The Bombay High Court has refused anticipatory bail to two persons accused of acting as the beneficial owners and controlling minds behind imports allegedly structured to evade approximately ₹31 crore in customs duty by falsely declaring walnuts and raisins as originating in Afghanistan.
The bench of Justice Madhav J. Jamdar held that the material collected during the investigation prima facie corroborated the statement of a co-accused and indicated that substantial funds had been routed through intermediary entities to finance the imports. The custodial interrogation was “absolutely essential” to trace the complete money trail and identify the beneficiaries of the alleged fraudulent transactions.
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The anticipatory bail application was filed under Section 482 of the Bharatiya Nagarik Suraksha Sanhita, 2023. They sought protection from arrest in an investigation being conducted by the Central Intelligence Unit, Mumbai Zone-II, Jawaharlal Nehru Custom House, Nhava Sheva, for alleged offences under the Customs Act, 1962.
The Customs investigation was initiated on the basis of specific intelligence regarding an alleged organised scheme involving large-scale customs duty evasion.
According to the investigating agency, consignments of walnuts and raisins exported from Jebel Ali and other ports in the United Arab Emirates to Jawaharlal Nehru Port were deliberately misdeclared as goods of Afghan origin.
The alleged purpose of the misdeclaration was to fraudulently claim the benefit of notifications issued under the South Asian Free Trade Agreement, under which qualifying imports were eligible for exemption from Basic Customs Duty at a nil rate.
The investigation was divided into approximately 28 parts. The applicants were alleged to be involved in Parts 11 and 22, concerning customs duty evasion of approximately ₹31 crore and ₹9 crore, respectively. The anticipatory bail application before the Court related to Part 11 and the alleged evasion of ₹31 crore.
Counsel for the applicants submitted that there were 18 accused in the case. Of them, 12 had received anticipatory bail and five had been granted regular bail.
It was pointed out that one of the persons granted regular bail was the son of the first applicant, who had remained in custody for 53 days. Customs had informed the Court in those proceedings that it was unable to file the complaint within the mandatory 60-day period contemplated under Section 187 of the BNSS.
The applicants argued that the principal material against them was the statement of co-accused Chirag Chamaria, recorded under Section 108 of the Customs Act on June 4, 2026.
Chamaria had earlier been granted anticipatory bail on March 31, 2026, subject to a direction that he attend the Central Intelligence Unit on April 6, 7 and 8. According to the applicants, Chamaria did not implicate them during those appearances and referred to their alleged role only after more than two months.
They contended that his statement was exculpatory and could not be relied upon.
The applicants also denied any connection with M/s Swastik International, the firm allegedly used for the imports. While acknowledging a business relationship with M/s ABC Enterprise, they maintained that they neither had a business relationship with Chamaria nor any association with Swastik International.
It was further argued that searches conducted at their residence and office following Chamaria’s statement did not lead to the recovery of any incriminating material.
The applicants offered to cooperate with the investigation, appear before Customs whenever required and refrain from visiting Kolkata, where Chamaria was based.
The Union of India argued that the applicants were the beneficial owners of the imported goods within the meaning of Section 2(3A) of the Customs Act.
That provision defines a “beneficial owner” as a person on whose behalf goods are imported or exported or a person who exercises effective control over the goods.
Customs alleged that Swastik International had been created by Chamaria at the instance of the applicants and was merely used as a front Importer Exporter Code holder. The imports, financial arrangements, suppliers, buyers, transportation, customs-duty payments and other operational aspects were allegedly controlled by the applicants and the first applicant’s son, Sneh Dipakbhai Kakadiya.
The agency alleged that the conduct amounted to customs duty evasion punishable under Section 135 of the Customs Act.
It also argued that one of the applicants had an antecedent involving a similar modus operandi. That earlier case had been compounded after a deposit of ₹5 crore with Customs. The Union referred to the restriction under the proviso to Section 137(3), which permits compounding only once in relation to offences under Sections 135 and 135A.
In his statement under Section 108 of the Customs Act, Chamaria reportedly stated that he was engaged in the event-management business in Kolkata and met Sneh Kakadiya during an event in or around 2024.
Chamaria claimed that he was facing financial difficulties and sought assistance from Sneh Kakadiya to start a side business. He was allegedly advised to establish an import-export firm, following which Swastik International was formed.
He allegedly stated that he was promised between ₹20,000 and ₹25,000 for every container imported in the firm’s name. According to the statement, the financial arrangements, dealings with suppliers, identification of buyers, transportation and payment of customs duty were to be handled by Sneh Kakadiya and his father.
Chamaria further claimed that he lacked the financial capacity to import high-value walnut consignments. Funds credited to Swastik International’s bank account were allegedly arranged through third-party accounts that were not directly connected to the applicants.
The High Court examined an affidavit filed by the Assistant Commissioner of Customs, Central Intelligence Unit, Nhava Sheva.
The affidavit identified a series of transactions allegedly demonstrating the routing of funds through intermediary businesses. M/s Dipak Trading Co., a partnership firm connected with the applicants, allegedly transferred ₹5.44 crore to M/s Akash Enterprises, which subsequently paid ₹4.20 crore to Swastik International.
Dipak Trading Co. was also alleged to have paid ₹8.20 crore to M/s ABC Enterprise. ABC Enterprise allegedly transferred ₹68.25 lakh directly to Swastik International and another ₹2.50 crore to M/s Best Deal Traders. Best Deal Traders, in turn, allegedly transferred ₹7.60 crore to Swastik International.
Although there was no direct transfer from Dipak Trading Co. to Swastik International, the Court found it significant that entities receiving substantial payments from the applicants’ firm had made large payments to Swastik International.
Justice Jamdar observed that the transactions prima facie substantiated Chamaria’s statement and the Customs allegation that intermediary entities had been used to route funds connected with the imports.
The Court noted that the material indicated an alleged attempt to conceal the identities of the actual financiers and beneficial owners. Chamaria had also reportedly disclosed that funds were routed through cash or angadia channels.
The Court consequently rejected the argument that the case against the applicants rested solely upon an uncorroborated statement of a co-accused.
The High Court also declined to grant anticipatory bail on the ground of parity with the first applicant’s son.
It noted that Customs had agreed to the son’s release because it was unable to file a complaint within the mandatory 60-day period. One of the reasons recorded at that stage was that the main accused were absconding.
The Court said the concession made in favour of the son was specific to those circumstances and could not be treated as a finding on the merits in favour of the present applicants.
According to the Court, the investigating agency regarded the present applicants as the main accused, and there was prima facie material indicating their involvement.
The High Court relied on Supreme Court decisions holding that anticipatory bail is an exceptional remedy and should not be granted routinely, particularly where grave economic offences are alleged.
Referring to the Supreme Court’s ruling in P. Chidambaram v. Directorate of Enforcement, the Court observed that economic offences form a separate category because of their effect on the economic fabric of society. Granting pre-arrest protection during an ongoing investigation may prevent investigators from obtaining relevant information and recovering concealed material.
The Court also relied on State v. Anil Sharma, in which the Supreme Court held that custodial interrogation is qualitatively more effective than questioning a person protected by an anticipatory bail order.
Justice Jamdar concluded that there was a strong prima facie case indicating that Swastik International had been formed at the instance of the applicants and the first applicant’s son. Substantial amounts were allegedly deposited into the firm’s account through entities that had received funds from the applicants’ partnership firm.
Finding that custodial interrogation was necessary, the Court dismissed the anticipatory bail application.
The Court clarified that its observations were prima facie and had been made only for deciding the request for anticipatory bail.
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