Supreme Court curbs customs tribunal's power to release seized vehicles

The Supreme Court has ruled that the Customs Appellate Tribunal cannot order a seized vehicle released against a fine once the Federal Board of Revenue has barred that class of conveyance from redemption.

A three-member bench headed by Chief Justice Yahya Afridi, with Justice Muhammad Shafi Siddiqui and Justice Miangul Hassan Aurangzeb, set aside a Peshawar High Court judgment that had upheld the tribunal's order. Justice Shafi wrote the judgment.

The appeal was filed by the Collector of Customs (Enforcement), Peshawar. A Hino Mazda truck, registration TKK-500, was stopped at the JCP Tunnel in Kohat on February 16, 2025, and foreign-origin spare parts were found in it. The driver could not produce documents showing the parts had been lawfully imported. The goods were seized under section 168 of the Customs Act, 1969, and the truck under section 157(2).

The adjudicating authority confiscated the goods and the vehicle outright. The Collector of Customs (Appeals) dismissed the driver's appeal, but the Customs Appellate Tribunal on July 30, 2025 allowed the truck to be released on a redemption fine equal to 40 percent of its appraised value. The High Court upheld that order.

Section 157(2) makes a conveyance used to move such goods liable to confiscation, while section 181 offers an option to pay a fine instead. The first proviso to section 181 lets the Board specify goods or classes of cases in which that option will not be given. The judgment held that liability to confiscation does not by itself create a right of redemption where the Board has imposed a restriction.

The Board's notification of June 13, 2009, SRO 499(I)/2009, took lawfully registered conveyances, including packages and containers, out of redemption where they were found carrying goods in false cavities or were used wholly or exclusively for transporting goods involved in smuggling. The court said the redemption rates in the table attached to that notification cannot be read separately from the exclusion, or used to get around it.

The judgment cited the court's earlier ruling in Bashir Ahmad and traced two later amendments. SRO 1280(I)/2024 of August 20, 2024 gave a limited, conditional relaxation for certain conveyances seized for the first or second time. SRO 1619(I)/2024 of October 3, 2024 rescinded that relaxation and added clause (ba) covering lawfully registered conveyances carrying smuggled goods.

The court said it had already held, in a case involving the Director of Intelligence and Investigation (Customs), FBR, Peshawar, that the temporary relaxation did not dilute the prohibition in the notification, and that a claim the vehicle was hired for public transport could not override the statutory restriction, which makes no such distinction.

The seizure in this case came after clause (ba) was inserted. The tribunal accepted that the truck was lawfully registered and relied on its being hired out, but the judgment said the redemption question had to be decided under the amended notification rather than on that use alone. The High Court, it added, erred in maintaining the tribunal's order.