FTO Recommends Refund for Three Deteriorated Customs Auction Lots
The Federal Tax Ombudsman (FTO) stated that the Federal Board of Revenue (FBR) confirmed the poor condition of three customs auction lots and agreed to refund the payments made for them. FBR is required to submit a compliance report within 30 days; refunds for five other lots were denied.
ISLAMABAD, (Pakistan Point News - 12th Nov, 2026) The Federal Tax Ombudsman (FTO) has instructed the Federal Board of Revenue (FBR) to refund payments for three customs auction lots, following acknowledgment that the goods had deteriorated due to prolonged storage.
In a review order, Federal Tax Ombudsman Zafar Hijazi directed the Collector of Customs, Appraisement (SAPT), Karachi, to expedite the refund of amounts paid for three fully paid auction lots. The department itself confirmed that the goods were in a rundown condition, with loose bales and an unpleasant odor.
The dispute arose from a customs auction of used clothing and household items held on February 13, 2024, comprising 42 lots with a combined bid value of Rs72.89 million. The successful bidder received 30 lots, while the dispute concerned the remaining 12 lots in 16 containers.
The petitioner argued that the goods received from the auction were damaged, deteriorated, and commercially unusable, raising concerns about the condition of the remaining lots. They requested the cancellation of the outstanding lots and a refund of the deposited amounts.
According to departmental records, four lots with 25% earnest money deposited had already been refunded. The department also acknowledged that three fully paid lots were in a deteriorated condition and expressed its willingness to refund the corresponding amounts.
However, the department denied refunds for the remaining five fully paid lots, stating that the goods were not in a condition warranting refunds and had remained uncollected despite repeated notices.
In his findings, the FTO noted that customs auctions are conducted on an "as is where is" basis, as per the auction terms and Rule 65 of the Customs Rules, 2001. A purchaser cannot withdraw from an accepted auction transaction solely because the goods are later considered commercially unattractive.
The FTO further emphasized that concerns about the condition of previously collected goods cannot replace specific evidence regarding each individual lot. Since the remaining lots had been fully paid for and made available for delivery, the purchaser was obligated to take delivery according to the auction terms.
However, the Ombudsman observed that the department's examination confirmed the deteriorated condition of three lots, and it was willing to refund the amounts received for them. The delay in reaching a timely and reasoned conclusion reflected administrative inattention.
Consequently, the FTO, exercising limited intervention under Section 10(3) of the Federal Tax Ombudsman Ordinance, 2000, recommended that FBR direct the concerned Collector of Customs to refund the amounts paid for the three acknowledged deteriorated lots.
FBR has also been directed to submit a compliance report within 30 days. The review proceedings have been concluded.