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Official Citation: 2026 IHC 254930
Court / Jurisdiction: Islamabad High Court
Parties: Laal Mat Khan, etc vs Collector Customs Adjudication, etc
Ruling Summary: This decision was rendered by the Islamabad High Court, officially reported as 2026 IHC 254930. In this matter between Laal Mat Khan, etc and Collector Customs Adjudication, 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 Mr. Justice Sardar Ejaz Ishaq Khan) AUTHOR JUDGE: Honourable Mr. Justice Babar Sattar DECISION DATE: 17-MAR-2026 CASE NO: Custom Reference-12-2022 CITATION: 2026 IHC 254930 PARTIES: Laal Mat Khan, etc VS Collector Customs Adjudication, etc LAW / SECTION: under clauses (9), (89) and (90) of 156 of the Customs Act | under Section 561-A of the Code of Criminal Procedure, 1898 | under Sections 420, 468 and 471 of the Pakistan Penal Code, 1860 | under Section 33 of the Motor Vehicles Ordinance, 1965 SUBJECT: , REMARKS: Custom Reference. ============================================================ JUDGEMENT SHEET
IN THE ISLAMABAD HIGH COURT, ISLAMABAD JUDICIAL DEPARTMENT
Custom Reference No. 12/2022
Laal Mat Khan & another Vs. Customs Appellate Tribunal, Islamabad & others
APPLICANTS BY: M/s Barrister M. Usama Rauf and Malik Bahawal Bakhsh, Bilal Shehzad and Rana Saeed Afzal, Advocates in Custom Reference No.12 of 2022. Mr. Karim Ullah Khan, Advocate in Custom Reference No.100 of 2023. Ch. Imtiaz Ahmed, Advocate in Custom References No. 61 & 42 of 2024 and 7 of 2025. Mr. Imr an Hussain, Advocate in Custom Reference No.05 of 2024. Mr. Muhammad Fahim Khan, Advocate in Custom Reference No. 77 and 214 of 2023. Malik Nasir Abbas, Advocate in Custom Reference No.31 of 2024. Mr. Zahir Shah and Mr. Asad Ullah Taimur, Advocates in Custo m Reference No.74 of 2024.
RESPONDENTS BY: Barrister Muhammad Mumtaz Ali and Barrister Abdullah Manik, Advocates in Custom Reference No. 12 of 2022.
Mr. Muhammad Fahim Khan, Advocate in Custom Reference No.100 of 2023.
Ms. Maham Jamal and Mr. Wajih Hassan Pasha, Advocates in Custom Reference No.61 of 2024.
Mr. Imran Feroze Malik and Mr. Muhammad Mohsin Ahmed, Advocates in Custom Reference No.42 of 2024.
Mr. Aasim Shafi, Advocate in Custom Reference No.07 of 2025.
Ms. Naziran Malik, Advocate i n Custom Reference No.05 of 2024. Custom Reference No. 12 of 2022 P a g e | 2
Mr. Touqeer Akram, Advocate in Custom Reference No.77 of 2023.
Mr. Abdul Hameed Baloch, Advocate in Custom Reference No.214 of 2023.
Mr. Sikandar Naeem Qazi, Advocate in Custom Reference No.31 of 2024.
Mr. M. D. Sha hzad, Advocate in Custom Reference No.74 of 2024.
Syed Bilawal Kamal and Ms. Janan Gul, State Counsels along with Mr. Asif Razzaq, Excise and Taxation Officer, and Mr. Asif Jahangir Khan, Inspector, Excise and Taxation Office, Islamabad.
Syed Shakeel S hah, Member Customs Operations, Mr. Saeed Akram, Member Legal Customs, Mr. Rizwan Slabat, Collector Customs, Islamabad, and Mr. Mudassar Rafique, Deputy Collector Preventive Customs, Islamabad.
Mr. Manzoor Ali Jokhio, Chief (Legal - HR), FBR (HQ), Islamabad. Dr. Abdul Samad and Mr. Muhammad Arif, S.L.O, Directorate General Archeology and Museum, Peshawar.
Mr. Sajid Hussain Zuberi, Advocate along with Sardar Temur Khan Durrani, Commissioner Inland Revenue.
DATE OF HEARING: 10.11.2025. ======================================= BABAR SATTAR, J. - This consolidated judgment will decide the above-titled reference as well as the r eferences listed in Annexure-A. 2. While a host of questions have been formulated by the applicants in the me ntioned references (a complete list of which is appended as Annex A ), the elemental question in all these references, whether filed by the Customs Department or private citizens, is whether the finding by a Forensic Science Laboratory Custom Reference No. 12 of 2022 P a g e | 3
(“FSL”) that the chassis number of a vehicl e is tampered is dispositive of the fact that such vehicle is smuggled in terms of Section 2(s) of the Customs Act, 1969 (“Customs Act”)? The affiliated question is one of consequences : where the chas sis number of a vehicle is found to be tampered, can such vehicle be released to the owner under any circumstances or must such vehicle always be confiscated and its title vested in the State in terms of Section 182 of the Customs Act? 3. The answers to the se primary questions are then contingent on other quest ions of law involving interpretation of provisions of the Customs Act. The first issue that the Court must attend to is the scope of this Court's reference jurisdiction in terms of Section 196 of the Customs Act and whether in exercise of such jurisdiction this Court can interpret provisions of the Customs Act that impinge on whether or not a vehicle that forms the subject-matter of the reference is to be released to its purported owner or confiscated by the State? The answer to the question of what constit utes smuggling for purposes of Section 2(s) of the Customs Act , inviting the penalties prescribed under Section 156 of the Customs Act , requires interpretation of Section 187A of the Customs Act to decipher the legislative intent behind such provision introduced through the Finance Act, 2025. The second foundational question that arises is whether penalties under clauses (9), (89) and (90) of Section 156(1) of the Customs Act can be imposed in relation to a vehicle without first rendering a finding of wrong doing against the owner of a vehicle held liable for the offence of smuggling. In other words , for purposes of clauses (89) and (90) of Section 156(1) of the Customs Act is the penalty for wrongdoing to be imposed on the Custom Reference No. 12 of 2022 P a g e | 4
property in rem, or is the penalty to be imposed in person am after rendering a finding that the purported owner of the property is liable for wrongdoing? In this context, the question of how property rights and the right to due process and fair trial guaranteed by Articles 9, 23, 24 and 10A of the Constitution are to be balanced against public interest and the legitimate interest of the State in preventing and deterring smuggling in terms of provisions of the Customs Act requires consideration. This discussion would then necessarily require an appreciation of how the principle of proportionality is to be applied where an order for confiscation of property is to be made and whether such confiscatory order qualifies the test of being the least restrictive means to realize a legitimate State objective that has the effect of fettering the right to property guaranteed by Articles 23 and 24 of the Constitution. 4. In terms of determining the question of wrongdoing and liability, there is need to interpret how burden of proof is to be discharged for purposes of Section 156 (1) read with Sections 187 and 211 of the Customs Act, how the requirement to discharge the burden of proof continu es to shift during the adjudicatory proceedings, and the implication of application of the best evidence rule to such proceedings. What also requires determination is how case property is to be administered during the adjudicat ory proceedings, starting from the detention of a vehicle through other stages starting from its detention and seizure through confiscation and the reafter till the adjudicat ory proceedings attain finality. This requires appreciation of how the notions of safe custody and safe transmission of case property are to be understood and applied while interpreting Sections Custom Reference No. 12 of 2022 P a g e | 5
168, 169 and 182 of the Customs Act ? In this context, the Court would also need to delineate the scope of Customs General Orders (“CGOs”) issued in terms of Section 223 of the Customs Act and whether such CGOs can regulate exercise of authority under Section 169(4) of the Customs Act or exp and the scope of authority vested pursuant to Section 182 of the Customs Act. What also requires interpretation is the scope of Section 169(4) of the Customs Act and how the principles of safe custody of case property, while a matter is sub-judice, is to be squared with Section 201 read with Section 169 (4) of the Customs Act , to understand and interpret the circumstances in which case property can be sold off or put to use by the State while the property remains the subject-matter of adjudicatory proceedings and its title remains vested in a private individual. 5. This Court is seeking to undertake a holistic appraisal of how provisions of the Customs Act are to be read and understood keeping in view the constitutional guarantees underscoring the right of ci tizens to fair trial , due process and property rights, which have sometimes escaped the attention of adjudicatory authorities, as evident from conflicting case law on the question of confiscation of v ehicles found or deemed to be tampered. We will therefor e start with considering the scope of our reference jurisdiction followed by an appraisal of the relevant constitutional principles and how they impinge on the various provisions of the Customs Act identified above for purposes of understanding how the pro cess of detaining, seizing and confiscating vehicles deemed to be smuggled , while upholding the rights of vehicle owners to fair trial and due process and to uphold their right to property while balancing t he same against Custom Reference No. 12 of 2022 P a g e | 6
the legitimate S tate interest of p reventing and deterring smuggling in Pakistan. Such analysis will be followed by interpretation of the various provisions of the Customs Act to explain how a finding of wrongdoing in view of the relevant record and evidence during the adjudicatory proceedi ngs is a prerequisite for imposition of liability in terms of Section 156 of the Customs Act. And how case property is to be preserved and its safe transmission ensured in order for a n FSL report re the chassis number or chassis plate of an allegedly tampered vehicle to have evidentiary value, especial ly where such ta mpered chassis plate is the primary or sometimes the only basis for the assertion that the vehicle in question is smuggled. The analysis will be undertaken in the larger context of how the rela tionship between the citizen and the State is to be understood and what affirmative steps the State is required to take in its fiduciary capacity before imposing penalties on citizens , where the effect of such penalty acquires the form of confiscation of t he citizen's property. The legal analysis will follow the relevant factual details of individual references, then leading to adjudication of questions framed in relation to such references. The arguments of learned counsel for vehicle owners and the Custom s Department have not been summarized separately in order not to elongate this already lengthy judgment, but have been dealt with as part of the legal analysis. Custom Reference No.12 of 2022 6. A Toyota Land Cruiser (2700 CC), Registration No. BH - 779-ICT, Model 2010, Chassis No. TRJ150-0008697, was intercepted and detained on 08.12.2020, and subsequently seized on 21.12.2020. A Show -Cause Notice was issued to the Custom Reference No. 12 of 2022 P a g e | 7
owner of the vehicle and through Order -in-Original dated 24.02.2021, the vehicle was ordered to be confiscated on the basis that its chassis number had been tampered with and that the prosecution had established that the vehicle had been brought into the country illegally without payment of duties and taxes. The owner of the vehicle, Raza Khan s/o Altaf Khan, submitted before the Collector that he was a bona fide purchaser of the seized vehicle. He stated that the vehicle had originally been purchased by Muhammad Bilal, resident of Dosali, North Waziristan Agency, under the Amnesty Scheme, 2013, wh o had deposited duties and taxes amounting to Rs.4,627,661 under Order-in-Original No. 7903 dated 30.03.2013, issued by the Deputy Collector Customs, Kohat. Subsequently, Minallah Jan (CNIC No. 21506 -8295775-1) purchased the vehicle, which was registered in his name by MRA Islamabad with Registration No. BH-779. Thereafter, the present owner purchased the seized vehicle from Raza Akram s/o Muhammad Akram, resident of Faisalabad, through Pak Motors and Property Advisor, G.T. Road, Sarai Alamgir. It was furth er contended that the Customs Department had not verified the particulars of the seized vehicle by scrutinizing the data available with it regarding imports, auctions, or vehicles cleared under the Amnesty Scheme. The vehicle was reflected at Serial No. 35 1 in the data of vehicles cleared under the Amnesty Scheme, 2013 by Customs at Kohat (MCC Peshawar). It was also asserted that, at the time of clearance of vehicles under the Amnesty Scheme, 2013, no mechanism existed for verifying chassis numbers in order to determine whether they were genuine or had been tampered with or cut and welded. The Tribunal, however, upheld the order of confiscation, observing that the tampered chassis number of Custom Reference No. 12 of 2022 P a g e | 8
the vehicle did not tally with the documents produced before MRA Islamabad for the purpose of registration. Custom Reference No.77/2023
7. A Toyota Aqua , Registration No.ANX -668-ICT, M odel 2014 (Chassis No.NHP10-6295729), was intercepted and detained on 12.07.2021. It was seized on 09.08.2021. A Show - Cause Notice dated 2 6.08.2021 was issued to the owner a nd by Order-in-Original dated 18 .10.2021, the confiscation of the vehicle was ordered on the basis of FSL report dated 15.07.2021, which rendered a finding that the chassis plate of the vehicle was cut and welded. The Customs Appellate Tribunal (“Tribunal”) set-aside the Order -in-Original for having been passed beyond a period of 30 days and thus being in contravention of the requirement of Section 1 79(3) of the Customs Act. It noted that a second forensic examination ordered by the Collector was not carried out. The owner of the vehicle produced goods declaration as well as tax payment receipts verified by the Customs Appraisement (East), Karachi, by letter dated 29. 07.2022. The Tribunal took into account the fact that there was no other vehicle according to the record that had the same chassis number and that there was no proof of smuggling in th e matter. The findings were rendered while taking into account the fact that the vehicle was stolen on 29.06.2019 and the vehicle‘s owner registered an FIR in this regard. It was subsequently recovered from Holy Family Hospital in Satellite Town Rawalpindi on 07.12.2020 and the owner was granted superdari under Section 561-A of the Code of Criminal Procedure, 1898 (“Cr.PC”), by the Judicial Magistrate , Rawalpindi. During the hearing of the reference , this Court had Custom Reference No. 12 of 2022 P a g e | 9
directed the Customs Department to provide details with regard to disposal of vehicles confiscated by the Customs Department. The Customs Department relied on ECC decision dated 08.03.2006 and submitted that vehicles with t ampered chassis numbers could not be registered by Motor Vehicle Registration Authorities (“MRA”). Such vehicles were to be given to the Government Departments offering the highest price. And any remaining vehicles were to be distributed free of cost to Government owned educational, medical and scientific institutions. The report stated that 122 confiscated vehicles, duly registered with M RA over the last 5 years , were being used by public officials. 404 v ehicles that h ad been confiscated due to tampered chassis numbers had been sold to Government Departments in terms of CGO No.05 of 2018. 555 vehicles with tampered chassis numbers were being used by Field Formations of the Customs Department. 109 vehicles with tampered chassis numbers were being used by Field Formations of the Internal Revenue Service. Such vehicles could not be driven on the roads by private individuals due to security concerns as the authentic identity of such vehicles was not verifiable. However, such vehicles could be used while they were under the control of Government Departments. It was submitted that the total cost of such confiscated vehicles, calculated on the basis of sale of scrap, was Rs.250 million. However, the replacement cos t of such vehicles was Rs.9,354 million. Custom Reference No.100 of 2023 8. A Toyota Land Cruiser Prado, Registration No.JAE -040 (Quetta), Model 2007 (Chassis No.TRJ120 -5094993), was intercepted and detained on 17.06.2020. The vehicle was seized Custom Reference No. 12 of 2022 P a g e | 10
on 24.06.2020. A Show -Cause Notice was issued to the vehicle owner and by Order -in-Original dated 29.07.2020 the vehicle was ordered to be released to the owner despite an FSL report dated 18.06.2020 establishing that the chassis frame of the vehicle was cut and we lded. The Collector (Adjudication) found that the Customs Department had failed to establish that the vehicle was not the one cleared under Amnesty Scheme, 2013. The Tribunal took note of the FSL report that the chassis number of the vehicle was cut and we lded. It observed that while the vehicle may have been cleared in the Amnesty Scheme, 2013, but by virtue of SRO No.568(I)/2008 dated 11.06.2008 such scheme excluded vehicles with cut and welded chassis plates. The Tribunal noted the vehicle owner's assertion that the original owner, Sher Muhammad, surrendered the vehicle to avail the benefit of an Amnesty Scheme and paid the requisite duties and taxes. Consequently, a No Objection Certificate was issued for registration of the vehicle after seeking an affi davit that the vehicle was not cut and welded. It also noted that by ECC decision dated 03.03.2006 the Government had decided that vehicles with tampered chassis numbers could not be released and it was therefore the owner and not the Customs Department that was responsible even to the extent that the vehicle was cleared through an Amnesty Scheme. The Tribunal noted that the notion of bonafide purchaser was alien to the Customs Act. In terms of background, an FIR No.143/2016 dated 25.04.2016 was registered against the vehicle owner for offences under Sections 420, 468 and 471 of the Pakistan Penal Code, 1860 (“PPC”). The owner's application under Section 249 -A of Cr.PC was dismissed. The vehicle owner then filed Writ Petition No.2364 of 2016 before the Islam abad High Court, which after Custom Reference No. 12 of 2022 P a g e | 11
taking into account the Amnesty Scheme details and verifying that duties and taxes had been paid pursuant to such scheme ordered the release of the vehicle on superdari by judgment dated 23.04.2016. The vehicle was then detaine d, as discussed above, on 17.06.2020. The vehicle owner then filed Writ Petition No.2817 of 2020 before the Islamabad High Court, which by judgment dated 17.11.2020 ordered the release of the vehicle subject to furnishing of surety. The Customs Department filed an appeal against such judgment, but the Supreme Court refused to grant leave by order dated 28.09.2021 in CP No.3462 of 2020. The Customs Department, however, refused to release the vehicle to the owner, despite court orders, during the pendency of adjudicatory proceedings. Custom Reference No.214 of 2023
9. A Toyota Premio, Registration No.ARQ -007 (Sindh), Model 2004 (Chassis No.ZTT240 -0044208), was intercepted and detained on 23.09.2020. The vehicle was seized on 28.09.2020 and Show -Cause Notice d ated 03.11.2020 was issued to the owner of the vehicle. The Order -in-Original dated 24.11.2020 ordered the confiscation of the vehicle on the basis of FSL report dated 24.09.2020, which found that the chassis number was grinded and self-punched. The chassis number, as apparent, was ZZT240-0091512, which after chemical treatment was deciphered to be ZZT240 -0044208. The Order -in-Original noted the owner's response that the vehicle had been purchased from Raja Riaz Hussain on 05.12.2017 and Rs.900,000/ - was paid in consideration through banking channels. The seller disappeared and FIR No.297/19 dated 03.04.2019 was registered against the seller, when the owner realized that the vehicle was tampered as Custom Reference No. 12 of 2022 P a g e | 12
a consequence of FSL report dated 10.04.2019. The custody of the vehicle was granted to the owner on superdari after the seller/accused was declared a proclaimed offender. The Order - in-Original was based on the fact that it was not denied that the vehicle was tampered and therefore its confiscation was ordered. The Tribunal by order dated 09.08.2023 set -aside the Order -in- Original on the basis that the forensic examination was carried out without associating the owner with the fact that the vehicle was lawfully registered in the name of the owner who was a bonafide purchaser and the Customs Department possessed no evidence of smuggling of the vehicle. It was also noted that the vehicle had remained in the possession of the Customs Department for a significant period creating doubt about how its chassis number was tempered. Custom Reference No.05 of 2024 10. A black Toyota Land Cruiser, Registration No.AAH -418 (Punjab), Model 2017 ( Chassis No.URJ202-4142902), was detained on 16 .08.2023 and seized on 24 .08.2023 due to its chassis number being manually punched. A Show -Cause Notice dated 08. 09.2023 was issued to the owner of the vehicle. The Order-in-Original dated 08 .09.2023 ordered the confiscation of the vehicle on t he basis of FSL report dated 07.08. 2023, which concluded that the chassis number was manually punched and the vehicle was smuggled in terms of Section 2 (s) of the Customs Act. The Tribunal by order dated 21.12.2023 upheld the Order-in-Original while relying on the law laid down by the Peshawar High Court in Sultan Muhammad vs. Collector Customs and another (2015 PTD 570 ) and the Supreme Court in Government of Khyber Pakhtunkhwa vs. Sarfraz and others (2020 SCMR 1410) and Ch. Maqbool Ahmed vs. Custom Reference No. 12 of 2022 P a g e | 13
Customs, Federal Excise and Sales Tax, Appellate Tribunal and 3 others (2009 SCMR 226 ). The Tribunal also ordered a second forensic examination , which was done a nd a report was submitted on 08.12.2023, which also concluded that the original chassis numbers had been erased and could not be deciphered due to deep grinding and such report had been rendered after associating t he owner with the examination process, and was conducted on the owner's request. The Tribunal concluded that the registration book in itself was not evidence of import in a case where the chassis number was found to be t ampered and that the notion of bonafide purchaser was alien to the Customs Act. During the proceedings before this Court, the Customs Department submitted that another vehicle with the same chassis number had been traced by the Customs Department. It was this vehicle that was cleared by the Customs Department on the basis of import documents being used by the confiscated vehicle. It bore Sindh registration number BT-0999 and was originally registered by Sheikh Naseer Ahmed on 21.06. 2017. It was then purchased by Pir Syed Saleh Shah Jil lani. T he registration documents of such vehicle reflected that the vehicle was imported a nd rendered out of charge on 24.03. 2017 and had been imported by Auto Mall. It was on the basis of such import documents that the vehicle was registered by the MRA in Sindh. The applicant in rejoinder submitted that the chassis number of the applicant's vehicle was URJ202 -41429O2, and confusion was being caused as the second last number in the chassis number of the applicant's vehicle was the alphabet O and not the digit 0 . The applicant was , however, unable to produce any import…
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