Business Recorder
ISLAMABAD: The Lahore High Court (LHC) has directed the Federal Board of Revenue (FBR) to return a refined gold bar to an international departing passenger upon payment of a penalty of Rs 100,000, and also to return USD 10,000 to the said passenger. In this regard, the LHC has issued an order against the Collector of Customs of the FBR. According to the latest order of the LHC (Writ Petition No 57129 of 2022), the petitioner’s entitlement to the seized gold jewellery is protected under Article 24 of the Constitution, which guarantees the right to property and prohibits its deprivation except in accordance with law. The court observed that once the petitioner’s entitlement had attained finality up to the Supreme Court of Pakistan, any action by the Customs department resulting in denial of restoration of the property — or its refined form through arbitrary valuation —amounts to deprivation of property in violation of constitutional safeguards. “The pivotal question requiring determination by the LHC is whether the petitioner is entitled to the value of the gold as determined on the date when the State Bank of Pakistan took possession of the gold bar and the corresponding amount was credited to the government treasury, or whether the petitioner is entitled to the restoration of the refined gold bar itself, or its value assessed at the prevailing rate at the time of delivery — particularly in circumstances where no sale or auction of the gold was conducted by the Customs department in terms of the provisions of the Act, 1969,” the LHC stated. Details of the case revealed that the petitioner (an individual) arrived at the Customs counter in the departure lounge of Allama Iqbal International Airport, Lahore, for travel to Bangkok. Upon suspicion, his baggage was examined in the presence of witnesses, which resulted in the recovery of gold jewellery weighing 3.085 kg and foreign currency amounting to USD 12,000 and 2,429 Thai Baht. As the petitioner failed to produce any documentary evidence regarding the lawful possession or export of the recovered items, and no declaration had been made, they were seized under Section 168(1) of the Act, 1969, after issuance of a notice under Section 171 ibid. Moreover, FIR No 19/2004, dated 28.05.2004, was registered against the petitioner for offences under Sections 156(1), 8, 14, 70, 139, 132, and 16 of the Act, 1969. Dissatisfied with the re-adjudication order, the petitioner again approached the Appellate Tribunal, Bench-I, Lahore, where the matter was heard by a three-member Larger Bench, which directed the Customs department to release the gold jewellery and return foreign currency equivalent to USD 10,000 in Pakistani Rupees at the prevailing exchange rate to the petitioner, while the remaining foreign currency was ordered to be confiscated. Conversely, learned counsel for the Customs department submitted a report stating that, after registration of the FIR against the petitioner and completion of the proceedings in accordance with the provisions of the Act, 1969, an Order-in-Original was passed on 12.11.2004 whereby the seized goods were outrightly confiscated. Thereafter, the seized gold jewelry was transmitted to the Pakistan Mint vide letter dated 12.05.2005 for the purpose of melting. Upon refining, its net weight was determined to be 2467.300 grams. The refined gold was subsequently converted into Gold Bar No.2959, which was lifted by the State Bank of Pakistan on 29.06.2007. On the said date, in accordance with the London Bullion Market price, the value of the refined gold was assessed at Rs 6,311,068.10, and the said amount was credited to the government account. The Customs department further contends that the sale proceeds were determined in accordance with the rate notified by the State Bank of Pakistan through a letter dated 30.06.2007. Consequently, approval for refund of the sale proceeds of the gold along with the foreign currency, after deduction of a penalty of Rs 100,000, was accorded vide order dated 17.07.2025, and a cheque amounting to Rs 5,874,128 was issued in favour of the petitioner, calculated on the basis of the value of refined gold as determined on 29.06.2007. The Customs department has stated that the seized gold jewellery had been transmitted to the Pakistan Mint, where it was melted, and its refined weight was determined as 2467.300 grams. It has further been contended that in terms of Section 169(5) of the Act, 1969, the sale proceeds of the refined gold were calculated on the basis of the rate prevailing on 29.06.2007, as notified by the State Bank of Pakistan, and accordingly a sum of Rs 5,874,128 was sanctioned for refund to the petitioner after deduction of the penalty amount. It is, however, an admitted position that the seized gold jewellery was transmitted to the Pakistan Mint for melting, resulting in a reduction of its original weight to 2467.300 grams. Such transformation of the seized property does not extinguish or impair the proprietary rights of the petitioner, which have attained finality up to the Supreme Court of Pakistan. The record is conspicuously silent regarding any lawful disposal of the refined gold through a legally recognized mode of sale. In the absence of a sale conducted in accordance with law, reliance placed by the respondents on Section 169(5) of the Act, 1969, is wholly misconceived. The said provision becomes applicable only where the seized property has actually been sold, and the sale proceeds have come into existence. Mere melting of the gold and its subsequent lifting by the State Bank of Pakistan, followed by credit of an amount into the government treasury on the basis of the London Bullion Market price, cannot be treated as a lawful substitute for the statutory requirement of sale, the LHC declared. “It is evident from the record that even prior to issuance of the said notice to the petitioner, the seized gold had already been transmitted to the Pakistan Mint for melting vide letter dated 12.05.2005, by the Customs department without lawful authority. No material has been placed on record to demonstrate compliance with the mandatory statutory requirements, nor have the respondents asserted that the refined gold was ever sold through a legally recognized process. Consequently, the invocation of Section 169(5) by the respondents for determining the value of the gold is legally unsustainable,” the LHC maintained. In view of legal principle, it is evident that alteration in the form or condition of seized property while in official custody does not extinguish the proprietary rights of its owner, and the State merely acts as a custodian thereof. The obligation of the Customs department is to restore the property to its original state, so long as it remains traceable. Only where such property has been lawfully disposed of in accordance with the procedure prescribed under the Act, 1969, can the owner’s right be satisfied through payment of sale proceeds determined on the basis of the price fetched at the time of lawful disposal. The Customs department cannot substitute the petitioner’s right to specific property with an arbitrary or unilateral determination of value. Consequently, the order dated 17.07.2025, whereby a refund of Rs 5,874,128 was sanctioned by the respondents in respect of the seized gold jewellery and foreign currency, is of no legal consequence, having been issued without lawful authority, the LHC added. For the foregoing reasons, the instant constitutional petition is allowed. The respondents’ department is directed to release the refined gold bar No.2959 weighing 2467.300 grams to the petitioner after receipt of the penalty amounting to Rs 100,000 from the petitioner. The respondents are further directed to return USD 10,000 to the petitioner, or its equivalent in Pakistani Rupees at the prevailing exchange rate on the date of payment, the LHC ordered. Copyright Business Recorder, 2026
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