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Official Citation: 2026 IHC 258411
Court / Jurisdiction: Islamabad High Court
Parties: Collector of Custom vs Aurangzeb etc.
Ruling Summary: This decision was rendered by the Islamabad High Court, officially reported as 2026 IHC 258411. In this matter between Collector of Custom and Aurangzeb etc., the court adjudicated key questions of statutory construction, procedural regularity, and legal precedent under Pakistani law.
Core Holding: The honorable bench evaluated governing statutory provisions and judicial authorities to establish the rights of the parties, delivering the binding reasoning set out below.
COURT: Islamabad High Court (Honourable Mr. Justice Babar Sattar, Honourable Ms. Justice Saman Rafat Imtiaz) AUTHOR JUDGE: Former Honourable Chief Justice Mr. Justice Athar Minallah DECISION DATE: 27-APR-2026 CASE NO: Custom Reference-29-2025 CITATION: 2026 IHC 258411 PARTIES: Collector of Custom VS Aurangzeb etc. LAW / SECTION: under section 185 of the Act SUBJECT: , REMARKS: Custom Reference (remarks passed about lower court ( Collector Adjudication/ ATIR (Tribunal) ============================================================ Form No: HCJD/C-121. JUDGEMENT SHEET
IN THE ISLAMABAD HIGH COURT, ISLAMABAD JUDICIAL DEPARTMENT
Custom Reference No. 29 of 2025
The Collector of Customs Vs. Aurangzeb and others
APPLICANTS BY: Raja Zubair Hussain Jarral, Advocate in Custom Reference No.29 of 2025.
Ms. Shazia Bilal, Advocate in Custom Reference No.30 and 31 of 2025. Barrister Ahsan Jamal Pirzada, Barrister Khizar Hayat Khan and Ch. Muhammad Anas, Advocates in Custom References No. 34 of 2025. Mr. M.D Shahzad, Advocate in Custom Reference No.46, 51 and 73 of 2025. Barrister Raja Abdul Qadeer and Mr. Muhammad Fiaz Kandowal, Advocates in Custom Reference No.52, 53, 54 and 55 of 2025. Barrister Abdullah Manik a nd Barrister Muhammad Mumtaz Ali, Advocates in Custom Reference No. 74, 77, 80, 81, 90 and 97 of 2025. Mr. Noman A. Farooqi, Advoc ate in Custom References No. 99, 100 & 101 of 2025 and 02 of 2026.
RESPONDENTS BY: M/s Fawad Haider and Ghufran Manzoor, Advocates for respondent No.1 in Custom Reference No. 46 of 2025 M/s Tauqeer Akram, Zargham Dil Khan and Raja Qaiser Pervez, Advocates for respondents in Custom Reference No. 29, 30, 31, 51, 73 , 80 and 81 of 2025. Mr. Fahad Khan, Advocate for the respondent in Custom Reference No. 54 of 2025 Mr. Manzoor Za man, Advocate in Custom Reference No. 97/2025. Mr. Zahoor Ahmed Mughal and Mr. Ibrar Hussain Kazmi Advocates for respondents in Custom Reference No. 53 and 77 of 2025.
DATE OF HEARING: 03.02.2026. ================================== ======= 2 | P a g e Cust. Ref. No.29/2025
BABAR SATTAR, J.- Through this judgement we will decide the above titled reference as well as the references listed in Annex- A, as they involve common questions of law , which, as framed in the references before us are innumerable, but can be summarized as follows: i. Whether a vehicle used wholly and exclusively for the purpose of removing smuggled goods could be released in view of SRO No.499 (I)/2009 dated 13 .06.2009 (“SRO 499”) , further amended by SRO No.1619 (I)/2024 dated 03.10.2024 (“SRO 1619”)?
ii. Whether the Tribunal misconstrued the scope and applicability of SRO 499, and SRO 1619 by permitting release of the offending vehicle on payment of redemption fine despite the statutory bar on such release in cases involving exclusive use of vehicle for removing smuggled goods?
iii. Whether in light of section 187 of the Customs Act , 1969 (“Act”), the burden of proving lawful authority to transport goods lay upon the person from whose possession the smuggled goods were recovered, and whether in the absence of such proof the offending vehicle was liable to outright confiscation? 2. In all of these references , the Collector has challenged the orders of the Customs Appellate Tribunal (“Tribunal”) ordering the release of vehicles with or without payment of redemption fine. As a large number of lawyers appeared in these references , which were heard together, we will summarise the arguments made on behalf of the learned counsels for the Customs Department and by the learned counsels for the respondents, instead of repeating the arguments of individual counsels in the interest of economy. 3. It was submitted by the learned coun sels appearing on behalf of Collector Customs that the penalty of confiscation arises out of quasi -judicial proceedings initiated under provisions of the 3 | P a g e Cust. Ref. No.29/2025
Customs Act, which are distinct from a criminal trial administered by the Special Judge under section 185 of the Act, and the imposition of the penalty of confiscation as a consequence of adjudicatory proceedings does not require a specific finding on mens rea, which finding is only required in a criminal trial. It was submitted that the penalty of confiscation of vehicles imposed in terms of section 157 (2) read with clauses (89) and (90) of section 156(1) of the Act is a case of absolute statutory liability , and being a penalty in the nature of strict liability it requires no proof of mens rea. It was then submitted that while the imposition of penalty did not require the Customs D epartment to establish knowledge on part of the owner of goods or vehicle, it was for such owner to discharge the onus of proof and establish that he /she had lawful authority to possess the goods -in-question in terms of section 187 of the Customs Act. The argument that the person in possession of smuggled goods was unaware or did no t have actual knowledge that such goods were smuggled could not function as an excuse as ignorance of law and/ or facts is not a valid justification to escape liability where one is found in possession of proscribed goods. Similarly, the argument that the g oods of foreign origin were available in the local market was also not a valid excuse or justification whe n it came to the possession and/ or removal of smuggled goods. It was submitted that once the Federal Board of Revenue (“FBR”) had issued an SRO in exercise of authority under the first proviso to section 181 of the Act, no adjudicatory authority under provisions of the Act was vested with jurisdiction to release a conveyance used wholly or exclusively for transportation of smuggled goods , by imposing re demption fine in lieu of confiscation of such vehicle , a s the words ―liable to confiscation ‖ 4 | P a g e Cust. Ref. No.29/2025
used in sections 157 and 181 of the Act were mandatory in operation. It was submitted that the owner of a public transport vehicle or cargo carrier could not assum e the role of a passive bystander, as such owner is under a statutory duty to account for the goods being transported in the vehicle, and feign ing ignorance as to the nature of the goods does not constitute lawful excuse or lawful authority for purposes of discharging onus of proof under section 187 of the Act. It was submitted that the question of whether a vehicle was used wholly and exclusively for transportation of smuggled goods was a question of fact to be determined objectively without undertaking an enquiry into whether there existed corresponding guilty intent. It was emphasised that in the cases at hand the penalty was to be imposed on the basis of strict statutory liability where intent was irrelevant. The act of transporting proscribed goods was sufficient for attracting the penalty of confiscation of the vehicle being used wholly and exclusively for transportation of such goods, which confiscation was mandatory and the penalty could not be mitigated by ordering its release on payment of redemptio n fine in lieu of confiscation, as the FBR had exercised its authority under section 181 of the Act to oust the exercise of such discretion. In support of these arguments, the learned counsels for the Customs Department relied on Pakistan v. Hardcastle Wou d (Pakistan) Ltd. (PLD 1967 SC 01), State v. Banda Gul (1993 SCMR 311), M/s Iram Ghee Mills (Pvt.) Ltd. V. Customs, Central Excise and Sales Tax (Appellate) Tribunal, Karachi (2004 PTD 559), Collector of Customs, Peshwar v. Wali Khan ( 2017 SCMR 585), Bashir Ahmed v. Director, Directorate of Intelligence and Investigation (Customs), FBR, Peshawar (2025 SCMR 5 | P a g e Cust. Ref. No.29/2025
684) and Director, Intelligence & Investigatio n (Customs), FBR, Peshawar v. Mu hammad Ishaq etc. (Civil Petitions No.2853 & 2854 of 2025). 4. Learned cou nsels for the respondents raised questions about the maintainability of the references while contending that no questions of law arose therefrom. It was submitted that it had not been argued before the Tribunal that , in terms of section 157 read with section 181 of the Act and the notifications issued by the FBR, there existed an express prohibition against the release of the impugned vehicles. It was argued that the Tribunal's findings were in the nature of findings of fact that ought not to be disturbed by this Court in its reference jurisdiction, as it is settled law that the Tribunal is the last fact -finding forum within the adjudicatory hierarchy provided under provisions of the Act. It was submitted that the phrase “liable to confiscation” as used in section 157 of the Act, did not mean express prohibition and did not constitute a mandatory requirement to confiscate the vehicle -in-question. It was argued that the Tribunal had correctly held that the term ‗liable to confiscation‘ did not mean mandatory c onfiscation. It was further submitted that where the alleged goods that were deemed to be smuggled were not subject to mandatory confiscation, the vehicle removing or transporting such goods could also not be subjected to mandatory confiscation, as such pe nalty would be hit by the doctrine of proportionality. It was submitted that in view of the law laid down by the Sindh High Court in M/s Kamran Industries v. Collector of Customs (Exports), Customs House, Karachi (PLD 1996 Karachi 68) , the ultimate burden to discharge the legal onus of proof that a vehicle owner was liable for transporting proscribed goods lay with the Customs Department, 6 | P a g e Cust. Ref. No.29/2025
and such onus had to be discharged on the basis of some material on the record and not on the basis of bald assertions. 5. It was contended on behalf of the vehicle owners that transporters could not be burdened with the liability of acting as customs clearing agents, and where appropriate documentation for purchase of goods was provided to a public transport carrier, and the transport carrier had discharged its duty to enquire about the goods, such public transport owner had lawful excuse to transport the goods, in terms of clauses (89) and (90) of section 156(1) of the Act, and the onus to prove wrongdoing shifted to the C ustoms Department. It was submitted that the penalty of confiscation acted as an infringement on the right to property guaranteed by Articles 23 and 24 of the Constitution, and such penalty , which fettered the fundamental right of a person to property , could only be imposed where mens rea had been established by the Customs Department. The penalty of confiscation could not be treated as strict statutory liability, as such reading would render the statutory provision ultra vires the Constitution, and such penalty without any finding of wrongdoing would be an unreasonable constraint on the fundamental rights of citizens, and would be disproportionate to the alleged wrong. It was submitted that SROs 499 and 1619 , if applied in isolation, would fall foul of requ irements of due process, fair trial and natural justice guaranteed by Article 10A of the Constitution. The requirements of Article 10A were therefore to be read into provisions of the Customs Act and no penalty of confiscation would be imposed in a mechani cal and premeditated fashion. The offence of smuggling was defined in Section 2 (s) of the Act and required proof of wrongdoing on part of the person accused of smuggling . A nd to the extent that a transport owner 7 | P a g e Cust. Ref. No.29/2025
removing or transporting smuggled goods was seen as aiding and abetting a person involved in smuggling, the existence of mens rea on part of such person required to be established , failing which aiding and abetting would be come a stricter offence than that of smuggling. Learned counsel for the respondents relied on the law laid down by the Supreme Court in Collector Customs, Model Customs Collectorate, Peshawar v. Muhammad Ismail (2023 SCMR 1319 ) to argue that the principle of natural justice was attracted where the same had not been excluded and consequently the vehicle owners had a right to be heard, without which no penalty of confiscation of the vehicle could be imposed. Likewise, a collective reading of sections 2 (s), 156, 157 and 168 of the Act read with Article 10A of the Constitution suggested that confiscation of a vehicle could not be mechanical or premeditated and a vehicle was only liable to confiscation where wrongdoing had been established on part of the vehicle owner. It was submitted that the cases relied on by the Customs Department to argue that the penalty of confiscation of a vehicle was in the nature of strict statutory liability were distinguishable, as the cases related to mis - declaration of goods dealt with under section 32 of the Act and not in relation to the offence of smuggli ng in terms of clauses (9), (89) and (90) of Section 156 (1) of the Act. It was submitted that the Supreme Court had held in Collector of Customs v. S. M. Yousuf (1973 S CMR 411) that private property was only liable to confiscation where the liability of t he owner stood established. It was further submitted that the jurisprudence that had evolved in relation to the Control of Narcotic Substances Act, 1997, also suggested that it was only where drugs were found to have been hidden in secret cavities that the vehicles were confiscated and not 8 | P a g e Cust. Ref. No.29/2025
otherwise. In a nutshell, the arguments of the learned counsel for the respondents emphasized that the offence of smuggling was penal in nature, and where confiscation was undertaken on account of possession or transportation of smuggled goods, the ingredients of the offence, including liability on the part of the offender, must first be established before any penalty can be imposed. 6. Let us first consider the cases cited by the learned counsels for the Customs Departmen t for the proposition that offences defined in clauses (89) and (90) of section 156(1) of the Act were in the nature of strict liability offences and confiscation of vehicles found carrying smuggled goods were mandatory in terms of SRO 499 and SRO 1619. 7. The Customs Department relied on the law laid down by the Supreme Court in Pakistan v. Hardcastle Waud (Pakistan) Ltd. and others (PLD 1967 SC 1). The facts of the case were that the respondent had imported lubricating oil from Japan. It however transpired that out of 21 cases indented for the respondent, only 12 cases contained lubricating oil and the remaining 9 cases had fountain pens packed in them. Similarly, in a second consignment, 33 cases were found to have lubricating oil while 9 cases were filled with press buttons and 20 cases contained silk fabric. The Supreme Court rendered a 2-1 majority judgement. On merits, there was no difference of opinion between the Members of the Bench as the majority judgement and the minority judgement both conclude d that the respondents were liable for fraud. The majority judgement noted that the Collector “need not have stated in so many words that the false statements were made in the relevant documents, consciously and delibera tely, by the respondents. It is sufficient if the Collector recorded findings of fact, from which such an 9 | P a g e Cust. Ref. No.29/2025
inference necessarily followed.” In Hardcastle the Supreme Court was dealing with section 167(37 -B) of the Sea Customs Act, 1878, which is akin to clause (45) of section 156(1) of the Ac t. The Supreme Court rejected the contention that mens rea was required to be proved before imposing penalty in terms of clau se 37 -B of section 167 of the Sea Customs Act, 1878. The Supreme Court while construing the language of the said provision noted that, “the only condition of the attachment of this liability is that it should have been found as a fact that the goo ds not declared to the Customs authorities were concealed or mixed with goods so declared. There are no words in this item which could justi fy placing it on a par with section 39 of the Act which requires that an oral or written statement in a document should be „untrue‟ and not merely false. It is also significant that apart from the penalty of confiscation, a personal penalty, imposable unde r item 37 -B, cannot exceed Rs.1,000. This contrasts with the penalty imposable under item 9 -B, which can be three times the value of goods, if that be in excess of Rs.1 ,000. This fact also supports the inference derivable from the language of item 37 -B, th at the legislature intended this to be a case of absolute liability, for which no mental ingredients need be proved.” In holding so, the Supreme Court took into account the statutory text used to define the offence, as well as the proportionality of the pu nishment imposed. In his minority opinion, Justice Hamood-ur-Rehman noted that, “even in the case of a statutory offence the presumption is that mens rea is an essential ingredient unless the statute creating the offence, by expressed terms or by necessary implication, rules it out. The mere omission of the „word knowingly‟ or „intentionally‟ is not sufficient to rebut this presumption, for all that such words do is to say 10 | P a g e Cust. Ref. No.29/2025
expressly what is normally implied. Thus, where the words used in the statute are not clear or unambiguous, an examination of the general scheme and object of the statute becomes necessary to determine whether the general rule of liability has been departed from.” He went on to note that, “I am, therefore, unable to agree that this item creates an offence of absolute liability so as to make an importer vicariously liable even for something done by another without his knowledge or consent.” On merits, however, Justice Hamood-ur-Rehman noted that, “even applying the principle enunciated … I f ind that there is enough material on the record to justify the conclusion that the element of mens rea was also present.” The Supreme Court in Hardcastle, therefore, did not undermine the general rule that mens rea ought to be established before finding a defendant guilty of an offence and imposing penalty on him/her , and strict liability is an exception to this rule . Similarly, it laid down no general principle that all offences defined under the Customs Act are strict liability offences that require no proof of mens rea. 8. The next case cited before us by the applicants is Messrs Iram Ghee Mills (Pvt.) Ltd. v. Customs, Central Excise and Sales Tax (Appellate) Tribunal , Karachi (2004 PTD 559) where the Sindh High Court, while relying on Hardcastle, found that the liabilities provided in c lause (14) of Section 156 (1) of the Act w ere independent of the fiscal measures provided under Section 32 of the Act, and that the offence under c lause (9) of Section 156(1) of the Act was a strict liability offence that d id not require proof of mens rea. We note that the references before us relate to the offences defined under Clauses (89) and (90) of Section 156 (1) of the Act in relation to which no opinion was 11 | P a g e Cust. Ref. No.29/2025
rendered by the Sindh High Court in Iram Ghee Mills . As a general matter of law, the Sindh High Court noted that, “sub- section (1) of section 32 defines the offence of mis - declaration/misstatement in connection with the matter of customs and an offence is always quasi -criminal/criminal in nature. For establishing an offence which is quasi -criminal/criminal in nature, the presence of guilty intent/mens rea is required to be established until and unless there is a case of absolute statutory liability where no mens rea is required to be proved. ” We are in agreement with these observations. We have , however, with respect, been unable to bring ourselves to agree with certain other observations in the Sindh High Court's judgement where it drew a distinction between the need to establish mens rea for purpose of conviction b y a Special Judge, and the absence of such need where a penalty was imposed as a consequence of adjudicatory proceedings. As was explained by this Court in Lal Mat Khan & another v. Customs Appellate Tribunal (Customs Reference No. 12 of 2022) decided by judgment dated 17.03.2026, while construing the intent of the legislature, that a Court must look to the text used to define the offence. The scheme of offences defined under section 156 (1) of the Act is such that the definition of an offence (and therefore the constituent elements constituting an offence) remains the same, whether the penalty that flows as a consequence of establishment of liabil ity is a product of adjudicatory proceedings or the outcome of prosecution before a Special Judge. The question of the penalty being in the nature of confiscation of property/financial penalty , or in the nature of jail term , is not relevant for purposes of determining whether the constituent elements of the offence include establishment of intent and /or 12 | P a g e Cust. Ref. No.29/2025
recklessness, as the case may be. This is because the question of penalty only arises after the constituent elements of an offense are made out and liability for such offence is thus established. The Sindh High Court in Iram Ghee Mills also noted that clause (9) of section 156 (1) was an offence of “absolute statutory liability as held by the Hon‟ble Supreme Court in the case of Hardcastle”. We must also note that in Hardcastle the question of interpretation of clause (9) of Section 156(1) of the Act, or a pari materia clause under the Sea Customs Act, was not before the Supreme Court. 9. The Customs Department then cited the State v. Banda Gul and 2 others (1993 SCMR 311), where the Supreme Court set aside the judgement of the High Court and remanded the matters back to the trial Court for a decision afresh. In the said matter, the driver of the truck had disappeared when the truck was seized and the High Court had set aside the penalty on the basis that there was no evidence to attribute knowledge of smuggling of the goo ds on the accused. The Supreme Court noted that the observations of the High Court had been made “in oblivion of the provisions of section 156 (90) and 187 of the Customs Act, under which burden of proof lay on the accused. It was, therefore, for the latter to have proved that they were unaware that prohibited goods were being smuggled. ” This case does not help the Customs case as the Supreme Court clearly acknowledged that an offence under clause (90) of section 156 (1) of the Act provided for a defence to the accused. The matter was decided by the Supreme Court on the basis that the accused had failed to discharge his burden of proof. 10. The next case cited before us was Collector of Customs v. Wali Khan (2017 SCMR 585). This case also turned on the question of burden of proof, with the Supreme Court observing that 13 | P a g e Cust. Ref. No.29/2025
the initial burden rested upon the person accused of an offence under clauses (89) and (90) of section 156(1) of the Customs Act. With regard to the scope of authority under section 181 of the Customs Act, t he Supreme Court noted that , “section 181 of the Customs Act allows an officer passing an order for confiscation of goods to give the owner of the goods an option to pay a fine in lieu of such confiscation. However, according to the first provi so to section 181, the Board may by an order specify the goods or class of goods where such option shall not be given.” The Supreme Court went on to hold that where the FBR had issued an SR O providing that no option to pay fine in lieu of confiscation was to be given in respect of certain goods, the imposition of redemption fine was in violation of section 181 of the Customs Act, read with the relevant SRO. 11. The next case cited before us was Bashir Ahmed v. Director, Directorate of Intelligence and Inve stigation (Customs), FBR, Peshawar (2025 S CMR 684) wherein the Supreme Court enumerated the scope of authority vested in the FBR under section 181 of the Act. In this case the vehicle seized was a Hi no LPG Gas Bowser , which was designed for exclusive transportation of LPG gas. It was seized as it was found transporting foreign origin betel nuts. The Supreme Court agreed with the finding of the Collector that the vehicle was being used exclusively to carry smuggled goods covered under section 2 (s) of the Act. In relation to section 181 of the Act, the Supreme Court noted that,…
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