Laws of the People's Republic of China

The General Administration of Customs, the Ministry of Foreign Trade and Economic Cooperation, the State Economic and Trade Commission

Decree of the General Administration of Customs of the People's Republic of China

No.71

The "Measures of the Customs of the People's Republic of China for Adopting Classified Administration over Enterprises" is hereby promulgated and shall come into force on June 1,1999.

The "Administration Measures of the Customs of the People's Republic of China for Creditable Enterprises" which was implemented by the General Administration of Customs on May 1,1988 is repealed simultaneously.

Minister of the General Administration of Customs Qian Guanlin

March 31 1999

Circular of the General Administration of Customs, the Ministry of Foreign Trade and Economic Cooperation, the State Economic and Trade Commission on Printing and Issuing Measures of the Customs for Adopting Classified Administration over Enterprises

Shu Jian [1999] No.240

The Sub-Administration of Customs of Guangdong, the customs offices, each province, autonomous region and municipality directly under the Central Government, and the Foreign Economic Relations & Trade Commission of cities specifically designed in the state plan, Economic and Trade Commission (the Planning Commission, Planning and Economic Commission):

In order to promote the self-discipline and law-abidance of the enterprises, increase superintendent and administration of customs efficiency, the General Administration of Customs, the Ministry of Foreign Trade and Economic Cooperation, the State Economic and Trade Commission established Measures of the Customs for Adopting Classified Administration over Enterprises Order (hereinafter referred to as " Measures ") to league together, are hereby on printing and issuing to you. Please to promulgate as No.71 order of the General Administration of Customs and shall come into force as of the day of June 1,1999. Now we hereby give our notice as follows regarding relevant matters:

1.

The customs in charge mentioned in the Measures refer to the customs directly under the Customs General Administration. As the classified management of enterprises involves wide and comprehensive work strongly, the various customs must strengthen organization and leadership and establish a mechanism of common management on enterprises among the customs. The competent heads of various customs are required to be responsible for setting up Committee of Classified Management of Enterprises at customs' level and treating with important issues. The daily implementation works are under the centralized management by specialized departments that are responsible for enterprise registration management. The scope of its responsibility as follows:

(1)

Accepting and dealing with the application of the enterprises, examining relevant documents and materials submitted by enterprises.

(2)

Offer name list of enterprises which are applicable to be under management of Category A or Category D, will be submitted to the Customs General Administration after the examination by the Committee of Classified Management of Enterprises of respective customs.

(3)

The name list of enterprises that are applicable to be under the management of Category B or Category C will be examined and approved, and organize the implementation in respective customs' region.

(4)

Regulating related work of various functional departments in a centralized way, collect feedback opinion and maintain database of enterprises in respective customs' region.

(5)

Setting up contact system with such related departments as Foreign Trade and Economic Cooperation, Economic and Trade Commissions, Taxation, Industry and Commerce, and Foreign Exchange so as to communicate and share information with each other.

2.

The appraisal of classified enterprises undertaking processing trade shall be taken in common by enterprise administration departments and competent authorities responsible for processing trade.

3.

The Measures emphasizes the dynamic classified management of enterprises. Therefore, various functional departments are required to strengthen coordination in them so as to ensure the specific records such as record of bill examination, record of check, record of tax payment,

record of verification and writing off, record of verification, and record of investigation kept by various sectors concerned to be send back timely to the centralized management departments. Those smuggling or laws-violation enterprises shall be put into adjusted category of

classified management as the occasion demands.

4.

Related regulations of Notice of Law Basis for Administrative Punishment Implemented on Units and Declarants without Taking Annual Examination (Shufa [1996] No. 1021) and Inspection Regulation of the Customs of the People's Republic of China promulgated by the Customs

General Administration will be followed in implementing Suspend Enterprise Qualification for Customs Declaration or Cancel Enterprise Qualification for Customs declaration, the 3rd and 4th sections of the article 15 of this Measures.

5.

In order to perfect classified management of enterprises, the Customs General Administration will set up the Committee of Classified Management of Enterprises attended by relevant professional departments. On how the name list of Category A and D will be submitted to the

Customs General Administration and how to implement the Measures in all the Customs' regions, another operational provisions will be drawn up and promulgated by Supervision and Administration Department and Customs-clearing Department of the Customs General Administration. The annual import and export volume stipulated in Article 6 of the Measures shall take Customs' statistics as standard.

6.

The former Inspection Department of the Customs General Administration and Research Institute of Social Science jointly designed the Questionnaire of Enterprise's Situation (see the appendix) and develop in complement System on Examining and Approving Classified Enterprise which has been put into use in some Customs. Thus, various customs may use this system for reference to examine and approve enterprises that are applicable to be under management of Category A that may be operated in a may of combination of human beings and machines. Meanwhile, the Customs General Administration shall make this system further perfectly.

Those customs without drawing the system software shall apply for it from Supervision and Administration Department of the Customs General Administration as soon as possible.

7.

In order to play role in guiding enterprises to abide by laws in operation and promote enterprises in self-warning and self-discipline, various customs shall be diligent and responsible in appraisal and examination work, execute the standard of the Measures strictly and operate the work in a realistic way.

8.

All the former measures of classified management of enterprises formulated by various customs shall be terminated in operation as of the day when the Measures are come into force.

9.

The work on classified management of enterprises is in need of the supports and assistances from relevant departments. All customs shall strengthen contact and cooperation with foreign trade and economic departments, and the opinions of relevant competent departments

such as foreign trade shall be heard and economic cooperation, economic and trade commission, tax, foreign exchange administration, departments of industry and commerce, and banks so as to do a good job with concerted efforts.

The measures mentioned on above shall be implemented accordingly. In case there comes any problems in its implementation, please report in time.

Appendix 1: Measures of the Customs General Administration of the People's Republic of China on Performing Classified Management of Enterprises

Appendix 2: Questionnaire on the Situation of Imported and Exported Enterprises (Omitted)

Appendix 1:Measures of the Customs of the People's Republic of China for Adopting Classified Administration over Enterprises

Article 1

These Measures are formulated in accordance with the Customs Law of the People's Republic of China and other relevant laws and regulations and in order to facilitate the lawful import and export of goods of the enterprises, promote the self-discipline and law-abidance of the enterprises and effectively operate the Customs' administration.

Article 2

"Enterprises" mentioned in these Measures shall be the enterprises and units directly involved in import and export activities, including: enterprises with foreign investment, foreign trade companies, commercial materials enterprises having the import and export right, production enterprises and scientific research academies and institutes having the self-operating import and export right, processing trade operating units and processing deal enterprises, enterprises engaging in bonded warehousing operations, enterprises using or dealing in tax-reduced or exempted import goods, enterprises engaging in Customs declaration services, enterprises transporting goods under Customs control, enterprises having warehouses for goods under Customs control, units dealing in duty-free foreign exchange commodities and other enterprises directly involved in import and export activities as stipulated by the General Administration of Customs.

Article 3

In accordance with the enterprises' operation and management situations, Customs declaration conditions and abidance of Customs law and regulations, the Customs introduces A, B, C and D administration classes and shall adopt the dynamic classified administration over the enterprises.

Article 4

The administration classes applicable to the enterprises shall be examined and determined by the competent Customs offices in the places where the enterprises are located respectively. Of them, the list of the enterprises under A-or D-class administration shall be submitted to the General Administration of Customs for the record. The General Administration of Customs shall send a copy of the list of the enterprises under A-class administration to the Ministry of Foreign Trade and Economic Cooperation.

Article 5

The B-or C-class administration shall be organized and adopted by the competent Customs offices within their respective Customs areas. The A-or D-class administration shall be organized and adopted by the General Administration of Customs within all Customs areas throughout the country.

Article 6

If an enterprise meets the following requirements, the competent Customs office shall, according to the application by the enterprise and upon examination and approval by the Customs, adopt A-class administration over the enterprise. If a foreign trade company has its annual import and export volume at or more than US$30 million or its annual export volume at or more than US$20 million or a production enterprise has its self-operated export volume at or more than US$10 million (its self-operated export volume of mechanical and electronic products at or more than US$5 million), it may be considered in priority.

(1)

It has been registered for two years or more, and

1.

It has no record of smuggling or irregularities for two consecutive years;

2.

It has no record of default of Customs duty for two consecutive years;

3.

Its processing trade contracts have been verified and written off on time for two consecutive years; and

4.

It has no record of unauthentic declaration within two years after the inspection exemption agreement for the commodities that must be inspected by the Customs office is signed;

(2)

The documents and certificates submitted by it to the Customs are authentic, complete and valid;

(3)

It has normal import and export business operations;

(4)

Its accounting system is perfect: sound financial and accounting books, reasonable account items and authentic and feasible business records;

(5)

It has appointed special persons responsible for Customs matters;

(6)

The error rate of its Customs declaration forms is below 5% for two consecutive years; and

(7)

If an enterprise has the warehouses for storing the goods under Customs control, its warehouse management system is sound, its warehouse detail accounts are clear, its warehouse-in and warehouse-out slips (including materials acquisition slips) are specially controlled, and its account records are consistent with its goods.

Article 7

When an enterprise applies for A-class administration to the Customs, it shall submit a written application to the competent Customs office. If an enterprise resorts to deception or files a unauthentic application, the Customs shall not accept its application for A-class administration within two years. In submitting the written application, the enterprise shall submit the following documents in two copies simultaneously:

(1)

Duplicate copy or photocopy of the valid document approving its business issued by the competent department of foreign trade and economic cooperation or by any other competent department;

(2)

Annual enterprise examination certificate;

(3)

Self-appraisal report of the enterprise against the requirements listed in Article 6 of these Measures;

(4)

Enterprise Survey Form signed by the legal representative or his authorized representative of the enterprise and affixed with its official seal; and

(5)

Written comments issued by the competent department of foreign trade and economic cooperation in the place where the enterprise is registered.

Article 8

The Customs shall strictly examine the relevant documents and archive materials submitted by the enterprises, shall make the examination according to their actual Customs passage, shall approve the enterprises if they meet the requirements and shall notify the enterprises within 30 days.

Article 9

If an enterprise has any of the following circumstances, the Customs shall adopt C-class administration over it:

(1)

It has irregularities twice in one year or dodges or evades the duty payable totaling more than 50,000 Yuan Renminbi but less than 500,000 Yuan Renminbi;

(2)

It defaults the Customs duty totaling less than 1 million Yuan Renminbi;

(3)

Its management of accounting books is poor or its accounting books and documents fail to truthfully and effectively reflect its import and export business operations;

(4)

It loses important business documents or refuses to provide relevant books and materials, thus causing the impossibility of Customs control;

(5)

It fails to fulfill the verification and writing -off formalities for processing trade contracts according to the provisions;

(6)

The error rate of its Customs declaration forms is more than 10% in one year;

(7)

It lends the enterprise's name to others for the purpose of Customs declaration and tax payment for import and export goods; or

(8)

It has been given such administrative penalties as criticism through circulation of a public notice or warning by the competent department of foreign trade and economic cooperation in its export and import business activities.

Article 10

If an enterprise has any of the following circumstances, the Customs shall adopt D-class administration over it:

(1)

It dodges or evades the duty payable through smuggling totaling more than 500,000 Yuan Renminbi within two years (the accumulated amount if several smuggling activities are involved);

(2)

It forges or alters the import or export license or document of approval;

(3)

It smuggles in goods or articles that are prohibited for import or export by the State;

(4)

It defaults the Customs duty totaling more than 1 million Yuan Renminbi;

(5)

It cheats for tax preference for the processing trade through the means of false manual, false Customs declaration form or false document of approval;

(6)

It creates hidden layers or hidden containers in the means of transport used for carrying the goods under Customs control;

(7)

It has been suspended or revoked of its foreign trade operation license by the competent department of foreign trade and economic cooperation; or

(8)

It has committed a crime of smuggling and has been investigated for criminal responsibility according to law by the judicial organ.

Article 11

If an enterprise is found through examination as not to meet the requirements for A-class administration but does not have the circumstances listed in Articles 9 and 10 of these Measures, the Customs shall adopt B-class administration over it.

Article 12

The name list of the enterprises under A-class administration shall be issued by the General Administration of Customs to all Customs offices for implementation, and on the basis of implementation of the regular administration system, the following facilities shall be provided:

(1)

Special counters shall be set up at the Customs business sites and the priority facility shall be given to the goods declaration, inspection and release formalities; and at the request of the enterprises, the priority "door-to-door" inspection for the goods shall be carried out.

(2)

With approval of the General Administration of Customs, Customs officers may be sent to the factories for control or the computerized administration may be adopted for the enterprises engaging in processing trade. Unless the State provides otherwise, the system of bank guarantee deposit account shall not be required.

(3)

For the goods for which guarantee is permitted according to the provisions, the Customs shall inspect and release them according to the letter of guarantee submitted by the enterprises and shall not require the money of guarantee.

(4)

The samples for inspection are not required for the commodities in the catalogue of commodities that must be inspected by the Customs for the enterprise's import.

(5)

The facilities for the enterprises in offering the EDI Customs declaration shall be provided.

(6)

The production enterprises and research academies and institutes having the self-operating import and export right may apply to the Ministry of Foreign Trade and Economic Cooperation for the establishment of import and export companies, and the Customs shall give priority to them in completing the Customs declaration registration formalities.

Article 13

The Customs shall adopt the regular administration system over the enterprises to which B-class administration is applicable.

Article 14

The Customs shall impose the key control on enterprises to which C-class administration is applicable, including the following measures:

(1)

The money of guarantee must be paid for the goods for which guarantee is permitted according to the provisions;

(2)

The money of guarantee must be paid according to the set rate in applying for the record of the processing trade contract;

(3)

Their business activities shall be put into key auditing and inspection;

(4)

Key inspection shall be imposed on their import and export goods;

(5)

Their application for Customs declaration and the record at places other their locations shall not be allowed; and

(6)

Relevant information shall be reported to the State Economic and Trade and Commission and the Ministry of Foreign Trade and Economic Cooperation.

Article 15

The Customs shall adopt the following measures over the enterprises to which D-class administration is applicable:

(1)

The record for new processing trade contracts shall not be allowed;

(2)

Import and export goods shall be inspected one-by-one according to the declaration forms;

(3)

According to the relevant provisions, the enterprise's qualifications of Customs declaration, the enterprise's qualifications for transporting goods under Customs control or the enterprise's qualifications for bonded warehousing business shall be temporarily suspended.

(4)

If the circumstances are serious, the enterprise's qualifications for Customs declaration, the enterprise's qualifications for transporting goods under Customs control or the enterprise's qualifications for bonded warehousing business shall be deprived of according to the relevant provisions; and

(5)

Relevant information shall be reported to the State Economic and Trade Commission and the Ministry of Foreign Trade and Economic Cooperation. The Ministry of Foreign Trade and Economic Cooperation or its authorized competent department of foreign trade and economic cooperation at the provincial level shall give administrative penalties to the enterprise according to the Interim Provisions on Imposition of Administrative Penalties as Warnings or Suspension or Revocation of the Operation License in Foreign Trade or International Cargo Agency on the Enterprises Committing Irregularities or Smuggling Activities.

Article 16

The Customs shall adopt the dynamic classified administration over the enterprises. Once an enterprise is found to have any of the circumstances listed in Articles 9 and 10 of these Measures, the Customs shall immediately make corresponding adjustment in the administration class applicable to the enterprise, and shall adopt C-or D-class administration over it. Of them, if A-class administration is applicable to the enterprise prior to the adjustment, the competent Customs office shall inform the enterprise that it does not adopt A-class administration, and shall report the adjustment result to the General Administration of Customs within seven days. The General Administration of Customs shall notify all Customs offices throughout the country, and at the same time, shall send a copy of the adjustment result to the Ministry of Foreign Trade and Economic Cooperation.

Article 17

If an enterprise to which D-class administration is applicable does not have any of the circumstances listed in Article 10 of these Measures within two years, the Customs shall adopt C-class administration over it; if an enterprise to which C-class administration is applicable does not have any of the circumstances listed in Articles 9 and 10 of these Measures within one year, the Customs shall adopt B-class administration over it.

Article 18

The General Administration of Customs shall be responsible for the interpretation of these Measures.

Article 19

These Measures shall go into effect as of June 1,1999. The Measures for Administration of Trustworthy Enterprises by the Customs of the People's Republic of China became effective as of May 1,1988 shall be repealed simultaneously.