The Allahabad High Court has clarified that an offence under Section 135(1)(a) of the Customs Act, 1962, becomes bailable when the value of seized gold is below Rs.1 crore, even if the prosecution initially claims otherwise. This ruling provides critical guidance for practitioners handling customs-related bail applications where valuation disputes are central.
Background & Facts
The Dispute
The applicant, Ashish Kumar, was arrested in connection with DRI Gorakhpur Case No. 01 of 2026, registered under Section 135(1)(a) of the Customs Act, 1962. The Directorate of Revenue Intelligence (DRI) alleged that 799 grams of gold were recovered from his possession, with a declared value of Rs. 1,12,25,950. Based on this valuation, the offence was treated as non-bailable, as the value exceeded Rs. 1 crore, triggering the higher punishment bracket under Section 135(1)(a).
Key Facts
- The alleged recovery of gold occurred on or before 06.01.2026
- The DRI assessed the value of 799 grams of gold at Rs. 1,12,25,950
- The applicant was arrested on 07.01.2026 and has been in custody since then
- The applicant contends the valuation is erroneous and the actual market value of the gold is below Rs. 1 crore
- The gold has been seized and is in the custody of the Department
- The applicant has no prior criminal record, as stated in his rejoinder affidavit
Procedural History
- 06.01.2026: FIR registered by DRI Gorakhpur Sub-Regional Unit, UP
- 07.01.2026: Applicant arrested and remanded to judicial custody
- 25.06.2026: Criminal Misc. Bail Application No. 14812 of 2026 filed before the Allahabad High Court
Relief Sought
The applicant sought bail on the grounds that the offence is bailable under Section 135(1)(e)(i) of the Customs Act, 1962, since the value of gold is below Rs. 1 crore, and that he has no criminal antecedents and will cooperate with the trial.
The Legal Issue
The central question was whether an offence under Section 135(1)(a) of the Customs Act, 1962, is bailable when the value of the seized gold is below Rs. 1 crore, despite the prosecution’s higher valuation, and whether the applicant is entitled to bail pending trial.
Arguments Presented
For the Appellant/Petitioner
Learned counsel for the applicant argued that the valuation of gold at Rs. 1,12,25,950 is incorrect and that the actual market value is below Rs. 1 crore. Therefore, the offence falls under Section 135(1)(e)(i), which prescribes a maximum punishment of three years and renders the offence bailable. The applicant has been in custody since 07.01.2026, with no prior criminal history. He undertook to cooperate fully with the trial and not misuse bail.
For the Respondent/State
The counsel for the Union of India opposed bail, asserting that the DRI’s valuation is prima facie correct and that the evidence against the applicant is substantial. The prosecution contended that the nature of the offence - smuggling of gold - warrants continued custody to prevent tampering with evidence or flight.
The Court's Analysis
The Court did not determine the final valuation of the gold, noting that such an assessment is a matter for the trial court. However, it emphasized that bail is not contingent on the prosecution’s unchallenged assertions but on whether the applicant has made out a prima facie case for bailability. The Court observed that if the value of gold is indeed below Rs. 1 crore, the offence is bailable under Section 135(1)(e)(i), which provides for imprisonment up to three years.
"This Court finds that the applicant has made out a case for grant of bail."
The Court further noted the applicant’s prolonged incarceration of over five months without trial, the absence of any criminal antecedents, and the fact that the seized gold is already in Departmental custody, eliminating any risk of disposal or destruction of evidence. The Court held that the right to liberty must be balanced against the presumption of innocence, particularly where the offence may not be non-bailable as alleged.
The Court imposed stringent conditions to ensure trial cooperation, including mandatory personal appearance on key dates and undertakings against adjournment abuse, to mitigate any risk of delay or non-appearance.
The Verdict
The bail application was allowed. Ashish Kumar is released on bail upon furnishing a personal bond and two sureties, each in the same amount, to the satisfaction of the trial court. The sureties must be verified before release. The applicant must comply with all conditions, including personal appearance on dates for framing of charge, Section 313 CrPC statement, and trial proceedings. Breach of any condition shall lead to cancellation of bail. The Court clarified that its observations do not prejudice the trial court’s independent evaluation of evidence.
What This Means For Similar Cases
Valuation Disputes Can Render an Offence Bailable
- Practitioners must challenge prosecution valuations at the bail stage if they appear inflated or unsupported
- If the seized commodity’s value falls below the threshold for non-bailable offences, bail must be granted even if the prosecution claims otherwise
- The burden shifts to the prosecution to demonstrate a prima facie case for non-bailability based on credible valuation
Bail Conditions Must Be Tailored to Trial Integrity
- Courts may impose specific conditions requiring personal attendance on critical trial dates
- Failure to appear without cause may trigger proceedings under Section 229-A IPC or Section 174-A IPC
- Undertakings against adjournment abuse are enforceable and may lead to bail cancellation
Custody Duration and Lack of Antecedents Are Critical Factors
- Prolonged pre-trial incarceration without trial progress weighs heavily in favour of bail
- Absence of criminal history strengthens the applicant’s claim to liberty
- Seizure of contraband by authorities reduces risk of evidence tampering, supporting bail
