Summary: (a) Customs Act, 1969 (IV of 1969) ----S. 169(5)—Claim to sale proceeds of confiscated goods—Prerequisites—Held, entitlement to sale proceeds of seized goods arises only after adjudication or appellate declaration that the goods were not liable to confiscation—Petitioner, without obtaining such declaration, directly claimed the proceeds of confiscated “black tea” under S.169(5)—Such claim was premature and not maintainable—To invoke S.169(5), the claimant must first establish ownership and wrongful confiscation through proper adjudication or court proceedings; absent such finding, no right to proceeds accrues. (b) Customs law—Confiscation and sale proceeds ----S. 168, S. 169(5), Ss. 156(1)(8)(89), 201—Once goods are lawfully confiscated under adjudication (Order-in-Original No.123/2011, dated 19.08.2011), the sale proceeds remain property of the State unless later adjudged otherwise—Findings in Custom Reference No. 27-P of 2018 and dismissal of subsequent Civil Appeal No.176 of 2020 upheld the confiscation; thus, petitioner’s ownership claim stood negated. Held: Petitioner failed to obtain requisite declaration that the goods were not liable to confiscation; claim for sale proceeds under S.169(5) was misconceived and premature. Disposition: Leave to appeal refused—Petition dismissed. Statutes and Provisions Cited: • Customs Act, 1969 (IV of 1969), Ss. 2(s), 16, 156(1)(8)(89), 157, 168, 169(5), 201. • Imports and Exports (Control) Act, 1950, Ss. 3(1) & 3(3). Result: Petition dismissed; leave to appeal refused.

Summary: (a) Customs Act, 1969— —Ss. 32, 80, 81 & 179—Jurisdiction—Recovery of short-levied taxes—Scope— Customs authorities retain jurisdiction, within five-year limitation, to recover sales tax and advance income tax at the import stage, even where discovered after clearance of goods due to wrongly granted exemption. Insertion of “taxes” in S.32 by Finance Act, 2014 and “including recovery” in S.6(1) of the Sales Tax Act, 1990 by Finance Act, 2015, coupled with omission of S.11 Sales Tax Act by Finance Act, 2024, show legislative intent to vest post-clearance recovery jurisdiction in Customs. Sections 80 and 81 envisage assessment not concluded at clearance stage; S.179 provides adjudicatory machinery. (b) Sales Tax Act, 1990— —S. 6(1)—Collection and recovery at import stage—Extent— Import-stage sales tax is charged, paid, enforced and recovered in the same manner and time as customs duty. With omission of general recovery jurisdiction of Inland Revenue (earlier S.11), S.6(1) now stands as sole operative provision, incorporating Customs Act machinery for collection and recovery of sales tax at import. (c) Income Tax Ordinance, 2001— —S. 148(5) & (6)—Advance income tax at import stage— Sub-sections (5) and (6) synchronize collection of advance income tax with customs duty, borrowing Customs Act provisions “so far as they relate to collection”. Scheme envisages that Customs may recover unpaid advance tax discovered through post-clearance audit. (d) Fiscal statutes—Amendments—Retrospective application— Amendments by Finance Acts 2012, 2014 and 2015 to Customs Act and Sales Tax Act are procedural; they regulate forum and machinery for collection but do not create new liabilities. Being procedural, they apply retrospectively unless expressly excluded. (e) Constitutional law— —Art. 199—High Court jurisdiction— Sindh High Court erred in holding Customs lacked jurisdiction to recover import-stage sales tax and income tax post clearance; impugned judgments set aside. Dissent (Muhammad Shafi Siddiqui, J.) (f) Customs Act, 1969—Sales Tax Act, 1990—Income Tax Ordinance, 2001—Jurisdiction— Held, Customs’ jurisdiction limited to import stage only. Post-clearance recovery of sales tax or income tax lies exclusively with Inland Revenue authorities under respective statutes. Amendments inserting “taxes” (Customs Act) or “including recovery” (Sales Tax Act) do not confer adjudicatory powers to Customs absent express conferment. Import-stage jurisdiction ends once goods are cleared under S.80 of Customs Act; subsequent proceedings must be by Inland Revenue. Civil Petitions dismissed. Cited Cases Gulistan Textile Mills v. Federation of Pakistan 2019 PTD 393 (Lahore High Court) (distinguished) Banwari Lal v. Mahesh AIR 1918 PC 188 Siddique Khan v. Abdul Shakur Khan PLD 1984 SC 289 Other jurisprudence on court-fees and jurisdiction referred for analogy. ----Disposition: By majority (Afridi, C.J. and Shakeel Ahmad, J.)—Petitions converted into appeals—Allowed—Sindh High Court judgments/orders set aside—Customs authorities declared competent to recover short-levied sales tax and advance income tax post-clearance. Dissent (Siddiqui, J.)—Leave refused—Customs jurisdiction confined to import stage; post-clearance recovery lies with Inland Revenue.

Summary: (a) Customs Act (IV of 1969) ----Ss. 2(s), 157 & 180—Confiscation of conveyance—Smuggling of petroleum product—Burden of proof on owner—Specially modified cavities in vehicle—Absence of bona fide defence Petitioner’s LPG bowser was seized by Customs Anti-Smuggling Organization while transporting foreign-origin high speed diesel (HSD); Show Cause Notice issued under S. 180—Petitioner contended the vehicle was on hire and smuggling was without his knowledge—Tribunal allowed appeal, setting aside confiscation—High Court, however, allowed reference under S. 196, holding petitioner failed to discharge burden of proving disconnection from the smuggled goods—Supreme Court upheld High Court’s view, emphasizing that under S. 157, burden lies on owner to show lack of nexus—Modification of LPG bowser with concealed compartments indicated knowledge or willful ignorance—Hiring contract, produced belatedly, was insufficient to rebut statutory presumption—Held, no right to release or redemption exists where vehicle is used exclusively for smuggling with concealed modifications. Cited Case: • Abdul Razzak v. Pakistan PLD 1974 SC 5 (distinguished) (b) Statutory Rules & Orders—S.R.O. 499(I)/2009 dated 13.06.2009 ----Application—Conveyance carrying smuggled goods in concealed compartments—Ineligibility for redemption Relaxation under first proviso to S. 181 of the Act via S.R.O. 499(I)/2009 not applicable where vehicle is found with hidden cavities or used wholly for smuggling—Petitioner’s bowser was structurally modified with concealed roof inlet for illegal transport—Held, such facts bar applicability of redemption option or imposition of fine in lieu of confiscation. (c) Evidence Act (I of 1872), General Principles—Burden of proof—Owner’s liability in smuggling cases Petitioner failed to produce documentary evidence of hire amount, report contract to Motor Vehicle Authority, or explain presence of original registration book in vehicle—Held, burden under customs law is affirmative; mere denial or unsubstantiated private agreement does not exonerate vehicle owner—Rebuttal of presumptive culpability requires cogent and credible evidence. Disposition: Leave to appeal declined—High Court’s judgment upheld—Petition dismissed—Confiscation of vehicle maintained due to exclusive use in smuggling operation and failure to rebut statutory presumption.

Summary: (a) Customs Act, 1969 read with S.R.O. 565(I)/2006 dated 05.06.2006 as amended by S.R.O. 474(I)/2016 dated 24.06.2016 ----Exemption from customs duty---HS Codes 3402.1300 & 3402.1190---Manufacturers and formulators of agricultural pesticides---Approval by Ministry of National Food Security & Research---Scope---**Petitioner, importer and manufacturer of agricultural surfactants/surface-active agents such as stabilizers, emulsifiers, and solvents, sought customs duty exemption under SRO 565 as amended by SRO 474---Claim denied on ground that petitioner was not approved or recognized by Ministry of National Food Security & Research as a manufacturer/formulator of agricultural pesticides---Held, exemption under Column (3) of Table at Serial (3) of the SRO was subject to conditions mentioned in Column (2), including mandatory approval by Ministry---Mere classification under HS Code was insufficient to claim benefit of zero percent duty---Obligations under SRO were binding and petitioner’s failure to meet prerequisites disentitled it from exemption---No vested right was curtailed and petitioner may still challenge vires of SRO before appropriate forum if so advised---Petitions dismissed and leave to appeal refused. (b) Interpretation of SROs and Tax Exemptions ----Conditional exemptions---Legislative intent---SRO-based tax exemptions not absolute and must be interpreted strictly---Held, exemption clauses in SROs are construed narrowly, and compliance with specified conditions is mandatory---Failure to fulfill qualifying requirements renders claim untenable irrespective of nature of imported goods or similarity to exempted items---Distinction drawn between provisions of Sales Tax Act, 1990 and subject SRO held valid as former lacked comparable restrictive language.

Summary: (a) Customs Act, 1969: ----Ss. 157(1) & (2), 181---Confiscation of vehicle carrying smuggled goods---Redemption fine---Burden of proof. A vehicle carrying smuggled Indian-origin goods was seized under S. 168 of the Customs Act, 1969, and later confiscated outright under S. 157(2). The Collector of Customs (Adjudication) allowed the owner to redeem the vehicle upon payment of a redemption fine under S. 181, reasoning that there was no evidence proving the vehicle was previously used for smuggling or contained secret cavities. The Customs Appellate Tribunal upheld this decision, ruling that in the absence of evidence of repeated use in smuggling, outright confiscation without an option for redemption was unwarranted. The Tribunal also observed that the burden of proof rested on the Customs authorities to establish the owner’s involvement in smuggling, which they failed to do. ---Cited Case: • Syed Taj Muhammad v. Collector-Appeals PTCL 1998 272 (Tribunal Lahore) (b) Standard of Proof in Customs Cases: ----S. 2(s), SRO 566(I)/2005, SRO 499(I)/2009---Mens rea in smuggling offenses---Requirement of concrete evidence. The Tribunal reaffirmed that mere presence of smuggled goods in a vehicle does not automatically establish the owner’s complicity unless there is evidence of prior involvement in smuggling or intent to abet the offense. The seizing agency failed to present concrete evidence linking the owner to the smuggling act, and the tribunal ruled that presumptive allegations are insufficient to justify outright confiscation. The tribunal also emphasized that when smuggled goods are confiscated outright under clauses (8) & (89) of S. 156(1), the same does not necessarily extend to the vehicle unless the conditions under S. 157(2) are met. (c) Jurisdiction of Adjudicating Authorities: ----Power to impose penalties under the Customs Act, 1969---Competence of Adjudication Authority. The Tribunal held that imposition of penalties for offenses under the Customs Act, 1969, falls within the exclusive jurisdiction of the Special Judge (Customs & Taxation). Since no provision in the Act grants adjudicating officers or the Tribunal the power to impose penalties beyond confiscation or redemption fines, the penalty of Rs. 50,000 imposed on the vehicle owner was declared ultra vires and was set aside. The Tribunal further clarified that remission of penalties should be exercised cautiously to uphold justice and fair play. (d) Appeals Against Customs Adjudication Orders: ----Scope of appellate review---Reassessment of evidence. The Customs Appellate Tribunal dismissed the appeal filed by the Collectorate of Customs, Hyderabad, holding that the Adjudication Officer’s order was legally sound. It observed that the appellate forum does not interfere with adjudication findings unless there is fresh evidence or a clear misapplication of law. Since no new evidence was provided by the seizing agency to establish repeated use of the vehicle in smuggling, the appellate tribunal found no justification to overturn the lower order. ----Disposition: Appeal dismissed. Redemption fine upheld. Penalty on vehicle owner waived.

Summary: Background: The case involves a set of Special Customs Reference Applications (SCRAs) concerning the levy of duties and taxes on petroleum consignments that were in transit to Afghanistan. The central issues revolved around whether duties and taxes could be levied on losses of consignments due to transit evaporation beyond 1% and on consignments lost due to terrorism. The references were filed by both the Collector of Customs, challenging the facilitation of non-payment of duties beyond 1%, and by carriers/importers, contesting the imposition of duties for goods lost due to terrorism. ----Issues: 1- Whether duties and taxes could be levied in respect of loss of consignment due to transit evaporation beyond 1%. 2- Whether duties and taxes could be levied on consignments allegedly lost due to terrorism. ----Holding/Reasoning/Outcome: --Transit Evaporation Loss (Beyond 1%): The court held that the concession allowing for a 1% loss due to evaporation under CGO 12/2002 (amended by CGO 6/2010) remains valid. However, losses beyond 1% due to evaporation must be subject to duties and taxes. The statutory exemption of 1% applies irrespective of the total loss or damage to the goods. --Loss Due to Terrorism: The court concluded that the act of terrorism does not absolve carriers from liability to pay duties and taxes for goods lost in transit. Despite claims of terrorism being the cause of non-delivery, the tribunal found no factual incidents to support these claims. Therefore, the carriers remained responsible for paying duties and taxes on lost consignments. ----Citations/Precedents: Al-Haj Enterprises v. Collector of Customs (2017 SCMR 1598): The Supreme Court held that consequences of short supply beyond 1% are not provided in Rule 564(4) of the Customs Rules 2001, thus supporting the dismissal of petitions challenging duties and taxes beyond 1%.

Summary: (a) Customs Act (1969) – Ss. 32(1), 32(2), 32(3A), 79, 80, 156(1)(14), 196(5); Sales Tax Act (1990) – Ss. 3, 6, 33, 34, 36; Income Tax Ordinance (2001) – S. 148 Misdeclaration of imported goods—Customs classification—Scope—Importer cleared consignments of water-based varnishers under incorrect classification, declaring them as "acrylic polymers in primary form" to avail lower customs duty—Customs authorities, after lab analysis and classification committee review, determined the correct classification under PCT heading 3209.1010, attracting a higher duty—Tribunal upheld duty recovery while remitting penalty—Held, past incorrect classification does not justify continued misclassification—Law does not permit perpetuation of erroneous benefits—Reference application dismissed—Relied upon Azam Shah (SC Judgment) regarding correction of past erroneous benefits. (b) Customs Law—Retrospective Application of Classification Rulings—Effect Customs classification—Past clearance practice—Scope—Importer contended that previous consignments were cleared under a lower duty rate, arguing against retrospective application of reclassification—Held, classification is determined on factual basis, not bound by prior erroneous practice—No vested right to incorrect classification—Tribunal's decision to uphold duty demand but remit penalty found lawful—Precedent applied: Fauji Fertilizer Co. Ltd. v. NIRC (2013 SCMR 1253). (c) Reference Jurisdiction—Scope of Review—Factual Controversies Customs adjudication—Tribunal as final fact-finding authority—Scope of judicial review—Importer failed to contest composition findings or classification correctness—Held, factual findings of tribunal not ordinarily interfered with in reference jurisdiction unless jurisdictional error or legal infirmity demonstrated—Reference application dismissed—Reliance placed on State Oil Co. Ltd. v. Bakht Siddique (2018 SCMR 1181). ---- Disposition Reference application dismissed—Tribunal’s decision to uphold duty demand affirmed—Customs classification under PCT heading 3209.1010 declared correct—Penalty remission upheld but duty evasion liability maintained.

Summary: Background: The appellant, the Additional Collector of Customs, filed an appeal against the judgment of the High Court of Sindh, Karachi, which favored the respondent, M/s K. S. Sulemanji Esmailji & Sons Pvt. Ltd. The dispute arose over the classification of goods imported by the respondent, specifically “BOPP” Printed Laminated Packaging Film (Metalized). The respondent sought a refund on customs duties, claiming that an incorrect classification had led to an overpayment of customs duty at 25% instead of 20%. After referring the matter to the Classification Committee of the Federal Board of Revenue (FBR), the committee classified the goods under a heading that maintained the 25% duty rate. Both the Tribunal and the High Court rejected the committee's ruling, favoring the respondent's classification, which attracted a 20% duty rate. The appellant challenged this decision in the Supreme Court. ----Issues: 1- Whether the classification ruling of the Classification Committee under PCT Heading 3920.2040 was correct. 2- Whether the Tribunal and the High Court erred in substituting their own classification of the goods without considering the ruling of the Classification Committee. 3- Whether the High Court and the Tribunal failed to properly interpret Rule 3(c) of the General Rules for Interpretation of the First Schedule to the Customs Act, 1969. ----Holding/Reasoning/Outcome: The Supreme Court allowed the appeal and set aside the judgments of the Tribunal and the High Court. The Court held that the Classification Committee’s determination under PCT Heading 3920.2040, which attracted a 25% customs duty, was correct and in accordance with the applicable rules. The Committee had relied on the Customs House Laboratory’s analysis and the Explanatory Notes to the Harmonised Commodity Description and Coding System, issued by the World Customs Organisation. The Court emphasized that the Classification Committee, established by the FBR, has technical expertise in determining the correct classification of imported goods. It further ruled that the Tribunal and the High Court had overstepped their bounds by disregarding the Committee's ruling without demonstrating that the Committee’s decision was arbitrary or in violation of the relevant rules and guidelines. The Supreme Court noted that Rule 3(c) of the Rules of Interpretation had been correctly applied by the Committee, and the classification under the heading "Others" was inappropriate as it pertained to films other than BOPP. Thus, the rejection of the respondent’s refund application was restored, and the Supreme Court ruled in favor of the appellant. ----Citations/Precedents: Rule 3(c) of the General Rules for Interpretation of the First Schedule to the Customs Act, 1969. Explanatory Notes of the Harmonised Commodity Description and Coding System (World Customs Organisation).

Summary: Background: The petitioners (Collector of Customs and others) sought leave to appeal against a decision by the High Court of Sindh, Karachi, where the court had ruled that the imposition of mobile handset levy on phones other than smartphones was unlawful and without jurisdiction. The respondents, various mobile phone importers, challenged the imposition of the mobile handset levy under section 10 of the Finance Act, 2018, which specified that the levy applied only to smartphones. The dispute arose when the Federal Board of Revenue (FBR) attempted to expand the scope of the levy to include feature phones through an amendment in the table attached to section 10 in the Finance Act, 2022. ----Issues: 1- Whether the imposition of the mobile handset levy on phones other than smartphones was lawful under section 10 of the Finance Act, 2018. 2- Whether the amendment of the table in the Finance Act, 2022, could lawfully extend the scope of the levy beyond smartphones without amending the charging section. ----Holding/Reasoning/Outcome: The Supreme Court dismissed the petitions, upholding the decision of the High Court. The court ruled that the power to impose a levy must originate from the charging section of the statute, not from the table that merely specifies rates. Since section 10 of the Finance Act, 2018, specifically mentioned smartphones, the levy could not be extended to other types of phones through a mere amendment to the table. The court found that the charging section remained unaltered, and the legislature's intent to limit the levy to smartphones was clear. Any attempt to recover the levy on feature phones was therefore without lawful authority. The court reiterated the settled legal principle that a table or schedule in fiscal statutes is subordinate to the charging section and cannot independently create new liabilities or expand the scope of a tax without proper legislative amendments to the charging provision itself. ----Citations/Precedents: Settled principles of law on interpretation of fiscal statutes and tax laws.

Summary: ----Issues:1. The procedural adequacy of the customs authorities in establishing the basis for the vehicle's seizure and the issuance of a vague Show Cause Notice.2. The application of burden of proof principles in the context of suspected smuggling of a