Cleared Before It Is Filed: Section 196JJ of the Customs Act, 1969, the Independent Case Scrutiny Committee and the Reference the Department May No Longer Lodge on Its Own Authority

On Wednesday, 4th November 2026, the Legal and Accounting Wing (Customs) of the Federal Board of Revenue wrote to every Chief Collector, Director General, Collector and Director of Customs under C. No. 1(1) Scrutiny/Committee Customs/2026, setting out “with immediate effect” the procedure by which a field formation must now obtain the approval of the “Independent Case Scrutiny Committee” before it files a reference in a High Court or a petition in the Supreme Court or the Federal Constitutional Court. The letter follows the Board’s notification of the same number of 29th October 2026 constituting Committee No. 1 (Islamabad), and an office order of 2nd November 2026 nominating its Secretary and staff. CustomsNews.pk reported the notification on 3rd November 2026 and published the letter in scan on 5th November 2026.

The letter is an administrative instruction, and the trade press has read it as one. It is more than that. Since Section 196JJ(1) of the Customs Act, 1969 (Act IV of 1969) now provides that a departmental reference or petition “shall only be filed” subject to the approval of the committee, therefore the Department has lost the power to decide on its own authority whether to take an importer to court, and the first question in every departmental reference from now on is whether that approval exists.

What Section 196JJ says

The section was inserted by Section 3(11) of the Finance Act, 2026 (Act XLIII of 2026), which received the assent of the President on 26th June 2026 and, by its Section 1(2), came into force on 1st July 2026. Sub-section (1) provides that “Any Civil petition, reference, civil petition for leave to appeal or review petition before the High Court, the Federal Constitutional Court or the Supreme Court of Pakistan shall only be filed by the Collector or Director of Customs”, or by an officer not below the rank of Deputy Collector or Deputy Director authorised by him in writing, “subject to approval by an independent case scrutiny committee, as constituted by the Board under sub-section (3)”. Sub-section (2) empowers the Board to constitute one or more committees and assign them jurisdiction, and they “shall exercise the powers and functions in a manner, and from the date, as may be notified by the Board”. Sub-section (3) fixes the composition at a retired judge of the superior judiciary as Chairman, an advocate of not less than fifteen years’ experience in customs and commercial litigation, and a serving or retired officer not below the rank of Director or Collector of Customs.

Two further sub-sections carry the weight. Sub-section (5) provides that the “recommendations of the committee shall be binding upon the concerned Collector or Director of Customs”. Sub-section (7) provides that, notwithstanding the Act or the Limitation Act, 1908 (Act IX of 1908), in determining whether a reference or petition is within time “the period from the date from which time begins to run to the date on which the committee gives its approval, which period shall in each case be certified by the chairman, shall stand excluded”; and its proviso adds that where time had already begun to run when the section came into force, the excluded period commences from the commencement of the Finance Act, 2026.

The periods that sub-section (7) suspends are short. Section 196(1), in the text as amended to 30th June 2026, allows a reference to the High Court “within thirty days of the date of receipt of the order of the Appellate Tribunal”, and Section 196(7) applies Section 5 of the Limitation Act, 1908 to it. A civil petition for leave to appeal to the Supreme Court has sixty days under Order XIII rule 1 of the Supreme Court Rules, and the Court’s own published guidance repeats that figure. Parliament has therefore stopped the Department’s clock for as long as the committee takes, and it has made the Chairman’s certificate the document that proves how long that was.

The rules and the letter

The Board made the rules twice. A draft was pre-published as S.R.O. 1141(I)/2026 on 22nd July 2026, as Section 219(3A) requires, and the final text issued as S.R.O. 1413(I)/2026 on 19th August 2026, adding Chapter L, “Independent Case Scrutiny Committee Rules”, to the Customs Rules, 2001 as rules 1242 to 1258, in force at once. Rule 1243 defines a “reference” as a reference to the High Court under Section 196 and a “petition” as a petition to the Supreme Court under Article 185(3) of the Constitution or to the Federal Constitutional Court. Rule 1244 constitutes four committees, No. 1 (Islamabad), No. 2 (Central), No. 3 (South-I) and No. 4 (South-II), each with a list of the collectorates and directorates whose cases it clears, and charges each to examine every case before a decision to file and to review pending references and petitions “to determine whether continuation of litigation is warranted”.

Rule 1247 is the operative prohibition: “no reference before a High Court or petition before the Supreme Court or Federal Constitutional Court, after the issuance of these rules, shall be filed unless the case has been placed before the concerned committee and the committee’s recommendation is on record”. Rule 1249(2) fixes the quorum at three members including the Chairperson and the Advocate Member. Rule 1252 gives the committee fifteen days from receipt, extendable by the Chairperson for ten more, and if no decision issues within that time the case “shall be deemed to have been cleared for filing”. Rule 1253 lets the Chairperson alone approve a “fast track decision” where limitation expires within fifteen days or revenue loss is imminent, subject to review by the full committee within thirty days. Rule 1246(1) makes the proceedings and records confidential, rule 1246(4) lets the Board’s Members or a Chief Collector refer any pending reference for review “including consideration of withdrawal or non-pursuance”, and rule 1254 provides for anonymised yearly summaries.

The letter of 4th November 2026 turns the rules into a timetable. On receipt of a Tribunal or High Court order the collectorate records the date of receipt of the certified copy “for limitation purposes”. The Legal Committee at each Chief Collectorate, a body created by the Board’s letter of 27th February 2025 under a Prime Minister’s directive, decides whether to recommend filing, and a recommendation not to file closes the case at field level. A recommendation to file goes through the Chief Collector to the Secretary of the committee, and until Committees Nos. 2, 3 and 4 are constituted every referral in the country goes to Committee No. 1. The referral must reach the Secretary within ten days of receipt of the order “and in no case later than thirty days before expiry of limitation”, with the draft reference and the panel advocate’s opinion among the ten documents at Annex-B; until the portal under rule 1248(1) exists it travels by electronic mail to an address hosted on a public mail service rather than on the Board’s own domain, and the date of the e-mail counts as the date of referral. The decision comes back in one of four forms: approved, not approved, approved with modification, in which case the filing is confined to “the questions of law as approved by the Committee”, or deemed cleared by lapse of time. A refused case “shall be closed in the record of the field formation”.

The references filed in the gap

Section 196JJ came into force on 1st July 2026. The rules issued on 19th August 2026 and prohibited, from that day, any reference without a committee recommendation on record. The first committee was constituted on 29th October 2026 and its Secretary on 2nd November 2026. For four months, therefore, the statute required an approval which no body existed to give, and the Department went on filing.

Two readings are open. On the first, sub-section (1) bound the Department from 1st July 2026, and every reference and petition it filed between that date and the first sitting of Committee No. 1 was filed without the approval the section makes a condition of filing. On the second, the condition bites only once a committee is in field, since sub-section (2) ties the committees’ powers to “the date, as may be notified by the Board”, and a filing cannot be conditioned on the leave of a body that has not been constituted. The Department will take the second reading, and it is not a weak one. But the proviso to sub-section (7) tells against it. Parliament foresaw that time would already be running on 1st July 2026 and provided that, for such cases, the excluded period “shall commence from the date on which the Finance Act 2026 comes into force”. That is a provision for a Department which waits: it stops the clock from 1st July 2026 precisely so that no reference need be filed before approval is obtained. Since the Department had no limitation reason to file in the gap, therefore its choice to do so was a choice, and a respondent served with a reference lodged between 1st July and 29th October 2026 has a preliminary objection worth taking, the more so because Section 196(9), which deems a reference preferred with the Collector’s approval by a junior officer always to have been preferred by the Collector, contains no equivalent saving for a reference preferred without the committee’s.

What the respondent should now ask for

From 29th October 2026 the objection changes shape. The question is no longer whether a committee existed but whether it approved, and the statute itself identifies the proof. Sub-section (7) requires the Chairman to certify the excluded period in each case, hence a certificate exists for every properly approved filing and its absence is itself evidence. A respondent should ask for three documents at the first hearing: the Chairman’s certificate under Section 196JJ(7), the committee’s recommendation under rule 1247, and, where the approval was with modification, the questions of law as approved, since a reference argued on questions the committee did not approve is to that extent a reference filed without approval.

Three of the shortcuts in the rules deserve testing against the statute. The first is deemed clearance under rule 1252(3). Section 196JJ(1) requires “approval by” the committee and sub-section (5) speaks of the committee’s “recommendations”; a silence of twenty-five days is neither, and a rule made under Section 219 cannot supply an approval the parent section requires the committee to give. Nor can the Chairman certify under sub-section (7) “the date on which the committee gives its approval” when the committee gave none, hence a deemed clearance leaves the Department’s limitation exposed in the very case the rule was written to rescue. The second is the emergency approval under rule 1253, given by the Chairperson alone where rule 1249(2) fixes the quorum at three; the full committee’s review within thirty days may ratify the decision, but a petition filed in between was filed on one member’s leave. The third is the letter’s own thirty-day cut-off, which is stricter than the statute needs, since sub-section (7) has already stopped the clock; a field formation which treats that cut-off as a reason to invoke rule 1253 is manufacturing an urgency Parliament removed.

What the importer gains, and what it does not

The gain is real. Before 1st July 2026 a Collector who lost before the Appellate Tribunal could file a reference for no better reason than that the revenue was large. Now a recommendation not to file ends the matter, and ends it in writing, and rule 1246(4) allows a pending reference to be referred for withdrawal, which gives a respondent in a long-pending reference a letter worth writing to the Chief Collector. The committee’s decisions bind the Collector under sub-section (5) and its members are immune under sub-section (6), hence a Collector cannot be pressed into filing a case the committee has refused.

What the importer does not get is a seat. Rule 1246(1) and the letter make the proceedings and the record confidential; the referral proforma asks for the Department’s grounds, precedents and revenue, and nothing from the other side; the respondent is not told that his case has been referred, is not heard, and receives no copy of the reasons. Rule 1254 promises anonymised yearly summaries, which is a database for the Department and not a record for the taxpayer. And the gate is one-sided by design: Section 196JJ(1) binds the Collector and the Director, not the aggrieved importer, whose own reference under Section 196(1) within thirty days of the Tribunal’s order is untouched.

It is highly recommended that the Board close the gap the statute has left open by directing, in a further letter under the same file, that the Chairman’s certificate under Section 196JJ(7) and the committee’s recommendation be annexed to every reference and petition at filing, as the statement of the case under Section 196(1) already is. The Department would lose nothing by it, since a properly cleared case carries both documents already, and the High Courts would be spared the preliminary hearing that every uncleared reference now invites. Until the Board does so, the respondent should ask, and the Special Bench should want to know, whether the case before it was cleared before it was filed.