Insertion of new section 135AA in Customs Act, 1962 - Was it a necessity or response to inaction under existing legislations?

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Somesh Arora | 08 Feb, 2022
The recent budget through Finance Bill has sought introduction of Section 135AA as a part of the Customs Act, 1962 the same is reproduced below:

Clause 94. After section 135A of the Customs Act, the following section shall be inserted, namely:

Protection of data.

Section 135AA.

(1) If a person publishes any information relating to the value or classification or quantity of goods entered for export from India, or import into India, or the details of the exporter or importer of such goods under this Act, unless required so to do under any law for the time being in force, he shall be punishable with imprisonment for a term which may extend to six months, or with fine which may extend to fifty thousand rupees, or with both.

(2) Nothing contained in this section shall apply to any publication made by or on behalf of the Central Government.

Explanation. -- For the purposes of this section, the expression "publishes" includes reproducing the information in printed or electronic form and making it available for the public'.

Clause 94 of Finance Bill, 2022 thus seeks to insert new section 135AA in the Customs Act, so as to make punishable the publishing of information relating to the value or classification or quantity of goods entered for export from India, or import into India, or the details of the exporter or importer of such goods, unless required so to do under any law for the time being in force except that provision shall not apply to any publication made by or on behalf of the Central Government.

The stated object of introduction of Section 135AA is to protect the import and export data submitted to Customs by importers or exporters in their declaration by making publishing of such information, unless provided by the law, as an offence under Customs Act. An exception has been carved out as far as any publication is made by or on behalf of the Central Government.

Therefore, the data published by Ministry of Commerce which normally forms basis of Anti-Dumping duty and Safeguard proceedings and is presented in aggregate without naming the importers and exporters, continues to remain unaffected.

The purpose of the provision is to prevent details of imports and exports as may be captured by the IT System of Customs Department or by NIDB data from being leaked out.

It is stated that proposal will only criminalise the illicit publication of transactional data by private entities, especially where the data reveals the identity of exporter or importer.

The provision seeks to empower the Customs to combat bad actors and hackers who illicitly mine commercially identifying and sensitive information and are engaged in selling transactional information or the dark web or through websites.

A number of entities (websites) have been identified by the CBIC who are selling data containing the name of exporter/importer, description of goods, quantity, value, classification etc. By selling commercially sensitive information, including the names of importers and exporters, they adversely impact the competitive position of Indian exporters in the international trade.

Earlier, in 2016, the Government had taken the step of protecting data of Indian exporters and importers, after rescinding provisions for publication of daily lists of transactions. The details are as follows -

"Publication of Daily Lists of Imports & Exports Rules, 2004" was rescinded under notification 140/2016 - Customs (NT) dated 25th November 2016, at the behest of Ministry of Commerce, which was prompted by industry complaints regarding leakage of commercially identifying and confidential information of import/export transactions.

As is mentioned, a need for such a measure to Customs Department arose as various data of importer or exporter was getting published on Internet and was after hacking etc., being illegally commercially exploited. It is also a fact that same was used by various persons either to offer defense in matters relating to valuation or classification.

But, instead of taking actions against such hackers under existing laws wherein a much severe punishments are available (as under the Information Technology Act as also under the Copyright Act which includes data base in its purview and both of which are again in turn covered under Prevention of Money Laundering Act, 2002), the Department has chosen to answer its own inaction against such hackers through creation of another provision providing far less punishment through an offense which has been made bailable and non-cognizable and prescribes punishment of only six month or fine up to Rs 50,000, or both.

On the other hand, publishing of such information from the database will prevent a lot of assessees in offering effective defense against differential classification or valuation being accepted by the Department at various ports, unless the department decides to make such vital information available without names and addresses of importer and exporters.

This may either encourage litigation or inconsistent assessment at various ports and therefore, varied assessment procedures in practice. The flipside is that vital information which may require business secrecy of importers and exporters may be maintained but only to some extent as foreign based hackers will still do their job.

While carving out such provision department has chosen the recourse of more power to itself, which rather shows that department has not chosen the Information Technology enforcement authorities or copyright authorities or Enforcement Directorate working under the same Ministry.

The right of any litigant to contest and defend itself against any Show Cause Notice, which indicates discriminatory practices should not be ignored neither the adequacy of other more effective existing legislations, the use of which department never seems to have made.

Since a litigant has a right to seek any information in possession of the Department for the purpose of his defense, will the department provide information without disclosing names of importers and exporters, about the classification of any product as assessed by the Department at various ports or the valuation thereof for contemporaneous imports and exports, if demanded under Right to Information Act, 2005 or for purpose of defense, remains to be answered. The wheat therefore must be separated from chaff.

It will be a pragmatic approach to legally allow publishing of such information sans name and addresses, and the same can be done by the Customs Department or Central Government only on commercial basis.

The format can be such as can be accepted by the courts and the Adjudicating Authority for their evidentiary value.

If the department is really serious about enforcing such provision, it should publish the classification of various products at various ports or the price range at which the same gets cleared in any particular month and treat the same as permissible evidence for defense purposes with statutory authority of law.

And further, it is time that the government decides to provide IPR protection to business secrets, which it has not done so far under Indian dispensation, rather than allowing such piecemeal efforts under various legislations for protection of data.

[Somesh Arora is an Advocate (Amicus Rarus), and Former Commissioner of Customs & Excise]