IN THE SUPREME COURT OF PAKISTAN 
(APPELLATE JURISDICTION) 
 
 
PRESENT: MR. JUSTICE MIAN SAQIB NISAR, HCJ 
 
 
MR. JUSTICE UMAR ATA BANDIAL 
 
 
MR. JUSTICE MAQBOOL BAQAR 
 
 
CIVIL APPEAL NO.1050 OF 2009 
(Against the judgment dated 17.2.2009 of 
the Peshawar High Court, Peshawar 
passed in Custom Reference No.24/2007) 
 
 
Collector of Customs, Peshawar 
 
…Appellant(s) 
VERSUS 
Wali Khan etc. 
 
…Respondent(s) 
 
For the appellant(s): 
Mr. Muhammad Habib Qureshi, ASC 
Mr. M. S. Khattak, AOR 
 
 
For the respondent(s): 
Mr. Isaac Ali Qazi, ASC 
(respondent No.1) 
 
Nemo 
(respondent No.2 and 4) 
 
Ex-parte 
(respondent No.3) 
 
 
Date of hearing: 
19.01.2017 
… 
ORDER 
 
 
MIAN SAQIB NISAR, CJ.- This appeal with the leave of the 
Court entails the facts that the customs authorities seized certain 
goods, i.e. cloth and black tea both of foreign origin, belonging to 
respondents No.3 and 4 (the owners) along with the transportation 
vehicles belonging to respondents No.1 and 2, under Sections 2(s), 16 
and 157 of the Customs Act, 1969 (the Customs Act) read with Section 3(1) 
of the Imports and Exports (Control) Act, 1950 (the Imports and Exports Act) 
punishable under Sections 156(1), (8), (89) and 164 of the Customs Act. 
After investigation and issuance of show cause notices to the 
respondents, the Additional Collector Customs passed an order-in-
original dated 14.2.2007 according to which the goods and vehicles 
Civil Appeal No.1050 of 2009 
-: 2 :-
were outrightly confiscated. Aggrieved, the respondents filed an appeal 
which was allowed by the Collector Customs (Appeals) vide order dated 
12.3.2007 and the order-in-original was modified to the extent that the 
confiscated goods were allowed to be redeemed upon payment of a 
redemption fine of 30% of the customs value of the goods in addition to 
payment of the duties/taxes leviable subject to production of an NOC 
from the concerned Trial Court where the criminal proceedings were 
taking place and imposition of a personal penalty of Rs.100,000/-  each 
upon the owners of the goods. This order was challenged by both the 
sides and the Customs, Federal Excise & Sales Tax Appellate Tribunal 
(the Tribunal) while dismissing the appeal of the appellant-department and 
accepting that of the respondents, through an order dated 27.6.2007, 
reduced the redemption fine on cloth from 30% to 15% and remitted in 
full the personal penalty upon the owners of the goods. The appellant’s 
reference before the learned High Court was dismissed. Leave in this 
case was granted on 21.7.2009 to consider the following questions:- 
 
“i) 
Whether provision of Section 2(s) of the Customs 
Act, 1969, was correctly interpreted and applied by the 
Tribunal and the High Court; 
ii) 
Whether imposition of fine in lieu of confiscation 
of goods is not in addition to any other penalty in terms of 
Section 181 of the customs Act, 1969; and 
iii) 
Whether the redemption fine of 15% is in violation 
of SRO 574(1)/2005 dated 06.06.2005.” 
 
2. 
 
Learned counsel for the appellant submitted that the goods 
could only have been outrightly confiscated, as the option of redemption 
of goods upon payment of fine under Section 181 of the Customs Act 
was not available to the respondents in view of SRO No.574(I)/2005 
dated 6.6.2005 (SRO No.574). He further argued that assuming that this 
Civil Appeal No.1050 of 2009 
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option was available to the respondents, then the redemption fine could 
not be less than 30% as provided by Column 3 of the Table of the said 
SRO. He stated that the respondents have admitted that the cloth was 
smuggled, whereas black tea is notified under SRO No.566(I)/2005 
dated 6.6.2005 (SRO No.566) and both goods were smuggled in terms of 
Section 2(s) of the Customs Act as they were brought into Pakistan in 
breach of a prohibition/restriction and the respondents had evaded 
payment of customs duties/taxes leviable thereupon. In support of his 
submissions, learned counsel relied upon the judgment of this Court 
dated 30.9.2014 passed in Civil Appeal No.112/2005 titled “Muhammad 
Saeed & another Vs. Collector Customs & Central Excise Peshawar”.  
3. 
 
Contrarily, learned counsel for respondent No.1 argued that 
the goods were freely importable as there was no law that prohibits or 
restricts them from being brought into Pakistan and therefore they did 
not fall within the purview of smuggling. While arguing that the law 
treats smuggled goods and non-duty paid goods differently, he conceded 
that duty was leviable upon such goods as they were being brought 
through an unauthorized route. Learned counsel stated that there was 
a difference between Clauses 89 and 90 of the table under Section 156 
of the Customs Act, and that the respondents’ case fell within the latter.  
4. 
 
Heard. In order to resolve the proposition at hand, we find 
it expedient to reproduce the relevant provisions of law which read as 
under:- 
 
The Customs Act, 1969 
 
“2. Definitions.- In this Act, unless there is anything 
repugnant in the subject or context:- 
 
(s) 
“smuggle” means to bring into or take out of 
Pakistan, in breach of any prohibition or 
restriction for the time being in force, or en route 
Civil Appeal No.1050 of 2009 
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pilferage of transit goods or evading payment of 
customs-duties or taxes leviable thereon,- 
 
(i) 
gold bullion, silver bullion, platinum, 
palladium, 
radium, 
precious 
stones, 
antiques, currency, narcotics and narcotic 
and psychotropic substances; or  
 
(ii) 
manufactures of gold or silver or platinum 
or palladium or radium or precious stones, 
and any other goods notified by the 
Federal 
Government 
in 
the 
official 
Gazette, which, in each case, exceed one 
hundred and fifty thousand rupees in 
value; or  
 
(iii) 
any goods by any route other than a route 
declared under section 9 or 10 or from any 
place other than a customs-station and 
includes 
an 
attempt, 
abetment 
or 
connivance of so bringing in or taking out 
of such goods; and all cognate words and 
expressions 
shall 
be 
construed 
accordingly; 
 
16. Power to prohibit or restrict importation and 
exportation of goods.- The Federal Government may, 
from time to time, by notification in the official Gazette, 
prohibit or restrict the bringing into or taking out of 
Pakistan of any goods of specified description by air, sea 
or land.  
 
156. Punishment for offences.-(1) Whoever commits any 
offence described in column 1 of the Table below shall, in 
addition to and not in derogation of any punishment to 
which he may be liable under any other law, be liable to 
the punishment mentioned against that offence in column 
2 thereof:- 
 
TABLE 
 
 
Offences 
Penalties 
Section of 
this 
Act 
to which 
offence 
has 
reference 
 
(1) 
(2) 
(3) 
89.(i) 
If any person without 
lawful 
excuse, 
the 
such goods shall be 
liable 
to 
General 
Civil Appeal No.1050 of 2009 
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proof of which shall 
be on such person, 
acquires 
possession 
of, or is in any way 
concerned 
in  
carrying, 
removing, 
depositing, 
harbouring, keeping 
or concealing, or in 
any manner dealing 
with smuggled goods 
or 
any 
goods 
in 
respect 
to 
which 
there 
may 
be 
reasonable suspicion 
that 
they 
are 
smuggled goods; 
 
confiscation 
and 
any 
person 
concerned in the 
offence 
shall 
be 
liable to a penalty 
not exceeding ten 
times the value of 
the 
goods; 
and, 
where the value of 
such goods exceeds 
three 
hundred 
thousand rupees, he 
shall 
further 
be 
liable, 
upon 
conviction 
by 
a 
Special Judge, to 
imprisonment for a 
term not exceeding 
six years and to a 
fine not exceeding 
ten times the value 
of such goods  
90. 
If any person, without 
lawful 
excuse 
the 
proof of which shall 
be on such person, 
acquires 
possession 
of, or is in any way 
concerned 
in 
carrying, 
removing, 
depositing, 
harbouring, keeping 
or concealing or in 
any manner dealing 
with any goods, not 
being goods referred 
to in clause 89, which 
have been unlawfully 
removed 
from 
a 
warehouse, or which 
are chargeable with a 
duty which has not 
been paid, or with 
respect 
to 
the 
importation 
or 
exportation of which 
there is a reasonable 
suspicion that any 
prohibition 
 
or 
restriction 
for 
the 
such goods shall be 
liable 
to 
confiscation, 
and 
any 
person 
concerned 
shall 
also be liable to a 
penalty 
not 
exceeding ten times 
the value of the 
goods. 
 
General 
Civil Appeal No.1050 of 2009 
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time being in force 
under or by virtue of 
this Act has been 
contravened, or if any 
person is in relation 
to any such goods in 
any 
way, 
without 
lawful 
excuse, 
the 
proof of which shall 
be on such person, 
concerned 
in 
any 
fraudulent evasion or 
attempt at evasion of 
any duty chargeable 
thereon, or of any 
such prohibition or 
restriction 
as 
aforesaid or of any 
provision of this Act 
applicable to those 
goods; 
 
 
181. Option to pay fine in lieu of confiscated goods.- 
Whenever an order for the confiscation of goods is passed 
under this Act, the officer passing the order may give the 
owner of the goods an option to pay in lieu of the 
confiscation of the goods such fine as the officer thinks fit 
 
Provided that the Board may, by an order, specify 
the goods or class of goods where such option shall not 
be given:  
 
Provided further that………………………………… 
 
Explanation.- Any fine in lieu of confiscation of goods 
imposed under this section shall be in addition to any duty 
and charges payable in respect of such goods, and of any 
penalty that might have been imposed in addition to the 
confiscation of goods.” 
 
The main controversy is whether Section 2(s) of the Customs Act was 
correctly interpreted and applied by the Tribunal and the learned High 
Court in that the confiscated goods, i.e. cloth and black tea, are 
smuggled goods entailing the consequences of Clause 89 or non-duty 
Civil Appeal No.1050 of 2009 
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paid items covered by Clause 90 of the table given in Section 156 of the 
Customs Act. 
5. 
 
In order to resolve the controversy, we first have to 
ascertain the meaning of the phrase “smuggled goods” as provided in 
the Customs Act. The definition of “smuggle” provided in Section 2(s) of 
the Customs Act can be broken down as follows:- (a) to bring into or 
take out of Pakistan, in breach of any prohibition or restriction for the 
time being in force; OR (b) en route pilferage of transit goods; OR (c)  
evading payment of customs-duties or taxes leviable thereon; OF (i) gold 
bullion, silver bullion, platinum, palladium, radium, precious stones, 
antiques, 
currency, 
narcotics 
and 
narcotic 
and 
psychotropic 
substances; OR (ii) manufactures of gold or silver or platinum or 
palladium or radium or precious stones, and any other goods notified 
by the Federal Government in the official Gazette, which, in each case, 
exceed one hundred and fifty thousand rupees in value; OR (iii) any 
goods by any route other than a route declared under section 9 or 10 or 
from any place other than a customs-station and includes an attempt, 
abetment or connivance of so bringing in or taking out of such goods. 
Some restricted goods are mentioned in Section 2(s) of the Customs Act 
[see Clauses (i) and (ii) thereof]. However, the Federal Government is 
empowered under Section 16 of the Customs Act to prohibit or restrict, 
by notification, the bringing into or taking out of Pakistan of any goods 
of specified description by air, sea or land. Section 3 of the Imports and 
Exports Act also authorizes the Government to “prohibit, restrict or 
otherwise control the import and export of goods of any specified description.” In this 
context, the Federal Government, in exercise of the powers conferred by 
Sections 2(s)(ii) and 156(2) of the Customs Act vide SRO No.566, 
notified certain goods to be prohibited/restricted for the purpose of the 
said sections. This notification held the field when the goods in question 
Civil Appeal No.1050 of 2009 
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i.e. cloth and black tea, were recovered from the respondents on 
06.01.2007. Item No.35 of SRO No.566 is “Black Tea (except Op-Pekoe)”, 
thus black tea is a restricted/prohibited item and falls within the 
meaning of smuggled goods in terms of Section 2(s) of the Customs Act. 
With regard to cloth, Item No.28 of SRO No.566 is “man-made fiber, man-
made yarn and fabric”. According to the learned counsel for the appellant, 
the cloth recovered from the respondents squarely falls within this item, 
whereas the learned counsel for the respondents contended that the 
same applies only to man-made cloth and not to the cloth confiscated in 
this case. It would be expedient at this juncture to interpret the scope of 
the item ibid in conjunction with the other items. The other relevant 
items are that of No.27, 29 and 42 of SRO No.566 provide for “Cotton, 
cotton yarn and fabric”, “Wool, woolen yarn and fabric” and “Natural silk, natural 
silk yarn and fabric” respectively. Thus, cotton, wool, natural silk and their 
yarn and fabric on one hand and man-made fiber, yarn and fabric on 
the other have been dealt with separately. It is important to note that 
while both categories of yarn and fabric involve some mechanical 
process for its making, the distinction between both the categories lies 
in the fact that Items No.27, 29 and 42 refer to naturally occurring 
materials including cotton, wool and silk, whereas Item No.28 pertains 
to man-made or synthetic fibers/fabric. By way of example, the latter 
category can include polyester, acrylic, nylon etc. The cloth in question 
has been referred to A/S cloth in the orders of the forums below, which 
stands for artificial silk cloth and is undoubtedly a man-made fabric as 
it comprises of synthetic fiber and thus is squarely covered by Item 
No.28 of SRO No.566. Hence the cloth from foreign origin is a 
restricted/prohibited item as per Item No.28 of SRO No.566 and falls 
within the meaning of smuggled goods in terms of Section 2(s) of the 
Customs Act.  
Civil Appeal No.1050 of 2009 
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6. 
 
Adverting now to the applicability of Clause 89 or 90 of the 
table in Section 156 of the Customs Act, it is to be noted that Section 
156 ibid provides for the punishment against any contravention of the 
Customs Act. Clause 89(i) of the table in Section 156 ibid provides that 
any person who, without any lawful excuse, acquires possession of, or 
is in any way concerned in carrying, removing, depositing, harbouring, 
keeping or concealing, or in any manner dealing with smuggled goods 
or any goods in respect to which there may be reasonable suspicion 
that they are smuggled goods, he shall be liable for the punishment 
detailed in Column 2 thereof. A few salient features need to be pointed 
out. First, Clause 89(i) deals with smuggled goods as well as those 
goods regarding which there is reasonable suspicion that they are 
smuggled. Secondly, a person is permitted to acquire possession etc. of 
such goods only with lawful excuse, the burden of proof of which lies on 
such person, and in case he fails to do so, it would be presumed that 
the goods were smuggled entailing the consequences provided in 
Column 2 of Clause 89 ibid. On the other hand, Clause 90 contained in 
the table under Section 156 of the Customs Act deals with “any goods, not 
being goods referred to in clause 89.” This makes it abundantly clear that the 
said clause deals with goods that are not smuggled and regarding which 
there is “fraudulent evasion or attempt at evasion of any duty chargeable thereon.” 
In this eventuality too, the burden lies on the person involved in such 
activities to prove the contrary, in the absence of which it will be 
presumed that the goods were non-duty paid in terms of Clause 90 ibid. 
In this regard, first the department has to show that the goods which 
are of a foreign origin could only be imported on payment of duty or 
under a license or their import is prohibit or restricted. It will then be 
for the possessor of such goods to show that they were lawfully 
imported either before any restrictions/prohibitions were imposed or in 
Civil Appeal No.1050 of 2009 
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accordance with such restrictions/prohibitions.1 As held above in 
paragraph 5, the foreign cloth and black tea are notified items in terms 
of SRO No.566, therefore, they are restricted/prohibited goods and 
therefore fall within the ambit of smuggled goods as defined in Section 
2(s)(ii) of the Customs Act. Resultantly, it is Clause 89 of Section 156 of 
the Act that deals with smuggled goods which is applicable to the 
instant case and not Clause 90 thereof.  
7. 
 
The confiscated goods were admittedly of foreign origin and 
there was no proof that they were lawfully imported into Pakistan (by an 
authorized importer under a valid license and through an authorized route), the burden of 
which, according to Clause 89 as mentioned above, was on the 
respondents. When confronted, learned counsel for the respondents 
failed to provide any concrete evidence except contending that these 
goods are easily available in the market and can be purchased from 
anywhere. Thus, the respondent has failed to prove that the confiscated 
goods were not smuggled goods. Therefore the forums below have erred 
in holding that the confiscated goods were not notified and thus do not 
fall within the purview of Section 2(s) of the Customs Act.    
8. 
 
We would now like to discuss the question as to whether 
the option to pay a fine in lieu of confiscation of goods, in addition to 
any other penalty, could be given or not. 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 proviso to Section 181 ibid, 
the Board may by an order specify the goods or class of goods where 
such option shall not be given. The Board in exercise of the powers 
conferred by Section 181 has issued SRO No.574 which provides, inter 
                                       
1 Messrs S. A. Haroon and others Vs. The Collector of Customs, Karachi and the Federation of Pakistan 
(PLD 1959 SC (Pak) 177) and Sikandar A. Karim Vs. The State (1995 SCMR 387). 
Civil Appeal No.1050 of 2009 
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alia, that “no option shall be given to pay fine in lieu of confiscation in respect of… 
(i) smuggled goods falling under clause (s) of section 2 of the Customs Act, 1969 (IV of 
1969) or (ii) conveyance including packages and containers found carrying offending 
goods of section 2(s) of the Customs Act, 1969…” Thus, the imposition of 
redemption fine at 30% by the Collector Customs (Appeals) and 15% by 
the learned Tribunal is in violation of Section 181 of the Customs Act 
and SRO No.574 issued thereunder.  
9. 
 
In the light of the above, this appeal is allowed and the 
impugned judgments of the learned High Court, the Tribunal and the 
Collector Customs (Appeals) are set aside.  
 
 
CHIEF JUSTICE 
 
 
 
JUDGE 
 
 
 
JUDGE 
Announced in open Court 
on 23.2.2017 at Islamabad 
Approved For Reporting 
Waqas Naseer/* 
 
 
 
 
 
 
 
 
CHIEF JUSTICE