Legal Clarification Issued on the Clearance of Banned Used Auto Parts

The Ministry of Law and Justice has issued a crucial clarification regarding the import of used auto parts, stating that Customs authorities can legally release these items by charging a penalty (redemption fine), even if they are technically “banned” under the import policy.

This clarification, issued on January 20, 2026, settles a long-standing dispute between the Federal Board of Revenue (FBR) and government auditors.

The Issue

The confusion began when the Audit Department, in its 2013-14 report, objected to the FBR releasing used auto parts. The auditors argued that under the Import Policy Order (2009), used auto parts are banned (Appendix-C). Therefore, they believed these items should be confiscated rather than released.

However, the FBR had been releasing these goods by charging a 20% redemption fine in addition to duties and taxes, using a different rule known as SRO 499(I)/2009.

The matter was discussed in the Public Accounts Committee (PAC) in November 2025, which directed the FBR to get a final legal opinion from the Ministry of Law to resolve the issue.

The Legal Verdict: “Not in Conflict”

In its response, the Ministry of Law and Justice ruled in favor of the FBR’s practice.

The Ministry explained that while the Import Policy Order sets the rules for bans, Section 181 of the Customs Act, 1969, gives the FBR the power to impose a fine and release used imported car parts rather than permanently confiscating them.

The Office Memorandum states:

“SRO 499(I)/2009, issued under section 181 of the Customs Act, 1969, is not in conflict with the Import Policy Order, 2009, rather it provides for the disposal mechanism for the goods imported in contravention of the Import Policy Order.”

Essentially, the Ministry concluded that the law allows the government to fine importers for breaking the rules and then release the goods rather than destroy or retain them.

Legal Backing

The Ministry also highlighted that this interpretation is supported by the judiciary. The memo cited a decision by the High Court of Sindh from January 13, 2021 (Special Customs Reference Applications 506, 507, and 508 of 2020), where the court upheld the release of used auto parts upon payment of the fine.

The Bottom Line

For importers and officials, this ruling means the “ban” does not require confiscation in all cases. As long as importers pay the 20% fine plus all standard taxes and duties, the goods can be legally cleared through customs.