ISLAMABAD: Federal Tax Ombudsman Zafar ul Haq Hijazi has directed the Federal Board of Revenue (FBR) to ensure early refund of payments received against three customs auction lots after the Customs Department acknowledged that the goods had deteriorated during prolonged storage.<\/p>\n
The direction came in a review order dated November 11, 2026, in a dispute arising from a customs auction held in Karachi on February 13, 2024. The auction involved used clothing and household items sold through 42 lots with a total bid value of Rs72.89 million.<\/p>\n
The Ombudsman recommended that the FBR direct the Collector of Customs, Appraisement (SAPT), Karachi, to refund the amounts collected against three fully paid auction lots and submit a compliance report within 30 days.<\/p>\n
According to the order, the Customs Department had itself admitted that goods in the three disputed lots were in poor condition. The official record showed that the goods had developed an unpleasant smell and that several bales had become loose due to prolonged storage.<\/p>\n
The department had also expressed willingness to refund the amounts received against these lots. The Ombudsman observed that failure to settle the matter in a timely and reasonable manner reflected administrative inattention, particularly when the department\u2019s own examination had confirmed the condition of the goods.<\/p>\n
The case was filed by Karachi-based businessman Abdul Ahad, son of Muhammad Naeem, who had purchased 42 auction lots of used clothing and household items for a combined bid value of Rs72,894,900.<\/p>\n
The complainant took delivery of 30 lots but later sought cancellation of the remaining 12 lots, comprising 16 containers. He stated that after opening the containers already received, he found that the goods were damaged, deteriorated and no longer fit for commercial use.<\/p>\n
On the basis of that experience, he feared that the remaining goods might also be in similar condition and requested cancellation of the outstanding auction lots along with refund of the money deposited against them.<\/p>\n
The Customs Department, however, maintained that the matter had been examined in light of auction records, payment details and the physical condition of the goods.<\/p>\n
In its response dated August 24, 2026, the department informed the Ombudsman that refunds had already been issued for four lots for which the purchaser had deposited only 25 percent of the bid amount as advance payment.<\/p>\n
The department also acknowledged that three fully paid lots had deteriorated and agreed that the payments received against them could be refunded. However, it declined refund for the remaining five lots, saying their condition did not justify cancellation or repayment.<\/p>\n
Customs further maintained that the purchaser had failed to collect those five lots despite repeated notices and reminders.<\/p>\n
The complainant had earlier submitted a representation to the department on June 1, 2024, and continued correspondence with the authorities over the dispute.<\/p>\n
The Federal Tax Ombudsman initially closed the proceedings on September 15, 2026, as the complaint was considered to have been filed beyond the legally permissible time. The complainant then sought reconsideration and referred to his earlier complaint and correspondence with the department.<\/p>\n
In its response dated October 21, 2026, the Customs Department maintained its earlier stance.<\/p>\n
During the review proceedings, the complainant\u2019s representative restricted the refund claim to eight identified lots involving a total amount of Rs15,471,950. The hearing was held on November 11, 2026, with representatives of both sides appearing before the Ombudsman.<\/p>\n
After reviewing the record and hearing the arguments, the Ombudsman observed that customs auctions are conducted on an \u201cas is where is\u201d basis under Rule 65 of the Customs Rules, 2001.<\/p>\n
Under these terms, buyers are expected to inspect the goods as far as reasonably possible before submitting bids and must comply with payment and delivery conditions once a bid is accepted.<\/p>\n
The Ombudsman clarified that a purchaser cannot cancel an accepted auction transaction merely because the goods later appear to be less valuable or commercially unattractive.<\/p>\n
He also observed that concerns about the condition of goods already collected could not automatically justify cancellation of other auction lots without clear evidence regarding their actual condition.<\/p>\n
The order noted that the purchaser was required to collect the five remaining fully paid lots after they had been made available for delivery. The Customs Department had stated that those goods were not found in a condition warranting refund, while the complainant had not provided sufficient evidence to prove otherwise.<\/p>\n
The Ombudsman, therefore, found no ground to allow refund against those five lots.<\/p>\n
However, he held that the position regarding three other lots was different, as the department\u2019s own examination had confirmed deterioration during storage. The three lots identified for refund were S 67\/SEP\/21, S 72\/MAR\/21 and S 53\/SEP\/21.<\/p>\n
The Ombudsman noted that Customs had already acknowledged the poor condition of these goods and had agreed to return the payments received against them.<\/p>\n
He further observed that another physical inspection after nearly two years would not reliably establish the original condition of the goods or determine responsibility for any deterioration that occurred later.<\/p>\n
The Ombudsman concluded that the department\u2019s failure to resolve the refund issue for the three acknowledged damaged lots justified limited intervention under Section 10(3) of the Federal Tax Ombudsman Ordinance, 2000.<\/p>\n
He recommended that the FBR direct the concerned Collector of Customs in Karachi to refund the amounts paid against the three lots without any further unnecessary delay.<\/p>\n
The FBR was also asked to submit a compliance report within 30 days.<\/p>\n
The Ombudsman made it clear that the order did not create a general right for successful auction bidders to cancel purchases simply because they were dissatisfied with the goods after completion of the transaction.<\/p>\n
The review order allowed the refund only to the extent supported by the department\u2019s own record and rejected the claim relating to the remaining five lots. The review proceedings were then concluded.<\/p>\n","protected":false},"excerpt":{"rendered":"
Federal Tax Ombudsman Zafar ul Haq Hijazi has directed the FBR to ensure refund for three Karachi customs auction lots after Customs admitted the goods had deteriorated in storage.<\/p>\n","protected":false},"author":7,"featured_media":22120,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[94],"tags":[],"class_list":["post-22121","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-pakistan"],"_links":{"self":[{"href":"https:\/\/www.peakpoint.pk\/en\/wp-json\/wp\/v2\/posts\/22121","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.peakpoint.pk\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.peakpoint.pk\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.peakpoint.pk\/en\/wp-json\/wp\/v2\/users\/7"}],"replies":[{"embeddable":true,"href":"https:\/\/www.peakpoint.pk\/en\/wp-json\/wp\/v2\/comments?post=22121"}],"version-history":[{"count":0,"href":"https:\/\/www.peakpoint.pk\/en\/wp-json\/wp\/v2\/posts\/22121\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.peakpoint.pk\/en\/wp-json\/wp\/v2\/media\/22120"}],"wp:attachment":[{"href":"https:\/\/www.peakpoint.pk\/en\/wp-json\/wp\/v2\/media?parent=22121"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.peakpoint.pk\/en\/wp-json\/wp\/v2\/categories?post=22121"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.peakpoint.pk\/en\/wp-json\/wp\/v2\/tags?post=22121"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}