Forfeiture of Property Customs Rules, 2001

Federal Board of Revenue (the Board) issued SRO 05(I)/2021 on 04 January 2021 in order to add a new chapter in Customs Rules, 2001. The chapter deals with the forfeiture of assets of people involved in smuggling. Illegal trade of goods is a major issue in Pakistan and a reason for both cost push inflation and closure of domestic industry. Promulgation of these rules is a good step if implemented in letter and spirit.

Following is the snapshot of the law:

Snapshot

Reference No.	SRO 05 (I)/2021
Description	Chapter XXXVII Forfeiture of Property Rules
Date of Issuance	04 January 2021
Amendment	Customs Rules, 2001
Objective	To implement law for the forfeiture and confiscation of assets of the person, directly or indirectly, involved in smuggling
Effective date	With immediate effect

A brief explanation of the rules is as follows:

Important Definitions

Rule 813 defines six terms namely administrator, assets, associate, relative, freezing and tracing. However, the most interesting definition is of associates. It extends the scope of the laws for a large number of people who could be accused and brought to justice under these regulations. So, let us see who is the associate:

Associate in relation to as person, means:

1. Any individual who is living in the residence provide by that person;
2. Any manager or accountant of that person;
3. Any association of persons, body of individuals, partnership firm or private limited company if that person is a member, partner or director;
4. Any individual who is member, partner or director of association of persons, body of individuals, partnership firm or private limited company is also associate of that person;
5. A trustee of any trust created by such person; or
6. Any other person if Special Judge considers so.

Smuggling is unlawful!

Rule 814 declares that acquisition or holding of assets through the proceeds of smuggling either directly or indirectly in the name of relatives and associates is unlawful. Such assets shall be forfeited to Federal Government.

Procedure

Following is the overview of the application of these rules starting from initiation of inquiry by Collector of Customs to disposal of forfeited assets:

Rule 815 (Power to trace and freeze assets): The Collector or any authorized officer may start inquiry or investigation in respect of any premises, place, property, conveyance, documents and books of accounts to trace and identify the assets acquired through smuggling. 

An authorized officer of Customs after his satisfaction that the assets were acquired through the proceeds of smuggling may freeze the assets for 15 days with the approval of Collector. The reason for freezing assets at this stage even before court proceedings is to restrict the transfer of assets by the accused. The information about such assets and accused person shall be submitted to the Special Judge (SJ) of Customs. Afterward, SJ may order freezing of the assets for further period.

Rule 816 (Notice to person holding property suspected to be acquired through smuggling): SP shall issue a show cause notice to the accused. While proceeding the matter, SP shall take into account the accused’s source of income, past involvement in smuggling or abetting the act of smuggling or conviction under any law meant for the prevention of smuggling. It is pertinent to note that SP shall not start proceedings of the case unless he has reasonable ground, in writing, to commence the proceedings against the accused.

Rule 817 (Order of Special Judge): If the SP passed the order against the accused, the burden of proving, that the assets were not acquired or held from the proceeds of smuggling, shall be on the accused.

Rule 818 (Option to pay fine): If value of asset forfeited is less than full of the value of the assets, the accused shall be given the option to pay the fine and retain the asset.

Rule 819 (Transfer of certain asset void): After the issuance of show cause notice by SP to the accused, the transfer of such asset to anyone else is void until all the proceeding are completed.

Rule 820 (Power to conduct inquiry, investigation etc.): Collector of Customs has the power to initiate the inquiry and investigation. He may involve FIA, police, financial instructions etc. in the proceedings.

Rule 820 (Forfeited property to be surrendered): After the order of the Court, the Collector shall ask the accused to surrender the property. He may use force for that purpose. An administrator of the property shall be appointed.

Rule 822 (Proper accounting of properties): The administrator shall keep the proper identification and record of the forfeited asset.

Rule 823 (Management of property): The administrator may authorize any person to take the possession of property for which the instruction of freezing or order of forfeiture have been passed.

Rule 824 (Disposal of property): Administrator or any other officer of Customs shall forfeit the property.

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