Bombay High Court
SHAUN STANY NORONHA AND ANRversusUNION OF INDIA AND ANR
- Decided
- Disposal
- Disposed Off
- Bench
- N JAMADAR
Holding
The arrest was unlawful because the customs officer did not have a reasonable belief that the seized diesel was a prohibited good or that its market value exceeded Rs 1 crore, making the offence bailable; therefore, the magistrate’s order declaring it non‑bailable was set aside.
Summary
The petitioners, employees of Shiny Shipping, were arrested after customs officers seized about 120 KL of diesel and cash from the vessel M.V. Tina 4 and were denied bail by the Additional Chief Judicial Magistrate on the ground that the offences under Section 135(1)(i) of the Customs Act were non‑bailable. The petitioners challenged the legality of the arrest, arguing that the customs officer lacked a reasonable belief (‘reason to believe’) that the seized goods exceeded the monetary thresholds for a non‑bailable offence and that the goods were not notified as prohibited under the relevant provisions. The High Court examined the statutory test for arrest under Section 104 of the Customs Act, the requirement of a detailed computation of value and prohibited‑goods status, and the Supreme Court’s guidance in Radhika Agarwal. It held that the officer had no material to conclude that the market value exceeded Rs 1 crore or that the diesel was a prohibited good under Section 11 and sub‑clause (C) of Section 135. Consequently, the magistrate’s finding of non‑bailability was erroneous. The Court quashed the magistrate’s order, granted bail to the petitioners on bond, and imposed conditions for their future conduct.
Issues considered
- Whether the customs officer had sufficient ‘reason to believe’ that the petitioners committed an offence punishable under Section 135(1)(i) making the arrest lawful.
- Whether the seized diesel qualifies as ‘prohibited goods’ under Section 11 and sub‑clause (C) of Section 135, thereby rendering the offence non‑bailable under Section 104(6).
- Whether the value of the seized diesel exceeded the Rs 1 crore threshold required for a non‑bailable classification under Section 104(6)(a).
- Whether the magistrate erred in classifying the offence as non‑bailable without a detailed valuation and prohibited‑goods notification.
Legislation cited
Subjects
- customs arrest
- bail
- non‑bailable offence
- Section 104
- Section 135
- reason to believe
- prohibited goods
- valuation of seized goods
- judicial review
- customs seizure
Judgment
-CRIWP338-2026.DOC
Santosh
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CRIMINAL APPELLATE JURISDICTION
CRIMINAL WRIT PETITION NO. 338 OF 2026
1. Shaun Stany Noronha
2. Sushant Kishor Manna ...Petitioners
Versus
1. Union Of India
2. State of Maharashtra …Respondents
Mr. Aabad Ponda, Senior Advocate a/w Mr. Bhomesh Bellam,
for the Petitioners.
Smt. Megha Bajoria, Special PP, a/w Chirag Sawant for the
Respondent No.1-UOI.
Smt. R. S. Tendulkar, APP for State-Respondent No.2.
CORAM: N. J. JAMADAR, J.
Reserved On: 3rd FEBRUARY, 2026
Pronounced On: 6th FEBRUARY, 2026
JUDGMENT:-
Rule. Rule made returnable forthwith, with the consent of
the learned Counsel for the parties heard finally.
1. This petition calls in question the legality and correctness
of an order dated 20th January, 2026, passed by the learned
ARUN
RAMCHANDRA
SANKPAL Additional Chief Judicial Magistrate, Mumbai, whereby the
Digitally signed by
ARUN
RAMCHANDRA
SANKPAL learned Magistrate declined to release the petitioners on bail
Date: 2026.02.07
17:44:23 +0530
holding that the offences for which the Petitioners were
arraigned, under Section 135(1)(i) of the Customs Act, 1962
(“the Customs Act”), were non-bailable.
2. The petitioners claim to be the employees of Shiny
Shipping and Logistics Pvt. Ltd. (“Shiny Shipping”). Shiny
Shipping owns multiple vessels including M. V. Tina 4, which is
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an Inland Vessel registered under the Inland Vessels Act, 1917.
The said vessel holds a valid licence for transporting petroleum.
Shiny Shipping, according to the petitioners, purchases High
Flash High Speed Diesel (“HFHSD”) regularly to fuel the engines
of the vessels.
3. Pursuant to an intimation, on 17th January, 2026, the
officers attached to Rummaging and Intelligence Division of
Commissioner of Customs (Preventive) intercepted M. V. Tina4.
During rummaging of the said vessel, approximately 120 KL
grey blackish coloured liquid purported to be diesel was found
concealed in forward freshwater tank and in service tank. Cash
amount of Rs.4,00,000/- was also found concealed in the ceiling
of the Master’s cabin. A seizure-memo was drawn.
4. After initial interrogation, and recording of the statements
of the petitioners, they were arrested on 20th January, 2026. The
petitioners were served with their grounds of arrest and reasons
for arrest. The petitioners were produced before the learned
Magistrate.
5. The Petitioners contended that, the arrest of the
petitioners was not in conformity with law and the threshold of
satisfaction and the pre-conditions for effecting the arrest of the
petitioners under Section 104(1) of the Customs Act were not
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satisfied. Secondly, from the documents annexed to the remand
report including the seizure-memo, the grounds of arrest and
the reasons for arrest, it became evident that the offences for
which the petitioners were arraigned were bailable and, thus,
the petitioners deserved to be enlarged on bail.
6. The learned Magistrate found the arrest of the petitioners
in conformity with the provisions contained in Section 104 of
the Customs Act and the provisions of the Bharatiya Nagarik
Suraksha Sanhita, 2023, (“BNSS”). Recording that the offences,
for which the petitioners have been arraigned, are non-bailable,
the learned Magistrate declined to release the petitioners on
bail.
7. Being aggrieved, the petitioners have invoked the writ
jurisdiction.
8. I have heard Mr. Aabad Ponda, the learned Senior
Advocate for the petitioners, and, Smt. Megha Bajoria, the
learned Special P. P., for respondent No.1 – UOI.
9. Mr. Ponda canvassed a two-pronged submission. First,
the arrest of the petitioners was wholly illegal. The test of
“reason to believe” was not satisfied. From the perusal of the
seizure-memo, the grounds of arrest and the reasons for arrest,
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it becomes evident that there was, no “material” with
respondent No.1 to justify an inference that, the petitioners had
committed the offences punishable under Clauses (A), (B) and
(C) of Section 135(1)(i) of the Customs Act. On the contrary, the
arrest memo would show a clear non-application of mind as the
officer effecting the arrest has recorded that the petitioners
committed the offences punishable under Sections 132 or 133 or
135 or 135A or 136 of the Customs Act. Such omnibus
reference to the offences allegedly committed by the petitioners,
in the alternatives, indicates that the arrest did not satisfy the
threshold of the reasonable belief that the petitioners had
committed the offences.
10. Thirdly, Mr. Ponda would urge, even if the case of the
Customs Department is taken at par, yet, in the facts of case,
the offence allegedly committed by the petitioners would be
bailable. Mr. Ponda would urge, on the own-showing of
respondent No.1 120 KL of gray blackish coloured liquid
purported to be diesel was found on the vessel. It was not the
case of respondent No.1 that by the alleged illegal import of
diesel there was evasion or attempted evasion of duty exceeding
Rs. Fifty Lakh or the market price of the allegedly illegally
imported commodity exceeded Rs.One Crore. Nor the Customs
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Department claimed that the seized commodity was notified
under sub-clause (c) clause (i) of sub-section (1) of Section 135.
Consequently, Clauses (a)(b) and (c) of sub-section (6) of Section
104 were not attracted. Once, the offence does not fall within
the ambit of clauses (a) to (e) of sub-section (6) of Section 104,
the resudiary sub-section (7) of Section 104, which declares all
other offences under the Customs Act as bailable, comes into
play.
11. Mr. Ponda strenuously submitted that, having realized the
unsustainability of the case built against the petitioners till 20 th
January, 2026, an abortive attempt was made to bolster up the
prosecution case by producing before the learned Magistrate a
certificate purportedly issued by Sharani Associates, Chartered
Engineer and IBBI Registered Valuer, dated 20 th January, 2026,
to the effect that, the proximate quantity of the diesel found on
the vessel was 178 KL and, thus, the value of the illegally
imported goods was Rs.1,33,50,000/- at the rate of Rs.75/- per
liter. Secondly, a Notification purportedly issued by Director
General of Foreign Trade dated 13th November, 2019 was also
pressed into service to show that the offence was in relation to
prohibited goods and, thus, clause (b) of sub-section (6) of
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Section 104 was attracted. None of these documents stand to
scrutiny, submitted Mr. Ponda.
12. An effort was made by Mr. Ponda to demonstrate that the
report of Sharani Associates is inherently unreliable. In any
event, there was no material to show that the value of the goods
exceeded Rs.1 Crore when the petitioners were arrested. The
claim of the Customs Department that the seized goods were
prohibited goods is belied by the facts that there is no
Notification under sub-clause (c) of clause (1) of sub-section (1)
of Section 135. Mere declaration of the goods as prohibited
goods by a Notification under Section 11 of the Customs Act is
not sufficient to make the offences in relation to such goods
non-bailable. Therefore, the learned Magistrate committed a
grave error in law in holding that the offences were non-bailable
and depriving the personal liberty of the petitioners. Thus, this
Court must intervene by exercising judicial review.
13. A very strong reliance was placed by Mr. Ponda on the
judgment of the Supreme Court in the case of Radhika Agarwal
vs. Union of India and others1.
14. Per contra, Smt. Bajoria submitted with equal tenacity
that, no case for exercise of judicial review is made out. The
1 (2025) 6 Supreme Court Cases 545.
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petitioners are in effect assailing an order passed by the
learned Magistrate denying the bail. Thus, a writ petition
against such an order is not tenable. The petitioners will have
to work out their remedies to seek bail in accordance with the
provisions of law. The impugned order neither suffers from
jurisdictional error nor patent illegality and, thus, cannot be
interfered with in exercise of writ jurisdiction. It was urged that
the writ jurisdiction cannot be used as a substitute for bail
proceeding especially at the nascent stage of the investigation.
15. To buttress these submissions, Smt Bajoria placed
reliance on the observations in the case of Radhika Agarwal
(Supra) in relation to powers of judicial review under Article 32
and Article 226 of the Constitution of India, when the arrest of a
person is challenged.
16. Smt. Bajoria joined the issue on the aspect of the
necessity of arrest by canvassing a submission that the
conscious possession of illegally imported prohibited commodity
is prima facie evident from clandestine concealment of the
commodity in non-cargo tanks. In addition, unaccounted cash
amount was recovered. From the attendant circumstances, the
statutory threshold of reasonable belief of the commission of the
offence can be said to have been satisfied.
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17. Smt. Bajoria would urge that the grounds of arrest
disclose the requisite material and satisfaction. The contentions
of the Petitioners as regards inadequacy of the grounds of arrest
and the reasons of arrest to satisfy the test of necessity of arrest
do not merit acceptance at this stage, was the thrust of the
submission of Smt. Bajoria. Reliance was placed on the
judgment of the Supreme Court in the case of Kasireddy
Upender Reddy Vs State of Anhdra Pradesh and Ors 2
18. Smt. Bajoria would urge the satisfaction arrived at by the
learned Magistrate that the offences appeared to be non-
bailable, at this stage, cannot be faulted at. A submission was
sought to be canvassed that the valuation of the illegally
imported commodity and the qualification of the commodity are
matters of investigation. The seizure memo and the
contemporaneous documents do record that the quantity found
was approximately 120 KL. The exercise of quantification of the
commodity and the market price thereof was underway and the
relevant documents were placed before the learned Magistrate
before the remand order. Therefore, the Petitioner cannot draw
any mileage from the said fact, especially at the stage of
remand. Neither the arrest nor the remand is vitiated on the
2 2025 LiveLaw (SC) 628.
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basis of mere contestation of the quantity and value of the
illegally imported commodity.
19. Smt. Bajoria further urged that, the offence allegedly
committed by the Petitioners does fall within the ambit of clause
(b) of sub-Section (6) of Section 104 and has, thus, been rightly
held by the learned Magistrate to be non-bailable.
20. The notifications issued by the Director General of Foreign
Trade under Section 5 of the Foreign Trade (Development and
Regulation) Act, 1992, render the seized goods prohibited goods
for the purpose of Clause (b) of sub-Section (6) of Section 104 of
the Customs Act. To this end, Smt Bajoria placed reliance on
the judgments of the Supreme Court in the cases of Union of
India and Ors Vs M/s Raj Grow Impex LLP & Ors 3 and Union of
India and Ors Vs Agricas LLP & Ors Etc4.
21. Lastly Smt. Bajoria would urge that, even if it is held that
the offences were bailable, neither the arrest nor the remand
order can be said to be without jurisdiction, and, thus, the
proper course for the Petitioners would be to seek bail and not
assail the impugned order by invoking the writ jurisdiction.
3 (2021) 18 SCC 601.
4 (2021) 14 SCC 341.
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22. To start with it may be apposite to note the provisions
contained in Section 135 and Section 104 of the Customs Act.
The relevant part of Section 135 reads as under:
135. Evasion of duty or prohibitions.
(1) Without prejudice to any action that may be taken under this
Act, if any person—
(a) is in relation to any goods in any way knowingly
concerned in misdeclaration of value or in any
fraudulent evasion or attempt at evasion of any duty
chargeable thereon or of any prohibition for the time
being imposed under this Act or any other law for the
time being in force with respect to such goods; or
(b) acquires possession of or is in any way concerned in
carrying, removing, depositing, harbouring, keeping,
concealing, selling or purchasing or in any other
manner dealing with any goods which he knows or has
reason to believe are liable to confiscation under
section 111 or section 113, as the case may be; or
(c) attempts to export any goods which he knows or
has reason to believe are liable to confiscation under
section 113; or
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(d) fraudulently avails of or attempts to avail of
drawback or any exemption from duty provided
under this Act in connection with export of goods;
or
(e) obtain an instrument from any authority by
fraud, collusion, wilful representation or
suppression of facts and such instrument has been
utilised by such person or any other person,
he shall be punishable,—
(i) in the case of an offence relating to,—
(A) any goods the market price of which
exceeds one crore of rupees; or
(B) the evasion or attempted evasion of duty
exceeding fifty lakh of rupees; or
(C) such categories of prohibited goods as the
Central Government may, by notification in the
Official Gazette, specify; or
(D) fraudulently availing of or attempting to
avail of drawback or any exemption from duty
referred to in clause (d), if the amount of
drawback or exemption from duty exceeds fifty
lakh of rupees; or
(E) obtaining an instrument from any
authoirity by fraud, collusioin, wilful
mistatement or suppression of facts and such
instrument has been utilised by any person,
where the duty relatable to utilisation of the
instrument exceeds fifty lakh rupees.
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with imprisonment for a term which may extend to
seven years and with fine:
PROVIDED that in the absence of special
and adequate reasons to the contrary to be
recorded in the judgment of the Court, such
imprisonment shall not be for less than one
year;
(ii) in any other case, with imprisonment for a term
which may extend to three years, or with fine, or
with both.
23. Section 104 of the Code reads as under:
“104. Power to arrest.
(1) If an officer of customs empowered in this
behalf by general or special order of the Principal
Commissioner of Customs or Commissioner of Customs
has reason to believe that any person has committed an
offence punishable under section 132 or section 133 or
section 135 or section 135A or section 136, he may
arrest such person and shall, as soon as may be,
inform him of the grounds for such arrest.
(2) Every person arrested under sub-section
(1) shall, without unnecessary delay, be taken to a
magistrate.
(3) Where an officer of customs has arrested
any person under sub-section (1), he shall, for the
purpose of releasing such person on bail or otherwise,
have the same powers and be subject to the same
provisions as the officer-in-charge of a police-station
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has and is subject to under the Code of Criminal
Procedure, 1898 (5 of 1898).
(4) Notwithstanding anything contained in the
Code of Criminal Procedure, 1973 (2 of 1974), any
offence relating to—
(a) prohibited goods; or
(b) evasion or attempted evasion of duty
exceeding fifty lakh rupees; or
(c) fraudulently availing of or attempting to avail
drawback or any exemption from duty provided
under this Act, where the amount of drawback
or exemption from duty exceeds fifty lakh
rupees; or
(d) fraudulently obtaining an instrument for the
purposes of this Act or the Foreign Trade
(Development and Regulation) Act, 1992 (22 of
1992), and such instrument is utilised under
this Act, where duty relatable to such utilisation
of instrument exceeds fifty lakh rupees.
Shall be cognizable.
(5) Save as otherwise provided in sub-section
(4), all other offences under the Act shall be non-
cognizable.
(6) Notwithstanding anything contained in the
Code of Criminal Procedure, 1973, (2 of 1974) an offence
punishable under section 135 relating to—
(a) evasion or attempted evasion of duty
exceeding fifty lakh rupees; or
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(b) prohibited goods notified under section 11
which are also notified under sub-clause (c) of
clause (i) of sub-section (1) of section 135; or
(c) import or export of any goods which have not
been declared in accordance with the provisions
of this Act and the market price of which exceeds
one crore rupees; or
(d) fraudulently availing of or attempt to avail of
drawback or any exemption from duty provided
under this Act, if the amount of drawback or
exemption from duty exceeds fifty lakh rupees; or
(e) fraudulently obtaining an instrument for the
purposes of this Act or the Foreign Trade
(Development and Regulation) Act, 1992 (22 of
1992), and such instrument is utilised under
this Act, where duty relatable to such utilisation
of instrument exceeds fifty lakh rupees.
Shal be non-bailable.
(7) Save as otherwise provided in sub-section
(6), all other offences under this Act shall be bailable.
[Explanation.—For the purposes of this
Section, the expression “instrument” shall have the
same meaning as assigned to it in Explanation 1 to
section 28AAA.
24. Sub-Section (1) of Section 104 empowers the empowered
Customs Officer to arrest a person, if he has reason to believe
that such person has committed an offence punishable under
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Sections 132, 133, 135, 135A or 136 of the Customs Act. Upon
arrest such Officer is enjoined to inform the arrestee the
grounds for such arrest, as soon as may be. Sub-Section (2) of
Section 104 casts a duty to take the arrested person before a
Magistrate without unnecessary delay. Sub-Section (3) of
Section 104 confers on the Officer effecting the arrest, the
powers conferred on the Officer in-charge of a Police Station in
the matter of release of such person on bail or otherwise. Sub-
Section (4) of Section 104 designates the offences specified
under Clauses (a) to (d) as cognizable and rest of the offence as
non-cognizable.
25. Sub-Section (6) of Section 104 is of critical significance in
the context of controversy at hand. Five categories of offences
punishable under Section 135 specified in Clauses (a) to (e) are
declared non-bailable. The rest of the offences under the
Customs Act are bailable.
26. In the context of controversy at hand, Claues (d) and (e) of
sub-Sectioin (6) of Section 104 are not attracted. The
controversy revolves around the question as to whether there
were reasonable grounds for arrest of the Petitioners in relation
to offences punishable under Section 135(1)(i)(A), (B) and (C),
and, secondly, whether those offences fall within the dragnet of
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(a), (b) and (c) of sub-Section (6) of Section 104 and, thus, non-
bailable.
27. The first question that would warrant consideration is
whether there were reasons to believe that the Petitioners had
committed the offences punishable under Sections 132, 133,
135, 135A or 136 of the Customs Act and, there was necessity of
arrest. The expression used in sub-Section (1) of Section 104 is
“has reason to believe that any person has committed an
offence”.
28. What is the import of the said expression? Whether the
said expression is equivalent to reason to believe that a person
is guilty of the offence? And what standard applies to satisfy the
threshold or pre-conditions for arrest? were the questions, the
Supreme Court was called upon to consider in the case of
Radhika Agarwal (Supra) .
29. After comparing and contrasting the provisions contained
in Section 19(1) of the Prevention of Money Laundering Act,
2002 (“the PMLA Act”) and Section 104 (1) of the Customs Act,
the Supreme Court enunciated that there was substantially no
difference between a person being guilty of an offence and a
person committing an offence.
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30. Applying plain language interpretation, the Supreme
Court exposited that, a person being guilty of an offence and a
person committing an offence is self-same and identical in so far
as Section 19(1) vis-a-vis Section 104(1) is concerned. The
Supreme Court, further, clarified that the absence of the term,
“on the basis of material in his possession” which precede the
“reason to believe” in Section 19(1) of the PMLA Act and which
does not find mention in Section 104(1) of the Customs Act,
does not make any qualitative difference on the threshold of the
satisfaction of necessity of arrest on the basis of reasonable
belief to be specified under Section 104(1) of the Customs Act. It
was in terms observed that, the fact that Section 104 (1) does
not explicitly require a Customs Officer to have, “material in
their possession” does not imply that a Customs Officer can
conclude that an offence has been committed out of thin air or
mere suspicion. The threshold for arrest under Section 104(1) of
the Customs Act is higher than that under Section 41 of the
Code of Criminal Procedure, 1908, by stipulating that the
Customs Officer may only arrest a person if they have, “reason
to believe” that a person has committed an offence. A person is
said to have a “reason to believe” a thing, if they have sufficient
cause to believe that thing but not otherwise. This represents a
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more stringent standard than the “mere suspicion” threshold
provided under Section 41.
31. With reference to the provisions that explicitly classify
offences into bailable and non-bailable, as well as cognizable
and non-cognizable under sub-Sections (4) to (7) of Section 104
of the Customs Act, the Supreme Court emphasised in clear and
explicit terms that, “the reasons to believe” must reflect these
classification when justifying an arrest.”
32. The observations in paragraph 46 of the judgment in the
case of Radhika Agarwal (Supra) are of material salience in the
context of the controversy at hand and, hence, extracted below:
“46. Thirdly, given the framework of the Customs Act,
which explicitly classifies offences into bailable and non-
bailable, as well as cognizable and non- cognizable, the
“reasons to believe” must reflect these classifications when
justifying an arrest. The reasoning must weigh in why an
arrest is being made in a specific case, particularly given
the specific severity assigned to the offence by the
legislature. The reasoning must also state how the
monetary thresholds outlined in the Act are met.
Subclauses (b) to (d) of Section 104(4) provide monetary
thresholds for cognizable offences, while subclauses (a)
and (c) to (e) of Section 104(6) provide those for non-
bailable offences. The “reasons to believe” must include a
computation and/or an explanation, based on factors such
as the goods seized, from which a conclusion of guilt can
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be drawn. This level of detail is crucial, as it facilitates
judicial review of the exercise of the power to arrest. The
department’s authority to arrest under Section 104 hinges
on satisfying these statutory thresholds.”
33. In relation to the claissification of the offences with
reference to Clauses (a) and (c) to (e) of sub-Section 104(6) — the
non-bailable offences — the Supreme Court has ordained that
reasons to believe must have a computation and/or an
explanation, based on factors such as the seized goods from
which a conclusion of guilt can be drawn. The necessity of such
computation and/or explanation was emphasised from the point
of view of facilitation of general review of the exercise of the
power of arrest. Thus, the broad submission on behalf of the
Respondent that at the stage of consideration of the challenge to
the validity of arrest and remand, the quantification and
valuation of seized goods need not to be delved into cannot be
unreservedly countenanced.
34. Consistent with the aforesaid enunciation of law, if an
accused is alleged to have committed an offence of evasion of
duty or prohibition under Section 135 of the Customs Act in
relation to Clause (A) of sub-Section (1)(i) of Section 135, the
Officer effecitng the arrest must have reason to believe that the
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market price of the goods exceeds One Crore of Rupess; in
relation to Clause (B) that the evasion or attempted evasion of
duty exceeds 50 Lakhs Rupees and under Clause (C), the
offence is in relation to the specified category of prohibited
goods.
35. Consequently, the material on record ought to justify that
the Customs Officer had reason to believe that the offences were
non-bailable under clauses (a) and (c) of sub-Section (6) of
Section 104 for evasion of duty exceeding Rs. 50 Lakhs or the
market price of the goods exceeds Rs. 1 Crore, respectively, and
for the applicability of clause (b) the goods were prohibited.
36. Thus, when an accused person is produced before the
learned Magistrate with the allegations that the offences
allegedly committed by such person are non-bailable within the
meaning of Clauses (a) to (c), of sub-Section (b) of Section 104,
the enquiry in relation to the value of evaded duty, market price
of goods and the character of the goods, assumes significance.
37. In the facts of the case at hand, clause (a) of sub-section
(6) of Section 104 of the Customs Act has, evidently, no
application. It is not the case of the respondent that there was
evasion of duty exceeding Rupees Fifty Lakhs.
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38. The contentious issue is, whether the allegedly illegally
imported goods i.e. diesel, is a “prohibited good” within the
meaning of clause (b) of sub-section (6) of Section 104. To retain
emphasis, clause (b) of sub-section (6) of Section 104 is
extracted below:
“(b) prohibited goods notified under section 11 which are also
notified under sub-clause (c) of clause (i) of sub-section (1) of
section 135.”
39. As noted above, Smt. Bajoria made a strenuous effort to
draw home the point that the Notification dated 13 th November,
2019 issued in exercise of powers conferred by Section 5 of the
Foreign Trade (Development and Regulation) Act 1992, by the
Director of General of Foreign Trade, renders the diesel imported
otherwise through State Trading Enterprises, a prohibited good.
Whether this submission is sustainable?
40. Under Clause (33) of Section 2 of the Customs Act, unless
the context otherwise requires, “prohibited goods" means any
goods the import or export of which is subject to any prohibition
under this Act or any other law for the time being in force but
does not include any such goods in respect of which the
conditions subject to which the goods are permitted to be
imported or exported have been complied with.
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41. Prohibited goods are thus defined as the goods, the import
or export of which is subject to prohibition under the Customs
Act or any other law for the time being in force, save and except
the goods which have been imported or exported in compliance
with the prescribed conditions. Undoubtedly, the goods, the
import or export of which is prohibited under any other law also
constitute prohibited goods. However, the definitions under
Section 2 of the Customs Act are subject to the rider, “unless
the context otherwise requires.”
42. On a plain reading of clause (b) of sub-section (6) of
Section 104, it becomes abundantly clear that the Parliament
has designedly provided a different connotation for the term
‘prohibited goods’ so as to render the offences in relation
thereto, non-bailable. Firstly, the goods must be notified as
prohibited under Section 11 of the Customs Act. It implies that
if the goods are prohibited under any other provisions of the
Customs Act itself, they would not qualify as prohibited goods
under clause (b). Secondly, there is an added requirement,
namely, in addition to Notification under Section 11 those goods
shall also be notified under sub-clause (C) of clause (i) of sub-
section (1) of Section 135 of the Customs Act. For ease of
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reference sub-clause (C) of clause (i) of Section 135(1) of the
Customs Act is again extracted below:
“(C) such categories of prohibited goods as the Central
Government may, by notification in the Official Gazette,
specify;”
43. A conjoint reading of clause (b) of sub-section (6) of
Section 104 and sub-clause (C) of clause (i) sub-section (1) of
Section 135 of the Customs Act, would indicate that there must
be a specific notification in respect of prohibited goods under
sub-clause (C) of clause (i) of Section 135(1) of the Customs Act.
It is elementary that the aforesaid provisions, being penal in
nature, and having a bearing upon the personal liberty of the
accused arraigned for the offence punishable under Section 135
of the Customs Act, require strict construction. Therefore, to fall
within the tentacles of clause (b) of sub-section (6) of Section
104 of the Customs Act the goods must first be notified as
prohibited goods under Section 11, and those goods must also
be notified under sub-clause (C) of clause (i) of Section 135(1) of
the Customs Act.
44. It is not the case of the prosecution that there is such
Notification under Section 135(1)(i)(C) of the Customs Act
prohibiting the import of diesel. Mr. Ponda by way of illustration
drew attention of the Court to a Notification dated 13 th May,
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2008 issued under the said section specifying “fake currency
notes” as goods falling under the category of prohibited goods
for the purposes of the said section, to show that such power
has been resorted to.
45. Reliance sought to be placed by Smt. Bajoria on the
judgments in the cases of Union of India vs. Agricas Llp and
others Etc.5 and Union of India vs. M/s. Raj Grow Impex LLP
and ors.6 is inapposite as those judgments do not deal with the
aspect of prohibited goods from the perspective of the offences
in relation thereto being bailable or non-bailable. Resultantly, it
must be held that the provisions contained in clause (b) sub-
section (6) of Section 104 have no application to the facts of the
case at hand.
46. This propels me to the question of the offences being non-
bailable for the reason that the market price of the illegally
imported goods exceeded Rupees One Crore. A brief reference to
the contemporaneous documents would be necessary. Firstly
the seizure-memo records that approximately 120 KL of gray
blackish coloured liquid purported to be diesel was found on the
vessel. Secondly, in the grounds of arrest communicated to the
5 Transfer Petition (Civil) Nos.496-509/2020, dtd.26/8/2020.
6 Civil Appeal No(s). 2217-2218/2021 dtd.17/6/2021.
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petitioners it was reiterated that the total quantity of the diesel
was approximately 120 KL and the value of the seized goods was
more than Rupees Fifty Lakhs. Thirdly, in the reasons for arrest,
recorded by the Intelligence Officer, it was again recorded that
approximately 120 KL of diesel was found and seized and its
value was more than Rupees Fifty Lakhs. Lastly, in the
application filed before the Magistrate seeking judicial custody
of the petitioners, it was asserted that, in the statements of the
petitioners recorded under Section 108 of the Customs Act, the
petitioners conceded that approximate quantity of 120 KL of
liquid, purported to be diesel, was found. The final
quantification of the imported goods i.e. purported to be high
speed diesel and its valuation could not be done at the time of
examination and rummaging as it was a weekend and surveyors
were not present.
47. The aforesaid contemporaneous record thus unmistakably
indicates that at no point in time until the arrest of the
petitioners and their production before the learned Magistrate, it
was the case of the prosecution that the market price of the
allegedly illegally imported goods exceeded Rupees One Crore.
On the contrary, the fact that the value of seized goods was
stated to be above Rupees Fifty Lakhs, indicates that the
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Customs Officer effecting the arrest of the petitioners was alive
to the position that the value of the seized goods had a bearing
upon the complicity of the petitioners.
48. It appears that, after the petitioners were produced before
the Magistrate, a purshis was filed in Remand Application
No.76/2026 and the certificate of valuation issued by Sharani
Associates dated 20th January, 2026 was produced. In the said
certificate, the valuer reported that the approximate quantity of
diesel was 178 KL and the realizable value was Rs.1,33,50,000/-
at the rate of Rs.75/- per liter. The brief justification for the
assessment is of material significance. It reads as under:
“12. Brief Justification
We have physically examined the detained Barge. The
storage Tanks filled with diesel were noted down for
calculating the quantities. On Physical Examination we
found documents pertaining to the barge. The cross sectional
drawing showing the tank capacities were matched with the
tanks examined filled with illicit Diesel.
Measured quantities are in accordance with the drawing and
on the quantity measurement made at the time of inspection.
Please Note that there may be variation of 10% to 20% of
volume in measurement.
This report is based entirely on the personal inspection
carried out by our Engineer and is issued without any
prejudice or favor nor bindings.”
49. Submissions were sought to be canvassed by the learned
Counsel for the parties based on the capacity of the tanks in
which the seized goods were illicitly concealed. At this stage,
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this Court would not be justified in delving into such details,
especially having regard to the technical nature of the
assessment.
50. Few factors, however, become clearly evident. The
assessment of the quantity is based on physical examination of
the storage tanks. Inferences are drawn by matching the cross
sectional drawing showing the tank capacity and the quantity
measurement at the time of inspection. The possibility of
variation of 10 to 20% of volume in measurement is adverted to.
The certificate is issued without any prejudice or favour and on
non-binding basis.
51. The core question before the Court is, can the personal
liberty be made to rest on such certificate which was not
available before the Customs Officer when the arrest of the
petitioner was effected. Incontrovertibly, the said certificate was
not taken into account by the Customs Officer to form a
reasonable belief that the petitioners had committed the offence
punishable under Section 135(1) of the Customs Act in relation
to the goods, the market price of which exceeded Rupees One
Crore.
52. At this juncture, the decision of the Supreme Court in the
case of Radhika Agarwal (supra), especially the observations in
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paragraph 46 (extracted above), assume importance. In the
absence of the quantification of the seized goods and valuation
thereof, the Customs Officer could not have formed a reasonable
belief that the petitioners had committed the offences which
appeared to be non-bailable. The crucial test of satisfaction of
the statutory mandate preceding the arrest of the petitioners
was thus not fulfilled.
53. In the aforesaid view of the matter, respondent No.1
cannot be permitted to wriggle out of the situation by asserting
that the quantification of the seized goods at 120 KL was
approximate. The submission that the matter was under
investigation and the process of quantification was underway
cannot be countenanced after the personal liberty of the
petitioners was jeopardized by first effecting the arrest. Nothing
prevented the Officer effecting the arrest to have the quantity of
the seized goods and value thereof certified before effecting the
arrest.
54. The aforesaid factors were not adverted to by the learned
Magistrate while holding that the offences appeared to be non-
bailable. Resultantly, the impugned order to the extent the
learned Magistrate declared the offences to be non-bailable and
rejected the prayer for bail deserves to be quashed and set aside.
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55. Hence the following order:
:ORDER:
(i) The petition stands allowed.
(ii) The impugned order to the extent the learned Magistrate
declared the offences to be non-bailable and rejected the prayer
for bail stands quashed and set aside.
(iii) Shaun Stany Noronha and Sushant Kishor Manna, the
petitioners be released on bail in File No.CUS/PTRL/
OTH/1/2026-RSR(S)-R and I, on furnishing P.R. bond of
Rs.50,000/-, each, with one or more sureties in the like
amount.
(iv) The petitioners shall mark their presence before the
Intelligence Officer, RSR R&I, Mumbai, on first Monday of every
month between 11.00 a.m. to 1.00 p.m. for the period of one
year or till conclusion of the trial, whichever is earlier.
(v) The petitioners shall furnish their contact details and
residential address to the Intelligence Officer, RSR R&I,
Mumbai, and shall keep him updated in case there is any
change.
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(vi) The petitioners shall not directly or indirectly make any
inducement, threat or promise to any person acquainted with
the facts of the case so as to dissuade them from disclosing the
facts to court or any police officer. The petitioners shall not
tamper with prosecution evidence.
(vii) The petitioners shall regularly attend the proceedings
before the jurisdictional Court.
(viii) By way of abundant caution, it is clarified that the
observations made hereinabove are confined for the purpose of
determination of the entitlement for bail and they may not be
construed as an expression of opinion on the guilt or otherwise
of the applicant and co-assued and the trial Court shall not be
influenced by any of the observations made hereinabove.
Rule made absolute in the aforesaid terms.
Petition disposed.
[N. J. JAMADAR, J.]
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