Laws of the People's Republic of China

No. 152

The Measures of the Customs of the People's Republic of China for the Administration of Shanghai Diamond Exchange have been adopted at the executive meeting of the General Administration of Customs on August 29, 2006. They are hereby promulgated and shall enter into effect as of the promulgation date. The Interim Measures of the Customs of the People's Republic of China for the Administration of Diamonds of Shanghai Diamond Exchange implemented as of April 29, 2002 shall be concurrently abolished.

Director of General Administration of Customs, Mu Xinsheng

September 11, 2006

Measures of the Customs of the People's Republic of China for the Administration of Shanghai Diamond Exchange Chapter I General Rules

Article 1

In order to regulate the administration of Shanghai Diamond Exchange by the Customs, the present Measures are formulated according to the Customs Law of the People's Republic of China and other related laws and administrative regulations.

Article 2

Shanghai Diamond Exchange (hereinafter referred to as the SDE) means the venue for the import and export of diamonds and diamond transactions set up upon approval of the State Council and under the control of the special administration of the customs.

According to the law, the customs shall set up a customs office in the SDE, which shall adopt closed management for this area by exercising functions.

Article 3

The import and export trade, storage, exhibition, entrusted processing and other diamond businesses approved by the customs office may be implemented in the SDE.

Article 4

The import and export of diamonds through general trade shall handle the import and export declaration procedures in the customs office of the SDE.

The import and export of diamonds through processing trade shall handle the import and export declaration procedures according to the Measures of the Customs of the People's Republic of China on the Control of Processing Trade Goods. Because of the diamonds under the processing trade sold within the territory of China, one shall handle the declaration procedures in the customs office in the SDE in accordance with the provision of the preceding paragraph.

If the import of diamonds for industrial use through general trade, namely the diamonds under the tariff codes 71022100, 71022900, 71049011 and 71051020, the customs declaration procedures are not handled in the customs office in the SDE in a centralized manner, and such diamonds shall be under the control of the import tariff and the import link value added tax.

Article 5

The customs office shall inspect and verify the diamonds entering into and exiting from the SDE. The diamond owner, or the member of the SDE entrusted to carry the diamonds into and out of the SDE (hereinafter referred to as the member) shall, when doing the examination, be present and take charge of unpacking and resealing the packages of diamonds. The customs office shall, after the inspection, issue a Confirmation for SDE Diamond Entry / Exit (see format in Annex), which shall be signed for confirmation by the diamond owner or member, inspector, as well as the officer of the customs office.

Article 6

Any diamond which has not handled the customs procedures or any goods or articles forbidden from import and export may not enter into or exit from the SDE.

Chapter II Administration of the SDE and Its Members

Article 7

A member shall handle the related registration procedures in the customs office of the SDE upon the strength of the approval documents of the competent organ and other materials.

A member may handle customs declaration procedures for the import and export of diamonds between the SDE and the domestic areas outside the SDE, and the archival filing procedures for the import and export of diamonds between the SDE and overseas after the registration.

Article 8

A member shall£¬according to the laws and administrative regulations£¬ set up special account books to record the import and export, inventory, exhibition, entrusted processing and other businesses relating to diamonds.

Article 9

The customs office may inspect the diamonds and the storage places in the SDE.

The customs office may check the SDE and its members. It may examine and copy the related contracts, invoices, account books, foreign exchange settlement and payment vouchers, commercial correspondence and other written materials, as well as the electronic data referred to the import and export or transactions.

Article 10

The customs office shall manage the SDE by computer network. The computer management systems shall be set up by SDE and its members to satisfy the administration requirements of the customs office and be connected to the computer network of the customs office.

Chapter III Administration of Diamonds Entering and Exiting Between the SDE and Areas outside China

Article 11

As regards any diamonds to enter the SDE from abroad or to exit from the SDE for overseas, the member or its entrusted declaration enterprise approved by and registered in the customs office (hereinafter referred to as the declaration enterprise), shall handle the archival filing procedures in the SDE, fill out the Customs of the People's Republic of China - Archival Checklist of Goods Entering China or the Customs of the People's Republic of China - Archival Checklist of Goods Exiting from China (hereinafter referred to as the archival checklists) and file the related documents for verification according to the related provisions.

Article 12

The import tariff, value added tax for the import link, or consumption tax will not be collected by the customs office if diamonds enter into the SDE from abroad in a direct manner.

Article 13

The customs office will not issue any related document for handling export rebate procedures if the diamonds exit from the diamond exchange to overseas.

Article 14

As regards any diamonds to enter into the SDE from abroad by freight, the member or declaration enterprise shall handle the declaration procedures in the customs office of the SDE in advance and it shall handle the customs transit transport procedures in the customs office of the place where the diamonds are bound to enter into China. If the declaration procedures fail to complete in advance, the said member or declaration enterprise shall handle the customs transit procedures through direct transit.

Article 15

If any diamonds export from the SDE to any area outside China by freight, the member or declaration enterprise shall handle the related procedures in the customs office of the SDE and the customs office of the place where the diamonds are bound to exit from China on the basis of export transit transport.

Article 16

Anyone bound to carry any diamonds into China shall make a declaration in the customs office of the SDE and shall handle the entry procedures in the customs office of the entry place upon the strength of the archival checklist issued by the customs office of the SDE. After the customs office of the entry place issues a customs envelop, he shall handle declaration procedures in the customs office of the SDE.

Chapter IV Administration of Diamonds Entering and Exiting Between the SDE and Areas outside the SDE

Article 17

Where any diamonds enter into any other domestic area from the SDE, the member or declaration enterprise shall handle the import declaration and tax payment procedures in the customs office of the SDE.

As regards any diamonds to exit from the SDE and to enter any domestic area outside the SDE, they are exempted from the import tariff, but the consumption tax for the import link shall be levied by the state taxation organ in the consumption link. The raw diamonds shall be exempted from tax import tariff. The part of actual tax burden of value added tax for the import link in excess of 4% of the finished diamonds shall be refunded by the customs office immediately upon payment. The concrete measures for the immediate refund upon payment shall be formulated by Shanghai Customs Office authorized by the General Administration of Customs.

Article 18

As regards any diamonds that are bound to temporarily enter into any area outside the SDE for the reason of exhibition or other business needs, an application shall be submitted to the customs office of the SDE. Upon approval of the customs office of the SDE, the related procedures shall be handled in accordance with the administrative provisions of the customs on the goods temporarily imported.

Article 19

For any diamonds which are bound to enter the SDE from domestic outside the SDE, the member or declaration enterprise shall handle the export declaration procedures in the customs office of the SDE.

Article 20

The diamonds entering and exiting between the SDE and the domestic areas outside the SDE shall be separately counted and recorded by the customs office of the SDE.

Chapter V Administration of Diamond Processing

Article 21

If a member entrusts an enterprise, which is in an area under the special administration of the customs office, to process any diamonds within the SDE, it shall be followed to the administration of the customs office according to the related provisions on bonded areas or export processing areas.

As regards the business of processing of diamonds according to the provisions in the preceding paragraph, the processing period may not exceed 6 months. If it is necessary to extend the time limit in light of any special circumstance, an extension application shall be submitted to the customs office and the extension period may not exceed 6 months.

Article 22

If a member entrusts an enterprise, which is not in an area under the special administration of the customs office, to process any diamonds within the SDE, it shall handle the customs procedures in accordance with the related provisions on processing trade.

Article 23

If a domestic enterprise directly undertakes any overseas business of processing of diamonds, it shall handle the procedures according to the related provisions on processing trade.

Article 24

As regards any diamonds under processing trade (including those finished diamond ornaments for embedment) sold within the territory of China, the processing trade enterprise shall handle the domestic sale declaration procedures in the customs office in the SDE upon the strength of the approval document of the foreign trade administrative department. The competent customs office shall handle the processing trade writing-off procedures upon the strength of the import customs declaration as well as the related documents.

If any diamonds under processing trade (including those finished diamond ornaments for embedment) are exported to the SDE, the processing trade enterprise shall handle the export declaration procedures in the customs office in the SDE. The competent customs office shall handle the processing trade writing-off procedures upon the strength of the import customs declaration as well as the related documents.

Chapter VI Supplementary Rules

Article 25

For the purpose of the present Measures:

The term "diamond" means the unembeded natural or synthetic diamonds (no matter processed or not) under 7102 and 7104 of Chapter 71 of the Import and Export Tariff the People's Republic of China, as well as the natural or synthetic diamond power under 7105.

The term "inspector" means the professional personnel of the National Gemstone Testing Center.

Article 26

Any citizen, legal person or any other organization may not import or export any diamonds through small-scale border trade.

Article 27

If any act in violation of the present Measures constitutes smuggling or violates the administrative provisions of the customs, the violator shall be punished by the customs according to the Customs Law of the People's Republic of China and the Regulation of the People's Republic of China on the Implementation of Administrative Punishments. If any crime is committed, the violator shall be subject to criminal liabilities.

Article 28

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

Article 29

The present Measures shall enter into force as of the date of promulgation. The Interim Measures of the Customs of the People's Republic of China for the Administration of Diamonds of Shanghai Diamond Exchange implemented as of April 29, 2002 shall be concurrently abolished.