2026 PLP (Trib (PTD)

SHAKIL AHMED ABBASI, MEMBER JUDICIAL-III.

By this order, I intend to dispose of abovementioned Customs Appeal filed against Order-in-Original No.21/2023 dated 15.09.2023 passed by the learned Collector of Customs (Adjudication) Quetta Camp Office at Hyderabad.

2. Brief facts of the case as reported by the Deputy Collector, Collectorate of Customs Hyderabad that on 24.06.2023. Upon inquiring the legal documents of petroleum product, the drivers produced the Delivery Challan No. 905 dated 23.06.2023 along with Sales Tax Invoice No. 2368023, showing a product of 30,000 liters of Solvent Oil issued to oil tanker No. TUB-572 in the name of driver namely Mr. Khalid and on other Delivery challan No. 906 dated 23.06.2023 along with Sales Tax Invoice No. 2368123, showing a product of 30,000 liters of Solvent Oil, issued to oil tanker No. TTD - 275 in the name of driver namely Mr. Shafiullah. Both Delivery challans along with sales tax invoices were issued by M/s Reliance Petroleum Industries (Pvt.) Limited to private person namely Mr. Muhammad Irfan Arif, bearing CNIC No 36603-8079132-7, Rio PO Office Khas, Chak No. 24-WB. Tahsil and District Vehari. The physical search of vehicles i.e. TUB-572 and TTD-275, the loaded goods were found to be High Speed Diesel (HSD) which were being smuggled ander the guts of solvent oil. Hence, both oil tankers along with loaded HSD were detained vide detentli memos. both dated 24.06.2023 in the presence of mushirs and same were brought in Contam House, Hyderabad for further legal proceedings. The department vide letter No. Cus/Det/Seiz/ASO/Hyd/202223/1393 dated 25.06.2023 M/s. Reliance Petroleum Industries (Pvt) Limited to verify the genuineness of documents i.e delivery challans and sales tax invoices produced by drivers at the time of detention and same were verified by M/s. Reliance Petrochem Industries (Pvt.) Limited vide Ref No, RPI-350/2023 dated 27.06.2023. In order to determine the veracity of nature of detained goods, as per requirements of section 199(1) of Customs Act, 1969, twelve (12) samples of goods were drawn, sealed and signed in presence of Mr. Wahid Ullah (CNIC No. 41304-2868620-5) authorized by Ms. Reliance Petroleum Industries (Pvt.) Limited itself vide RPI-298/2023 dated 26.06.2023 for testing purpose. The pictures of twelve sealed and signed samples are enclosed for kind perusal. The drawa samples (four each) were sent to three different Lab institutions for testing purpose i.e (1) M/s. Hydrocarbon Development institute of Pakistan (HDIP) (Karachi Laboratories Complex) vide letter C.No. 123Cus/Det/Seiz/ASO/Hyd/22-23/01 dated 03.07.2023 (ii) M/s. Tti Testing Laboratorios, Lahore vide letter No. Cus/Det/ASO/Hyd/22-23/1489 dated 06.07.2023(iii) Pakistan Council of Scientific and Industrial Research Laboratories Complex Karachi vide letter C.No. Cus/Det/ASO/Hyd/22-23/1400 dated 26.06.2023. The findings of each lab tests are reproduced below: S# Name of the Lab Report No. Findings Findings 1 Hydrocarbon Development Institute of Pakistan (HDIP) (Karachi Laboratories Complex) Nil The sample does not meet the specification notified by DG (Oil) MEPD for High-Speed Diesel(HSD) The findings of lab test failed to specify explicitly the true nomenclature of detained goods whether the same are HSD 02 Solvent oil. 2 Tti Testing Laboratories, Lahore Report No.17060-23 The sample is diesel with as light mixing of petrol or any other solvent The findings of lab test explicitly specify that sampled goods are HSD 3 Pakistan Council of Scientific and Industrial Research Laboratories Complex, Karachi (PSCIR) PCSIR-KLC-5015905 The tested parameters of the submitted sample complies with PS -- specifications of High speed diesel, PS-344 / 2009, except the Flash Point (38oC), which shows slight mixing of Kerosene. -do-

3. The FSL tests of both detained vehicles i.e. TUB - 572 and TTD - 275 in which goods were loaded were also conducted and one vehicle i.e. TUB - 572 has been found tempered vide Examination Report No.FSL/FD/OR/V/75/2023 dated 11-7-2023 which is liable to confiscation in terms of Board letter No.1(12)E&C/2019 dated 18-11-2019. Without prejudice, balance of convenience and facts on the basis of lab reports above, it is proved that High

Speed Diesel (HSP) is smuggled one and same as being transported under the garb of solvent oil on the basis of Delivery challans and sales tax invoices issued by M/s Reliance Petroleum Industries (Pvt.) Limited to provide person namely Mr. Muhammad Irfan Arif, P.O Office Khas, Chauck No.24-WB, Tehsil and District Vehari. Therefore, the detained High Speed Diesel (HISD) along with oil tankers bearing registration Nos.TUB

572 and TTD-275, both being used wholly and exclusively for transportation of foreign origin/smuggled High Speed Diesel (HSD) have been seized under section 168 of the Customs Act, 1969 after issuing Notice under sections 2(s) 16 and 157 of the Customs Act, 1969 read with rule 126 of Customs Rules, 2001 and read with section 3(1) of the Import and Export (Control) Act, 1950, punishable under clause (89) of section 156(1) of the Customs Act, 1969 and 157(2) ibid and further read with SRO 566(I)/2005 dated 6-6-2005 and 499(I)/2009 dated 13-6-2009. Besides, FSL report, the oil tanker i.e. TUB -- 572 has been found tempered vide Examination Report No.FSL/FD/OR/V/75/2023 dated 11-7-2023 which is liable to confiscation in terms of Boards letter No.1(12)E&C/2019 dated 18-11-2019.

4. Adjudicating proceedings were culminated into passing of Order-in-Original No.21/2023 dated 15-9-2023 passed by learned Collector of Customs (Adjudication) Quetta Camp Office at Hyderabad as under:--

17. I have examined the case record and considered the written/verbal arguments of the seizing agency. Neither any one appeared to claim the seized goods mentioned at para 12 supra of this order nor any written reply was received rebutting the allegations as contained in the Show-Case Notice. Being conscious of the universally established legal principal of Audi Alteram Partem i.e. no one shall be condemned unheard, this office tried it best to provide the respondent (s) sufficient opportunity of hearing through show-cause notice and the hearing notices. Despite that, the respondents(s) failed to appear either in person or through authorized representative and did not furnish any written reply to the show-cause notice. Accordingly, reliance is placed on the departmental reply submitted in the case vide para 16 above. The Collectorate argued that the Complainant had sold a hazardous substance to an individual based solely on his CNIC, contrary to regulations governing the transportation of dangerous and hazardous compounds. The samples of the seized good were drawn in the presence of the respondent's representative and sent to HDIP, a lab recognised approved by OGRA. The Collectorate requested confirmation regarding whether the seized sample was High-Speed Diesel (HSD), Solvent Oil, Kerosene Oil or any other petroleum product. The HDIP's test report revealed that the sample did not meet the specification for HSD as notified by DG (OIL) MEPD. The other lab namely TTI reported the presence of diesel with slight mixing of petrol or any other solvent. PCSIR reported that sample complies with specification of HSD except the Flash Point (38 C) which shows slight mixing of Kerosene Oil. As the respondent was not satisfied with the lab report, therefore, it was agreed that a lab test for the 4th time will be conducted and that the samples would be re-tested by HDIP in accordance with OGRA's guidelines Samples were again drawn in the presence of the respondent representative. The test reports for both seized tankers stated that the seized goods did not meet the specification notified by the DG (OIL) MEPD for High Speed Diesel (HSD) which is the same report as communicated earlier by HDIP The lab teats conducted during the course do not specifically indicate the seized goods to be a "solvent oil at contended by the respondent. Report by HDIP (recognized by OGRA) also concludes that the seized goods do not meet the specifications of HSD however, it does not specify the exact nature of the seized goods as required by the Seizing Agency The HDIP's report stated that the sample does not meet the specifications notified by DG (oil) for HSD but it also does not specify the product being texted as required by the seizing agency. This gives a lead to the conclusion that it does not meet local standards and therefore is not HSD of Pakistan origin, instead foreign origin HSD. The other two labs have given reference to the presence of HSD in the sample. Hence, it can be fairly concluded that the seized goods are not solvent oil as contended by the respondent and neither of the three labs have mentioned "Solvent Oil" in their findings, hence the seized goods are foreign origin HSD. Therefore, I do not find any reason to disagree with the contention of the seizing agency that the seized goods were brought into the country through an unauthorized route without payment of duty and taxes. Consequently, the seized goods mentioned at Para 12 Supra of this order are Confiscated Outright in terms of clauses (8) and (89) of section 156(1) of the Customs Act, 1969 for violation of sections 2(x) and 16 of the Customs Act, 1969 read with SRO 566(I)/2005 dated 06.06.2005. ORDER REGARDING VEHICLE NO.TUB-572

18. The seized vehicle Hino oil tanker (10 wheelers) Reg. No. TUB-572, Chassis No. FF173-18728, Hp-165 CC and Model 1990 was subjected to FSL and found to be Tempered vide Examination Report No FSL/FD OR/V/75/2023 dated 11.07.2023). Consequently, the seized vehicle mentioned at para 12 of this order is Confiscated Outright in terms of section 157(2) of the Customs Act, 1969 for violation of sections 2(s) and 16 of the Customs Act, 1969 read with SRO 499(I)/2009 dated 13.06.2009 and Board letter No. 1(12)E&C/2019 dated 18.11-2019. ORDER REGARDIN VEHICLE NO.TTB.275.

19. As for the seized vehicle No TUB-572 is concerned the same has been used for carriage/removal of offending goods. Therefore, it is confiscated under Section 157(2) of the Customs Act, 1969. However, nothing has been placed on record by the Seizing Agency to the effect that the vehicle is hit by clause (b) of the preamble of SRO 499(I)/2009 dated 13.06.2009 or has been used repeatedly in terms of Board's letter No. 10(17)L&P/05 dated 26.06.2006. Since, the vehicle was not being exclusively used for transportation of smuggled goods, within contemplation of clause (s) of Section 2 of the Customs Act, 1969, therefore, same was not liable to be confiscated outright.

20. The respondent for the seized vehicle also contended that the driver of the vehicle had picked up the seized goods against normal hire charges and he has no relation with the seized good. Therefore, keeping in view the request of the respondent for vehicle that it has bona fide status, an option under Section 181 of the Crestoms Act, 1969 read with clause 2(f) SRO 499(I)/2009 dated 13.06.2009 is given to the lawful claimant/owner of the seized vehicle to redeem the same against payment of redemption fine equivalent to 20% of the ascertained Customs Value subject to condition that the vehicle is already lawfully registered in the country with the relevant Motor Registration Authority and has not been previously used in the act of smuggling and to verify that it does not attract clause (b) of the preamble of SRO 499(I)/2009 dated 13.06.2009. The Seizing Agency is also directed to complete the verification process regarding legal status/lawful registration of the impugned vehicle and get the vehicle lab tested (FSL) to ascertain as to whether its chassis number/frame is genuine or otherwise. In case of adverse findings, necessary action may be taken accordingly. Moreover, it may also be verified before release whether the vehicle is required in any other court of law. These aspects are to be verified by the seizing agency before release of the vehicle. A personal penalty of Rs.150,000 (Rupees One Hundred Fifty Thousand Only) in terms of clauses (8) and (89) of Section 156(1) of the Customs Act, 1969 is also imposed on lawful claimant/owner of the seized vehicle for carriage of offending goods.

5. Appellant being aggrieved with the aforesaid impugned order passed by the Adjudication Officer filed the instant appeal before this Tribunal and has assailed the impugned order inter alia on the following grounds:- A. That the Appellant is a law abiding citizen of Islamic Republic of Pakistan and has never been indulged in such kind of activities as alleged by the Respondent. B. That the impugned order of the Respondent No.1 has been passed due to misreading, non-reading and ignorance of facts and law which is liable to be set-a-side. Moreover the vehicle of appellant is belonging to Make and Type of Pak Hino Motors which can be verified the original documents from Pak Hino Motors to determine whether its genuine or else. It is also pertinent to highlight that the impugned FSL report was carry out in absence of appellant, this one side report FSL is liable to set aside. Copy of said Order-in-Original attached as Annexure A . C. That it is further submitted that in the impugned order the Respondent did not disclose the reason of independent private witness were associated with this incident, creating doubt to conceal the real facts. D. That the seizing Agency has failed to prove that the goods were smuggled and had been brought in to the Country by evading legitimate duty and taxes Seizing officer of Deputy Collector of Customs Hyderabad on behalf of the seizing agency has falsely testified on basis of concocted and fabricated seizure report. E. That after the perusal of seizure report it conveys that the contents are capricious and without any reasonable and cogent evidence. F. That regarding the seized vehicle the same has not been used for carriage/removal of offending goods and the Vehicle was wrongly confiscated by the seizing agency. G. That the seized vehicle is not liable to any redemption fine as it was wrongly confiscated by the seizing Agency and Respondent has miserably failed to appreciate the facts and law. H. That the vehicle was seized on the basis of alleged contraband goods whereas there has been no any concern with the contraband goods and there is no any record to link with the owner of the said Hino Oil Tanker TUB

572. So that the owner has no concern with the goods and do not claim any items. I. That the said vehicle is registered in MRA Quetta in accordance with law, Therefore, the said vehicle is liable to release as public transport. J. That the order passed by the Respondent No.1 is arbitrary in nature and liable to be set aside, as the DC staff has assumed by his won that the goods were smuggled and confiscated. K. That the appellant crave leave of to urge the other grounds at the time of arguments of this instant Appeal L. That at the time of seizure of appellant's vehicle, the appellant was not boarded on it moreover it has been cleared proved that the appellant has nothing knowledge about the alleged offence and there is no evidence of mens-ria established against the Appellant M. That place of seizure is territorial limit of country which does not any border areas, moreover there is no evidence available on record against the Appellant neither they have the connivance nor has any knowledge about the alleged offence. N. That Appellant have no relation with the alleged offence nor habitual nor the criminal nor previously convicted in any offence nor been involved in any case furthermore such vehicle was given to driver on monthly basis and Appellant in only bread earner for their large family O. That the Appellant was alleged in offence due to ulterior motive of the customs staff because place of seizure is public place area/general parking area and territorial limit of country which was falls under the jurisdiction of this Honorable Appellate Tribunal Customs there is also delay of lodging of case which also creates serious doubts. P. That the Appellant said vehicle was seized by the respondent No.2 staff which clearly Indicates malafidely of the seizing agency and innocence on part of the Appellant and there is no evidence of mens-ria established against the appellant. Q. That Sections 2(5) 16 and 157 of Custom Act, 1969 not applicable under the circumstances of the case, because place of seizure is not border area and the same seized within country and as per law detained Hino Truck is not liable for confiscation because same was not seized from border area nor smuggled one present accused are also not involved in smuggled previously. R. That the mandatory provision of Section 103, Cr.P.C has not been complied properly even not bothered to asked civilian person to become a mushir and both the mushirs were belonging to department and members of seizing party which can also be confirmed form the record of the case and the separate mushimama of the recovery was not prepared at the time of seizure. S. That the Sections of 2(s) and 16 of Custom Act, 1969 is not applicable as per circumstances of the cases and in the presence of credible information a seizing agency mandatory provision of sections 162 and 163 of the Custom Act, 1969 and in numbers of cases reported as PLD 1974 SC 5, PLD 1988 Lahore 177, 1991 SCMR Page 1753 as its clearly stated that penal section against the conveyance should not take unless there is clear evidence of involvement of owner in transportation of smuggled goods and the alleged sections 2(s), 156(2), 157(2) and 178 of the Custom Act, 1969 are not applicable under the circumstances of the case, because the place of seizure is not border area and the goods and vehicle was seized during the transportation within the country without given notice. T. Hence being aggrieved and dissatisfied with the above said ambiguous, illegal, void and impugned order of the adjudicating authority Customs House Hyderabad the appellant having no remedy other than to prefer instant appeal before yours good self on the amongst other grounds:

6. I have perused the case record and heard both parties. The DR has not filed parawise comments but has made oral submissions and supports the findings of impugned order-in-original. Through instant appeal the appellant has challenged outright confiscation of the impugned vehicle carrying smuggled goods. Learned counsel for the appellant conveyed willingness to pay redemption fine if departmental would release the vehicle, exercising his option in terms of Section 181 of the Customs Act, 1969.

7. The learned counsel for the appellant filed copy of judgment of Supreme Court and Lahore High Court in C.P. No.1802-L/2020 dated 28.09.2021 in his support in which the Hon'ble Supreme Court of Pakistan has upheld the Hon'ble High Court order in case of Collector of Customs v. Muhammad Maqbool, which says that forensic reports were not reliable source of determination of genuineness or otherwise in this regard. Further, para 5 of Hon'ble High Court of Sindh, Karachi's order in case of C.P. No.D-2280 of 2010 says. The report of the FSL was insufficient to authorize the Directorate of Customs, Intelligence and Investigation, to detain and/or seize the vehicle, inter alia, on the ground that it was smuggled vehicle . The same order has been given in Sindh High Court with the observation at Para 11 of the order in Special Customs Reference Application. No. 110 along with SCRAS which is reproduced below: "

11. We have also observed that in some of the cases, there have been allegation by the Customs Authorities that the chassis numbers of the vehicles are found tampered. However, such allegations have been seriously disputed, whereas there has been no specific FSL Report to show as to whether chassis numbers of the vehicles were erased for numbers and such sketchy sterotype FSL Report, cannot be considered as conclusive proof to establish the charge of smuggling. The Hon'ble Supreme Court in the core of Federation of Pakistan through Director-General of Intelligence and Investigation-FBR, Karachi v. Muhammad Jamal Rizvi and others (2012 PTD 90), while examining the fate of similar allegation regarding tampered chassis number and the FSL. Reporting has been pleased to hold as under:-- "The report of the FSL was insufficient to authorize the Directorate of Customs. Intelligence and Investigation, to detain and or seize the vehicle inter alia on the ground that it was smuggled vehicle.

8. That the Hon'ble Supreme Court on identical issue decided the case titled as [Federation of Pakistan through Director General of Intelligence and Investigation-FBR Karachi v. Muhammad Jamal Rizvi and others] reported as [2012 PTD 90]. Applicable extract of the judgment is reproduce as under: The FSL report shows that the chassis numbers on the vehicle were tampered. The FSL report is not specific and creates doubts as whether the chassis numbers of the vehicle were erased for the purpose of theft and or for any other purpose. This issue is not answered in the FSL report though the Directorate of Customs, Intelligence and Investigation had sought report through a letter calling upon FSL to specifically mention the status of chassis numbers. The FSL report is silent on queries made by the Investigating agency, except that chassis numbers were tampered. The report of FSL was insufficient to authorize the Directorate of Customs, intelligence and Investigation, to detain and or seize the vehicle, inter alia on the ground that it war smuggled vehicle.

9. That the import of FSL is insufficient to detain or seize the subject vehicle, inter alia on the ground that the said vehicle is tampered. In view of above legal and factual position, the appellant is allowed to redeem the impugned vehicle under Section 181 of Customs Act, 1969 on payment of redemption fine equal to 20% of the value of vehicle. The impugned Order-in-Original No.21/2023 dated 15.09.2023 is modified to the above extent only.

10. The appeal stands disposed of in above terms with no order as to cost. MQ/8/TAX(TRIB) Appeal disposed of.