Imported limousine car: SC sets aside PHC’s order in vehicle seating capacity case

ISLAMABAD: The Supreme Court held that a vehicle originally manufactured and designed as a five-seater motor car does not become a vehicle designed for the transport of 10 or more persons merely because it is subsequently and privately subjected to structural modifications that increase its seating capacity. “The subsequent alteration may change the physical configuration of the vehicle, but cannot, without more, alter the design and character with which it was originally manufactured for purposes of tariff classification, ” it said. A three-judge bench, headed by Chief Justice Yahya Afridi, and comprising Justice Muhammad Shafi Siddiqui and Justice Miangul Hassan Aurangzeb, set aside the Peshawar High Court (PHC) judgment dated 05. 10. 2023. According to the facts, respondent (Shahid Muhammad) imported a limousine car bearing VIN No. 2C3KA53G97H610047 through Customs Dry Port, Peshawar, vide Goods Declaration (GD No. PDRY-HC-1165) dated 01. 11. 2011. The vehicle was initially declared by the clearing agent of the importer under Heading 87. 02 relating to motor vehicles for the transport of ten or more persons, including the driver. Upon examination, however, the Customs authorities found the vehicle to be a stretched vehicle originally designed as a five-seater. On this basis, the vehicle was considered classifiable under Heading 87. 03. The vehicle was accordingly assessed under PCT 8703. 2490, and respondent No. 1 obtained its release upon payment of the assessed differential duty and taxes. Aggrieved by the classification, respondent approached the Federal Tax Ombudsman, Islamabad, which directed the Federal Board of Revenue to have the matter of classification determined in accordance with law. Deputy Collector of Customs (Adjudication), Peshawar, upheld the departmental classification of the vehicle under PCT 8703. 2490. The respondent thereafter preferred an appeal before the Collector of Customs (Appeals), Peshawar, which was dismissed vide Order-in-Appeal dated 27. 12. 2012, thereby maintaining the classification determined by the adjudicating authority. Respondent No. 1 then approached the Customs Appellate Tribunal, Peshawar, which set aside the Order-in-Appeal and held that the vehicle was classifiable under PCT 8702. 9090 rather than PCT 8703. 2490, and consequently directed refund of the excess amount of duty and taxes recovered from respondent No. 1. The petitioner (Department) challenged the said judgment before the Peshawar High Court through Customs Reference No. 12-P/2014 under section 196 of the Customs Act, 1969. The PHC on 05. 10. 2023, upheld the Tribunal judgment. Hence, the petition before the apex court. The judgment, authored by Justice Shafi, said that the SC judgment in Collector of Customs, Karachi v. M/s Muhammad Shafiq (2022 SCMR 2107) is instructive in the present case, where the evidence relating to the vehicle’s original manufacture, its VIN and the manufacturer’s data has to be considered in determining the effect of its subsequent modification. The wording of the relevant tariff provisions must be considered in this factual context. Heading 87. 02 covers motor vehicles “for the transport of ten or more persons, including the driver, ” while the corresponding Harmonised System Explanatory Notes refer to vehicles “designed” for the transport of ten persons or more. The expression “designed” is concerned with the purpose and configuration for which the vehicle was originally manufactured. In the present case, the vehicle was originally manufactured as a five-seater motor car and only subsequently and privately altered, so as to accommodate either additional passengers or lesser disputed taxes. The increased seating capacity was, therefore, a consequence of a later modification and not a feature of the vehicle’s original manufacture. In such circumstances, the mere existence of additional seats in the vehicle at the time of importation cannot, by itself, establish that the vehicle was one designed for the transport of ten or more persons within the meaning of Heading 87. 02. The original design and construction of the vehicle, as established from the material on record, consequently remain relevant to its classification and support its placement under PCT Heading 87. 03. Copyright Business Recorder, 2026

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