Guide to Application, Transaction and Administration for Duty Reduction or Exemption

Goods under duty reduction or exemption is a tariff preference measure that the state gives to the qualified enterprises and units. When enjoying the right of duty reduction or exemption, enterprises and units shall value this right and assume the responsibility to apply for, to use, to take care of and to deal with the goods under duty reduction or exemption in accordance with laws and regulations. In order to make the enterprises and units understand the requirements for the application for and supervision over the goods under duty reduction or exemption, to enhance the internal administration and to promote the sound relationship and win-win cooperation between Customs and enterprises and units, here Customs will notify the relevant affairs seriously as follows:
I. Application Procedures
ⅰ.　Application process: prerecord of the project of the applying units—examination and approval of Customs for the project—prerecord of duty reduction or exemption for the applying units—examination and approval of Customs for duty reduction or exemption—production of the Duty Imposition/Exemption Certificate for Import/Export Goods by Customs—declaration for importation
ⅱ. Time limit for application: project units shall declare to Customs with the hold of complete and valid papers and documents for examination and approval formalities for duty reduction or exemption granted for import or export goods before importing the goods.
ⅲ. Time limit for Customs acceptation: Customs shall complete the procedures for application to put on record and to examine and approve the duty reduction or exemption within 10 working days after the second day when accepting the application under the condition that the electronic data is doubtless as well as all the papers and documents are complete and valid. When, owning to such reasons as clearing the policies, limits of authority for examination and approval and technical index that shall ask the Customs General Administration for instructions, or because of other special conditions that the Customs is unable to complete the registration procedures during the specific time or to issue the Duty Imposition/Exemption Certificate for Import/Export Goods, Customs may use discretion to prolong the period after gaining the approval from the competent Customs Director or the person that is authorized.
II. Administrative Regulations
ⅰ. Application for duty reduction or exemption granted for goods must be based upon the purpose for private use. Enterprises and units shall not apply for and go through the formalities for duty reduction or exemption granted for goods for others in the name of themselves.
ⅱ. Goods granted with duty reduction or exemption belong to goods under Customs supervision and control. Throughout the period of Customs supervision and control, no unit (enterprise) or individual may sell, keep transfer, transpose, refit, rent, mortgage, impawn, shift to other use, or change the use area, the user or the use way of goods under specific duty reduction or exemption without Customs authorization. Units (enterprises) or individuals shall gain the Customs approval and go through the relevant formalities to deal with such affairs as listed above or other affairs.
ⅲ. Customs shall not accept the application for duty reduction or exemption if the project units (enterprises) do not apply to Customs for going through formalities for duty reduction or exemption before importing or exporting goods without any special reason.
ⅳ. Project units (enterprises) shall take the consequences of losing the Duty Imposition/Exemption Certificate for Import/Export Goods owning to their own reason.
ⅴ. Under the approval of the competent department for project modifications (including modifications of character of the enterprise, transfer of stock rights, name of the enterprise, legal address, time limit of cooperation, and list of equipment), project units (enterprises) that have been put on record for duty reduction or exemption shall apply to Customs for modifying the record that has been put on before.
ⅵ. Project units (enterprises) shall apply to competent Customs in advance to go through the corresponding formalities in accordance with the relevant regulations of Customs on condition that the ownership of the goods under duty reduction or exemption or the character of the project units (enterprises) are changing because of amalgamation, division, assets recomposition, modification or revocation of stock rights, dismission, bankruptcy or other reasons for termination of the units (enterprises).
ⅶ. Customs may conduct audits on account books, account vouchers, declaration forms and other relevant data as well as goods of the enterprises and units directly related to import and export activities within the period of Customs supervision and control over goods granted with duty reduction or exemption and three years afterwards.
ⅷ. The party concerned shall clear the Customs in advance when the goods under Customs supervision and control (including the goods granted with duty reduction or exemption under Customs supervision and control) will be dealt with in accordance with the judgement, decision of the people’s court or the decision of the relevant administrative departments.
ⅸ. Project units (enterprises) shall report the conditions of the goods granted with duty reduction or exemption to the competent Customs once a year after the release of such goods within the period of Customs supervision and control.
ⅹ. Customs supervision and control will be terminated automatically when the time limit of Customs supervision and control over equipment granted with duty reception or exemption is reached on condition that there is no performance violating the Customs regulations. Project units (enterprises) shall apply to Customs for termination with the hold of the relevant papers and documents if the control termination certificate is needed.
Periods of Customs supervision and control over goods under duty reduction or exemption are as follows:
1. Vessels, aircrafts: 8 years
2. Motor vehicles: 6 years
3. Other goods: 5 years
III. Relevant Provisions about Punishments of the Customs Law of the People’s Republic of China
……
Article 82
Breach of this Law and relevant laws and administrative regulations, evasion of Customs control, defraud payable impost, elusion of national inward and outward prohibition or restriction in any of the situations listed below shall be deemed as smuggling:

.……
ⅱ. to sell within the territory, without Customs permission and without having paid the payable duties and taxes or producing relevant licensing document, bonded goods, goods under specific duty reduction or exemption and other goods, articles or inward foreign means of transport under Customs control.

If any of the acts listed in the preceding paragraph does not constitute the crime of smuggling, the Customs may, while confiscating the smuggled goods, articles and illegal proceeds obtained therefrom, concurrently impose a fine on the person or persons concerned. When any of the acts listed in the first paragraph of this Article that constitutes a crime, the person or persons concerned shall be investigated for criminal liability according to law.
……
Article 86
A fine may be imposed for any of the following acts which violate this Law and the illegal proceeds obtained therefrom shall be confiscated if there any:
……
ⅹ. to open, and dismantle, collect, deliver, forward, transpose, refit, mortgage, impawn, keep transfer, replace label, shift to other use or conduct other treatment on goods under Customs supervision and control without Customs permission.