This Customs Reference Application filed under Section 196 of the Customs Act, 1969 (the"Customs Act") seeks opinion of this Court on the following questions of law:

i. Whether the learned Member Judicial of the Customs Appellate Tribunal has not wrongly interpreted the provision of Section 157, 181, SRO 499(I)/2009 dated 13.06.2009 and failed to consider the SRO 1619(I)/2024 dated 03.10.2024 while releasing the vehicle @ 40% redemption fine against the law/fact that vehicle was used exclusively and wholly for transportation of offending/smuggled goods and found carrying smuggled goods falling under clause (2) of Section 2 of the Customs Act, 1969?

ii. Whether the learned Single Bench has acted without jurisdiction in passing the Impugned Order, in contravention of the mandatory provisions of sub-section (3) of Section 194A of the Customs Act, 1969, which expressly stipulates that every appeal involving determination of duty, tax, penalty, or fine exceeding five million rupees shall be heard by a Special Bench consisting of not less than two members, including at least one Judicial member and one Technical Member?

2.The facts which led to the filing of the instant Customs Reference Application and germane to decide the same are that on 02.03.2025, the customs officials intercepted a Toyota pickup vehicle bearing registration No.C-4359 (the "Vehicle"). On examination of the Vehicle, it was revealed that the Vehicle was loaded with huge quantity of following non-duty paid Foreign Origin goods/materials:

3.It is the case of petitioner that no one has come forward to claim the ownership of the confiscated goods and the Vehicle has exclusively been used for the purpose of smuggled goods, therefore, the goods & the Vehicle were seized under Section 168 of the Customs Act as these items were liable to be confiscated in terms of Section 2(s), read with Sections 156(1), 157(1)(2), 168, 187, of the Customs Act, as well as SRO 499(I)/2009 dated 13.06.2009, read with amended SRO 1619(I)/2024 dated 03.10.2024.

4.The seizure report alongwith its enclosures was submitted to the Collectorate of Customs (Adjudication) Faisalabad for proceeding under Section 179 of the Customs Act. Accordingly, a show cause notice in terms of Section 180 of the Customs Act was issued. Though no definite person

appeared to claim the smuggled goods, however, Respondent No.1 replied to the show cause notice, claiming himself to be the driver / owner of the Vehicle and agitated that the goods were being carried against the normal fare. After hearing Respondent No.1, the adjudicating authority proceeded to pass Order-in-Original No.433/2025 on 05.05.2025 (ONO). Respondent No.1 filed an appeal under Section 194-A of the Customs Act before the Customs Appellate Tribunal, Lahore ("Tribunal"), which appeal was allowed vide judgment dated 20.06.2025 ("Impugned Judgment") to the effect that ONO was modified by ordering the release of the Vehicle against payment of 40% redemption fine on appraised value of the Vehicle. Hence this Customs Reference Application.

5.Learned counsel for the petitioner submits that the Tribunal has erred in law while passing the Impugned Order; adds that the provisions contained under Section 157 of the Customs Act can only be invoked by an ‘appropriate officer'during the process of adjudication of the case involving goods, which are liable to be confiscated. Finally submits that while handing down the Impugned Judgment, the Tribunal has failed to appreciate the material amendments brought about in SRO 499(I)/2009.

6.Learned counsel for the respondent has supported the Impugned Judgment and prayed for dismissal of the instant Reference Application.

7.Arguments heard. Record perused

8.Since the Tribunal has placed its reliance on the provisions contained under Section 157(2) of the Ordinance, therefore, we have considered Section 157 of the Customs Act. The said provision is reproduced herein below:

157. Extent of confiscation.- (1) Confiscation of any goods under this Act includes any package in which they are found, and all other contents thereof.

(2) Every conveyance of whatever kind used in the removal of any goodsliable to confiscationunder this Act shall also be liable to confiscation.

Provided that,where a conveyance liable to confiscation has been seized by an officer of customs, the [appropriate officer] may, in such circumstances as may be prescribed by rules,order its release, pending the adjudication of the case involving its confiscationif the owner of the conveyance furnishes him with a sufficient guarantee from a scheduled bank for the due production of the conveyance at any time and place it is required by the [appropriate officer] to be produced.

(3) Confiscation of any vessel under this Act includes her tackle, apparel and furniture.

[Emphasis Supplied is ours

9.A perusal of the foregoing provision, particularly the highlighted parts of sub-section (2) and proviso thereof, makes it abundantly clear that the recourse to sub-section (2) of Section 157 of the Customs Act can only be made as an interim arrangement during the pendency of the process of adjudication for the purpose of determination that as to whether the goods, which are seized as‘liable to confiscation', are to be confiscated or not. This authority to invoke sub-section (2) vests in an ‘appropriate officer'. The ‘appropriate officer' as couched in the afore-referred proviso of sub-section

(2) has been designated by virtue of SRO 52(I)/2024 dated 18.01.2024, which supplies that for the purpose of exercise of authority under Section 157 of the Customs Act, the ‘appropriate officer' shall be the ‘Officer of Customs competent to adjudicate the case under Section 179 of the Customs Act, 1969'. This selection of officer further lends support to the effect that sub-section (2) is only meant for an interim arrangement during the course of adjudication as the said power has been exclusively conferred upon the same officer, who is seized with the jurisdiction to finally adjudicate upon the matter of confiscation or otherwise. The rationale is unequivocal and logical; the words being employed in Section 157 ineluctably conclude that sub-section (2) is an enabling provision which can only be invoked during the pendency of the process of adjudication of the goods, which goods are seized as being liable to be confiscated. Therefore, the reliance placed upon sub-section (2) of 157 of the Customs Act by the Tribunal is misconceived
 

Reliance in this respect is placed uponShahzad'scase1,the relevant enunciation wherefrom is reproduced herein below:

"7. Section 157 of the Act unambiguously talks about the confiscation of the conveyance of whatever kind used in the removal of any goods liable to confiscation under this Act. Proviso to sub-section (2) of section 157 of the Act only caters for its release by an authorized officer of the customs as required by the prescribed rules pending adjudication of the goods involving its confiscation, subject to furnishing sufficient guarantee from the scheduled bank for due production of the conveyance at any time and place it is required by the appropriate officer to be produced. Sub-section (3) of section 157 of the Act also related to confiscation of vessel which includes, tackle, apparel and furniture."

10.In addition to the above, another question being raised before this Court is whether the Vehicle was liable to outright confiscation or the benefit under Section 181 of the Customs Act, could have been extended by ordering its release in lieu of redemption fine. Section 181 of the Customs Act is to the effect that once an order for confiscation of goods is passed under the Customs Act, the Adjudicating Officer may pass an order giving an option to the owner of the goods to pay such fine in lieu of the confiscated goods, as he thinks fit, however, the proviso to the said section envisages that the Federal Board of Revenue is empowered to circumscribe the discretion of the officer for passing an order for payment of fine in lieu of confiscated goods. While exercising the powers conferred under Section 181 of the Customs Act, the Federal Board of Revenue has indeed issued a notification bearing SRO 499(I)/2009 dated 13.06.2009, the preamble of the said SRO describes the goods or classes of goods from clauses (a) to (g) regarding which the officer concerned cannot exercise his discretion in terms of Section 181 of the Customs Act. There are two significant recent amendments/insertions/substitutions brought about in the SRO 499(I)/2009. Initially clause (ba) was inserted vide SRO 1280(I)/2024 dated 20.08.2024, which read as follows:
 

1Shahzad v. The Collector of Customs, Model Collectorate of Customs (Preventive), Karachi and another.

(2025 SCP 172).

"(ba)lawfully registered conveyance including packages and containers other than in clause (b), found carrying smuggled goods if seized for the third time; or"

Thereafter, vide SRO 1619(I)/2024 dated 03.10.2024, the said clause (ba) has been substituted as under:

"(ba)lawfully registered conveyance including packages and containers, other than in clause (b), if seized and found carrying smuggled goods;-.

11.The bare perusal of newly substituted clause (ba) of SRO 499)(I)/2009 clearly concludes that a ‘lawfully registered conveyance', ‘if seized and found carrying smuggled goods' will fall within the exceptions of Section 181 of the Customs Act and shall not be amenable to avail the option of payment of fine in lieu of confiscation. This substitution is definite in terms and unequivocal in application. The Vehicle was found carrying smuggled goods and was being used exclusively for the transportation thereof, thus, the same is squarely covered under clause (ba) of SRO 499(I)/2009 and the option contemplated under Section 181 of the Customs Act could not have been resorted to for its release. As regards to the true import of Sections 157 and 181 of the Customs Act, read with SRO 499(I)/2009, the reliance is further placed upon the law laid down by the Supreme Court of Pakistan in

theBashir Ahmad'scase2, which is to the effect that the proviso inserted in Section 157 of the Customs Act generally explains the extent of confiscation and does not in any manner effect the limit or interfere with the powers conferred upon the Federal Board of Revenue under Section 181 of the Customs Act in the context of giving an option to release the goods in lieu of payment of fine. Sections 157 and 181 of the Customs Act are independent of each other and the former cannot be construed as having an overriding

effect on the later3. The Tribunal was thus bereft of the jurisdiction of giving the option and ordering the release of the Vehicle against a fine as the Vehicle has been found carrying the smuggled goods. The Tribunal has failed to take into account this development and existing position of law on

the day of passing of the Impugned Order, therefore, the same is not sustainable on this score as well.

12.Since the above findings leads to the conclusion of setting aside of the Impugned Judgment, therefore, we do not wish to overwhelm this judgment by deciding the second question proposed for determinationvizthe jurisdiction of learned Single Member of the Tribunal. In this respect, we are guided by the well settled principle of law that "If it is not necessary to

decide more to dispose of a case, then it is necessary not to decide more4.

13.For what has been discussed above, we are of the opinion that the learned Tribunal has erred in law while relying upon sub-section (2) of Section 157 of the Customs Act, 1969 and has also failed to take into consideration the true import of Section 181 of the Customs Act, 1969 read with SRO 499(I)/2009, as amended vide SRO 1619(I)/2024. Resultantly, the question No.1 mentioned above is answered in affirmative. Consequently, this Customs Reference Application isallowedin the terms that the Impugned Judgment is set aside.

14.Office shall send a copy of this Judgment under Section 196(5) under the seal of the Court to the Appellate Tribunal.