Facts: Shaun Stany Noronha and Sushant Kishor Manna, employees of Shiny Shipping, were arrested after approximately 120 KL of grey blackish liquid, purported to be diesel, and ₹4,00,000 in cash were found concealed on the vessel M. V. Tina 4. They were charged under Section 135(1)(i) of the Customs Act, 1962. The Additional Chief Judicial Magistrate declined to release them on bail, deeming the offences non-bailable.
Procedural Posture: The petitioners filed a Criminal Writ Petition in the High Court of Judicature at Bombay challenging the legality and correctness of the Magistrate's order denying bail.
Issue: Did the Customs Officer have sufficient "reason to believe" that the petitioners committed a non-bailable offence under Section 135(1)(i) of the Customs Act, 1962, specifically concerning the value of the seized goods exceeding ₹1 Crore or involving prohibited goods, justifying their arrest under Section 104 of the same Act? Was the Magistrate's order denying bail justified?
Holding: No, the Customs Officer did not have sufficient "reason to believe" that a non-bailable offence was committed at the time of arrest. The Magistrate's order denying bail was quashed and set aside. The petitioners were granted bail.
Reasoning: The Court reasoned that the "reason to believe" standard under Section 104(1) of the Customs Act requires a computation and/or explanation based on seized goods to conclude guilt, especially regarding monetary thresholds for non-bailable offences. The Court relied on Radhika Agarwal vs. Union of India to emphasize that the reasons for arrest must reflect the classification of offences into bailable and non-bailable categories. The Court found that at the time of arrest, the prosecution had not established that the value of the seized diesel exceeded ₹1 Crore. The certificate valuing the diesel at over ₹1 Crore was produced after the arrest and could not be the basis for the initial "reason to believe". Furthermore, the Court held that the diesel was not proven to be a "prohibited good" as defined under Section 104(6)(b) of the Customs Act, which requires specific notifications under both Section 11 and Section 135(1)(i)(C) of the Act. Since these conditions were not met, the offence could not be deemed non-bailable.