Laws of the People's Republic of China

REGULATIONS CONCERNING CUSTOMS SUPERVISION
AND CONTROL OF GOODS BEING PROCESSED

  (Issued on November 1, 1987)

 

 

SUBJECT: CUSTOMS

ISSUING-DEPT: GENERAL CUSTOMS ADMINISTRATION

ISSUE-DATE: 11/01/1987

IMPLEMENT-DATE: 11/01/1987

LENGTH: 2173 words

TEXT:

[Article 1] The government applies preferential policies to processing and assembly. To encouroge and promote the processing and assembly of materials supplied by foreign buyers and to strengthen Customs control, the present regulations are drawn up in accordance with "The Customs Law of the People's Republic of China" and relevant decrees of the State Council.

[Article 2] Processing and assembly in the present regulations shall refer to transactions in which foreign forms provide raw material, accessories, spare parts, components, material for packing and equipment if necessary (hereinafter referred to as materials and parts) for processing and assembly carried out in factories in China according to the requirements of the foreign firms. After the re-export of the finished products to the foreign firms for sale, the parties in China shall receive processing fees in return. The cost of equipment supplied by overseas manufactures is to be compensated for by such processing fees.

[Article 3] Foreign trade corporations and industrial corporations dealing in foreign trade (including the service companies dealing in processing and assembly approved by authorities at or above county level in Guangdong and Fujian provinces) may sign contracts with foreign firms by themselves or together with factories in China. Factories which are not authorized to conduct foreign trade transactions shall join the aforesaid corporations in signing contracts with foreign firms.

Authorization certified by notaries public or departments of foreign economic relations and trade shall be presented when contracts are signed by attorneys in China on behalf of foreign firms.

The enterprises dealing in processing and assembly and the attorneys of the foreign firms must be economic entities qualified as legal persons.

[Article 4] The contract signed by the business enterprise shall be verified and approved by the Ministry of Foreign Economic Relations and Trade, the relevant ministries and commissions under the State Council, the foreign economic relations and trade departments of the provinces or their authorized organs.

The contracts shall specify:

[Article 5] The materials and parts for processing and assembly and equipment necessary for production shall, with approval, be imported without import licenses.

But finished products subject to export licenses shall be released by the Customs office only with such a license.

[Article 6] The following documents and certificates shall be submitted by the business enterprise to the nearest local Customs office or a designated Customs office (hereinafter referred to as competent customs offices) for registration within on month after approval of the contract:

The competent Customs offices shall issue a "Registration Book for Goods to be Processed or Assembled" (hereinafter referred to as "Registration Book") if the aforesaid documents and licenses are verified as correct and complete. Customs formalities shall be conducted upon presentation of the "Registration Book." No release shall be granted by the Customs office for the import or export or export of processed and assembled goods if the business enterprise fail to acquire such a "Registration Book."

The relevant corporation and enterprise shall keep the "Registration Book" intact. In case of loss, timely notification shall be made to the competent Customs office, which shall reissue a "Registration Book" upon the presentation of relevant documents for goods imported and exported for processing and assembly provided the loss is found to be authentic by the Customs office. The goods in question shall not be released unless the "Registration Book" is replaced.

[Article 7] Materials and parts imported for processing and assembly shall be exempt from Customs duties and product tax (or value added tax) at the time of import in accordance with the relevant regulations provided that the finished products are entirely re-exported. But the aforesaid materials, parts and finished products shall not be allowed to be converted to domestic consumption. In case where domestic consumption is needed for certain reasons, or where the cancellation of the contract is requested unilaterally by foreign firms, approval by the original authorities and Customs office shall be required, normal import formalities completed and Customs duties paid if the business enterprise applies for domestic consumption of residual materials, parts or finished products as a means of redress. In addition, an import license shall be required for goods falling under national import restrictions.

An import license shall be waived on the remnants and scraps left after processing, and Customs duties may be collected or partially or totally waived, depending on their actual value.

[Article 8] The following imported equipment and materials compensated for by processing fees under processing and assembly contracts shall be entitled to exemption from Customs duties and imported product taxes (or value added taxes):

Goods beyond what is mentioned above shall be subject to normal import procedures and formalities.

[Article 9] The materials, parts and equipment imported for processing and assembly shall be deemed goods under Customs bond, without exception. Customs supervision and control shall in all cases be exercised on the aforesaid materials and parts from the time of import to the time of export of finished products and on the machines from the time of export of finished products and on the machines from the time of importation until they are compensated for by processing fees and the duration of Customs control is exceeded. No sale, transfer, exchange, mortgager or removal for other use by any enterprise or individuals shall be allowed without the approval of Customs offices.

The relevant business enterprise shall, under their contracts, keep detailed records of the disposal of the imported materials, parts and equipment and exported finished products in special accounts confirmed by the Customs office. The Customs office shall have the right at any time to audit and examine the above mentioned bookkeeping and business correspondence and cables exchanged as well as bonded warehouses and workshops, and the business enterprise shall provide the Customs with necessary facilities.

[Article 10] After a contract with a foreign firm for processing and assembly has been carried out, surplus materials and parts and excess finished products due to improved craftsmanship and management shall be examined and verified by the Customs, provided that the original authorities issuing the certificate of approval (or certifying the contracts on record) give permission to convert the surplus items to domestic consumption. Items which are worth less than 2 per cent of the value of the relevant imported materials and parts and whose total value does not exceed 3000 yuan do not require import licenses and may be exempted from duty and tax. Materials and parts exceeding 2 percent in value or with a total value of more than 3000 yuan shall be subject to duty and tax figured on the basis of materials and parts but do not require import licenses.

[Article 11] Materials, parts and equipment for processing and assembly and finished products shall, as it may be deemed necessary by the Customs office, be imported and exported at designated ports. If the need arises to change the port of entry or exit prior customs approval shall be obtained and the fact noted in the "Registration Book" before such a change takes place.

At the time of import and export of materials, parts, equipment and finished products, the business enterprise concerned or its agent shall submit to the local Customs office the Customs declarations duly filled out in quadruplicate, invoices, packing lists and other relevant documents for examination. When the Customs office deems it necessary, a sampling may be taken of the imported materials and parts and the shipment subsequently sealed after confirmation by both sides. Customs escort may be required for transporting the goods in question.

[Article 12] The business enterprise concerned shall, before the 15th of the first month of each quarter, report to the competent Customs office and local internal revenue departments for verification by submitting a statement on the disposal of materials and parts imported for processing and assembly procedure and of exported finished products, as well as on stock in the previous quarter. Within a period of one month after the contract is terminated or the last consignment of finished products is re-exported, check-up formalities by the competent Customs office shall be completed upon presentation of the balance sheet endorsed by the internal revenue departments in the "Registration Book," Customs declarations and relevant documents.

In case of suspension, extension or transfer of contracts, the competent Customs office shall be duly notified by the business enterprise concerned within 10 days of occurrence and approval by the competent authorities.

[Article 13] When the finished products derived from imported materials and parts are not intended for outright re-export, but are transferred to another domestic enterprise for further processing or assembly, both the transferor and the transferee shall furnish the Customs office with the purchase-sale agreement or commission for processing countersigned by both parties and other relevant documents for Customs transfer and check-up formalities. The transferee shall remain responsible to the Customs for compliance with relevant regulations.

[Article 14] All persons in charge of inward, outward and transit transport of materials, parts and finished products shall abide by the rules and regulations concerning the control of transport vehicles and goods loaded thereon and bear legal responsibity.

[Article 15] The business enterprise which has signed the contract together with the foreign trade (or industrial) corporation shall be held directly responsible to the Customs for Customs formalities and legal obligations. The foreign trade (or industrial) corporation, being a party to the contract, shall be held jointly responsible to the Customs for what has been laid down in the contract. If a foreign trade (or industrial) corporation signs a contract independently and assigns the processing to a business enterprise (including cases where the processing is conducted between the corporation as a buyer and the business enterprise as a seller), any corporation or related persons involved shall be legally responsible to the Customs. Any foreign firms or their agents in violation of the present regulations shall be held responsible to the customs in the same way.

[Article 16] Any acts in violation of present regulations which constitute smuggling or other evasion of Customs control shall be dealt with by the Customs in accordance with the Customs Law of the People's Republic of China and other relevant laws and regulations. Any offences of a greivous nature which constitute crimes shall be prosecuted by the juridical departments for criminal liability.

[Article 17] The present regulations shall come into force on November 1, 1987.