through payment of fines. Supreme Court set-aside the impugned judgments of the High Court as well as the Customs Appellate Tribunal and restored Order-in-Original of outright confiscation of the goods and vehicle. Petition to leave to appeal was converted into an appeal and allowed accordingly.

DIRECTOR, INTELLIGENCE AND INVESTIGATION (CUSTOMS), FBR, PESHAWAR vs MUHAMMAD ISHAQ — 2026 SCMR 885 SUPREME-COURT

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