ISLAMABAD: The Supreme Court has clarified that following the issuance of S.R.O. 499(I)/2009, the Federal Board of Revenue (FBR) no longer has the authority, under the first proviso to Section 181 of the Customs Act, 1969, to allow payment of a fine instead of confiscation for vehicles used to transport smuggled or non-custom-paid goods.
Justice Muhammad Shafi Siddiqui, in the judgment, stated that SRO 499(I)/2009 explicitly removed the discretion of adjudicating officers to offer such an option, applying to:
- Smuggled goods as defined in clause (s) of Section 2 of the Customs Act, and
- Lawfully registered vehicles used wholly or exclusively to carry such goods in false compartments.
The judgment noted that a brief exception introduced by S.R.O. 1280(I)/2024 on 20 August 2024—allowing conditional release of certain vehicles seized for the first or second time—was rescinded by S.R.O. 1619(I)/2024 on 3 September 2024, fully restoring the prohibition. As a result, FBR and other adjudicating authorities no longer have lawful competence to release such vehicles against a fine; confiscation is now mandatory.
Justice Siddiqui emphasized:
“Following SRO 499(I)/2009, the Board divested itself of the authority to allow payment of a fine in lieu of confiscation for vehicles used to transport smuggled or non-custom-paid goods. The Supreme Court’s decision in the Bashir Ahmad case confirms that this mandate applies to both pending and future cases.”
The Court further explained that any earlier interpretation of Section 157(2) of the Customs Act as granting discretionary confiscation was incorrect. Both the Customs Appellate Tribunal, Peshawar, and the Peshawar High Court erred in allowing release of vehicles with payment of redemption fines, misunderstanding the binding effect of the amended SRO. Consequently, the Supreme Court set aside their judgments.
A three-judge bench, headed by Chief Justice Yahya Afridi with Justices Shafi Siddiqui and Miangul Hassan Aurangzeb, heard the appeal against the PHC’s order.
Case Background: On 7 October 2024, a Bedford truck (Reg. No. K-1780-D.I. Khan) was intercepted in Dera Ismail Khan by the Field Intelligence Unit. The vehicle was carrying foreign-origin PU-coated fabrics and old tyres without lawful import documents. The truck and goods were seized under Sections 168 and 180 of the Customs Act.
The Additional Collector of Customs (Adjudication), Islamabad Camp Office, Peshawar, issued an order on 18 December 2024 to confiscate both the vehicle and goods. On appeal, the Customs Appellate Tribunal allowed release against 40% redemption fine. The Department’s subsequent reference to the PHC was dismissed on 20 May 2025. The Supreme Court’s ruling now restores the mandatory confiscation requirement.
Impact: The judgment closes a longstanding loophole that previously allowed offenders to reclaim smuggling vehicles through fines, strengthening enforcement and permanently removing instruments of smuggling from circulation.
