The Rules of the General Administration of Customs of the People’s Republic of China on the Levying of Duties and Taxes on Imported and Exported Goods, which were deliberated and adopted at the Executive Meeting of the General Administration of Customs on December 15, 2004, are hereby promulgated and shall come into force as of March 1, 2005. The Rules of Customs for the Administration of the Levying of Duties and Taxes promulgated on September 30, 1986 shall be repealed simultaneously.

Mu Xinsheng

Minister

General Administration of Customs

January 4, 2005

Rules of the General Administration of Customs of the People’s Republic of China on the Levying of Duties and Taxes on Imported and Exported Goods

(Adopted at the Executive Meeting of the General Administration of Customs on December 15, 2004, promulgated in the form of Decree No. 124 of the General Administration of Customs of the People’s Republic of China on January 4, 2005, and effective as of March 1, 2005)

Chapter I General Provisions

Article 1 These Rules are formulated in accordance with the Customs Law of the People’s Republic of China (hereinafter referred to as the Customs Law), the Regulations of the People’s Republic of China on Import and Export Duties (hereinafter referred to as the Regulations on Duties) and other relevant laws and administrative regulations with a view to ensuring the implementation of the duty and tax policies of the State, better administering the levying of Customs duties and taxes, upholding the rule of law in levying practices, safeguarding the State revenues, and protecting the lawful rights and interests of duty and tax payers.

Article 2 The levying of duties and taxes by Customs shall follow the principles of accurate classification, correct valuation, collection on the basis of applicable rates, reduction and exemption according to law, refunding and recovering duties and taxes by strict standards, and timely transfer of the paid duties and taxes to the State treasury.

Article 3 These Rules apply to the administration of the levying of import and export duties and import taxes collected by Customs on behalf of other authorities.

The administration of the levying of import taxes on incoming articles and vessel tonnage dues shall be carried out in accordance with the provisions of relevant laws, administrative regulations and departmental rules. In the absence of such provisions, these Rules shall apply.

Article 4 Customs shall undertake its confidentiality obligation in accordance with relevant provisions of the State and take good care of the materials involving commercial secrets that are provided by duty and tax payers. None of such materials shall be provided to any third party unless otherwise prescribed by any law or administrative regulation.

A duty and/or tax payer may request Customs in writing to keep confidential its commercial secrets by listing in detail the contents deserving confidentiality protection, but shall not refuse to provide relevant materials to Customs under any pretext of commercial secrets.

Chapter II Levying of Duties and Taxes on Imported and Exported Goods

Section One Declaration and Examination

Article 5 When importing or exporting goods, a duty and/or tax payer shall go through the declaration formalities with Customs in accordance with law and provide relevant documents as required. Where Customs considers it necessary, the duty and/or tax payer shall also provide such documentation as required to determine the classification, dutiable value, origin, etc. of the goods. Where the documentation provided is in a foreign language, if Customs deems it necessary, the duty and/or tax payer shall provide a Chinese translation, for the quality of which the duty and/or tax payer shall be responsible.

When importing or exporting any goods with duty and/or tax reduction or exemption except those as listed in Article 72 of these Rules, a duty and/or tax payer shall also submit the Duty/Tax Levied/Exempted Certificate for Imported/Exported Goods (hereinafter referred to as the Duty/Tax Levied/Exempted Certificate; see format in Annex 1) as issued by the competent Customs house.

Article 6 A duty and/or tax payer shall, in accordance with the provisions of relevant laws, administrative regulations and Customs rules on commodity classification, assessment of dutiable value, and administration of origin, file a bona fide declaration of the description, tariff code (commodity code), specification, model, value, freight and insurance cost, other relevant costs, origin, quantity, etc. of the imported or exported goods.

Article 7 To examine and determine the classification, dutiable value, origin, etc. of the imported or exported goods, Customs may ask a duty and/or tax payer to file an additional declaration in accordance with the relevant provisions. Where a duty and/or tax payer considers it necessary, it may offer to file an additional declaration on its own initiative.

Article 8 Customs shall, in accordance with the relevant laws, administrative regulations and Customs rules, examine the commodity description, specification, model, tariff code, origin, value, transaction terms, quantity, etc. of the imported or exported goods as declared by a duty and/or tax payer.

Customs may, based on the specific circumstances of clearance and those of the imported or exported goods, conduct only a procedural examination of the declared information at the release link, and then make a substantive check of the authenticity and accuracy of the declared value, classification, origin, etc. of the goods after the goods are released.

Article 9 In order to assess and determine the classification, dutiable value, origin, etc. of the imported or exported goods, Customs may examine the goods, organize laboratory testing and inspection of the goods, or conduct investigations on relevant enterprises.

Where, upon examination, Customs finds that the tariff code of the imported or exported goods as declared by a duty and/or tax payer is incorrect, it shall re-determine the tariff code in accordance with the relevant rules and provisions on commodity classification.

Where, upon examination, Customs finds that the value of the imported or exported goods as declared by a duty and/or tax payer does not correspond with the conditions for transaction value, or it is impossible to determine the transaction value, Customs shall reassess the value in accordance with relevant provisions on determining the dutiable value of imported or exported goods.

Where, upon examination, Customs finds that the origin of the imported or exported goods as declared by a duty and/or tax payer is incorrect, it shall, in accordance with the relevant provisions of Customs on the administration of origin, assess and determine the origin by checking the Certificate of Origin as provided by the duty and/or tax payer, conducting a physical examination of the goods, or examining other relevant documents, etc..

Where, upon examination, Customs finds that the application for duty and/or tax reduction or exemption, or any content contained therein, as filed by a duty and/or tax payer, fails to correspond with relevant provisions on duty and/or tax reduction or exemption, it shall calculate and levy the duties and/or taxes in accordance with applicable provisions.

In case a duty and/or tax payer has breached Customs provisions and is suspected of falsification or deception in its declaration, the case shall be handed over to the investigation or anti-smuggling unit of Customs for disposal.

Article 10 Prior to the actual importation or exportation of goods, a duty and/or tax payer may, in accordance with relevant provisions, file an application with Customs for advance classification, advance valuation, or advance determination of origin of the goods to be imported or exported. Upon completion of such advance procedures, Customs shall notify the duty and/or tax payer in writing of its opinion and acknowledge the validity of such opinion when the real act of importation or exportation occurs.

Section Two Levying of Duties and Taxes

Article 11 Customs shall calculate and levy duties and taxes on the basis of the tariff code, dutiable value and origin of the imported or exported goods in accordance with the applicable exchange rate, tariff rate and tax rate.

Article 12 Customs shall determine the applicable tariff rate for imported or exported goods in accordance with relevant provisions of the Regulations on Duties on the application of the MFN rate, the conventional rate, the preferential tariff rate, the general tariff rate, the export tariff rate, the tariff quota rate, or the interim tariff rate, as well as the applicable tariff rates during the imposition of anti-dumping, countervailing, safeguard measures or retaliatory duties.

Article 13 For any imported or exported goods, the valid tariff and tax rate for the day on which Customs accepts the import or export declaration shall apply.

Where, upon the approval of Customs, a declaration is filed before the arrival of the imported goods, the valid tariff and tax rate for the day on which the means of transport carrying the goods is declared for entry shall apply.

With respect to imported goods transshipped between different Customs regions, the valid tariff and tax rate for the day on which the Customs at the place of final destination accepts the import declaration of such goods shall apply. Where, upon the approval of Customs, a declaration is filed before the goods arrive at the place of final destination, the valid tariff and tax rate for the day on which the means of transport carrying the goods arrives at the place of final destination shall apply.

With respect to exported goods transshipped between different Customs regions, the valid tariff and tax rate for the day on which the Customs at the place of departure accepts the export declaration of such goods shall apply.

With respect to imported or exported goods as declared collectively upon the approval of Customs, the valid tariff and tax rate for the day on which Customs accepts the declaration for each import or export consignment of such goods shall apply.

For the calculation and levying of duties and/or taxes on imported goods sold by Customs in accordance with law as a result of failure on the part of the duty and/or tax payer to go through the declaration formalities within the prescribed time limit, the tariff and tax rate valid for the day on which the means of transport carrying the goods is declared for entry shall apply.

Where any duties and/or taxes for imported or exported goods need to be recovered due to the violation of relevant provisions by a duty and/or tax payer, the tariff and tax rate valid for the day on which the violation occurs shall apply. If the exact date of violation is unable to be determined, the tariff and tax rate valid for the day on which Customs detects the violation shall apply.

Article 14 Where, under any of the following circumstances, the payment of duties and/or taxes is required for bonded goods, goods with duty and/or tax reduction or exemption, or leased goods, which have been released upon entry declaration, or for goods temporarily admitted into or shipped out of the Chinese mainland that have been released upon entry or exit declaration, the tariff and tax rate valid for the day on which Customs accepts the declaration re-filed by the duty and/or tax payer to go through the duty and/or tax payment procedure and other relevant procedures shall apply:

(a) Upon approval, the bonded goods are not re-exported out of the Chinese mainland;

(b) The goods stored in a bonded warehouse are sold on the domestic market;

(c) Upon approval, the goods with duty and/or tax reduction or exemption are transferred, or used for other purposes;

(d) Upon approval, the goods temporarily admitted into or shipped out of the Chinese mainland for which the payment of duties and/or taxes is temporarily not required are not re-exported out of or shipped back to the Chinese mainland; or

(e) The duties and/or taxes for the goods imported on lease are paid by installment.

Article 15 In case any duties and/or taxes are to be recovered or refunded for imported or exported goods, the applicable tariff and tax rate shall be determined in accordance with the provisions of Articles 13 and 14 of these Rules.

Article 16 In case the value of imported or exported goods or the associated expenses are denominated in a foreign currency, Customs shall, for the purpose of calculating the dutiable value of the goods, convert them into RMB according to the valid exchange rate for the day on which the tariff rate is applied to the goods. The dutiable value shall be rounded off to RMB fen.

The exchange rate adopted monthly by Customs as the basis for the calculation of dutiable value shall be the basic exchange rate of RMB against foreign currencies as posted by the People's Bank of China on the third Wednesday of the previous month (the fourth Wednesday shall be an alternate to the third one if the latter falls on any statutory national holiday). If the value of the imported or exported goods are denominated in a foreign currency other than those covered by the basic exchange rate, the median (rounded off to 4 decimal places after RMB yuan) of the cash buying and selling rates as posted by the Bank of China on the same day shall apply. In the event of major currency fluctuations of the above rates, if the General Administration of Customs considers it necessary, it may otherwise prescribe the exchange rate applicable for the calculation and levying of duties and/or taxes at its own discretion, but shall make an announcement thereon to the public.

Article 17 Customs shall, in accordance with the Regulations on Duties, levy duties on imported and exported goods ad valorem, by quantity or by any other means as prescribed by the State.

Customs shall calculate and levy import taxes on imported goods in light of the applicable tax type, tax item, tax rate and calculation formula as prescribed in relevant laws and administrative regulations.

Unless otherwise provided for, Customs duties and import taxes shall be calculated in accordance with the following formulas:

Formula for calculating ad valorem duty: Duty Payable = Dutiable Value × Tariff Rate

Formula for calculating specific duty: Duty Payable = Quantity of Goods × Unit Duty

Formula for calculating import VAT: Tax Payable = (Dutiable Value + Duties Levied + Consumption Tax Levied) × VAT Rate

Formula for calculating import consumption tax ad valorem: Tax Payable = [(Dutiable Value + Duties Levied) / (1 - Consumption Tax Rate)] × Consumption Tax Rate

Formula for calculating import consumption tax by quantity: Tax Payable = Quantity of Goods × Unit Consumption Tax

Article 18 Unless otherwise provided for, Customs shall fill out and issue a Duty/Tax Payment Record in a timely manner after the entry of goods has actually taken place and document inspection has been completed at the Customs operational site upon Customs’ acceptance of the import declaration. Where an examination of the goods is needed to determine the classification, dutiable value or origin of the goods, the Duty/Tax Payment Record shall be issued or altered after the examination is completed.

The duty and/or tax payer shall sign and go through the relevant formalities for receipt of the Duty/Tax Payment Record upon receiving the record.

Article 19 The Customs Duty/Tax Payment Record shall be made in sextuplicate (see format in Annex 2). The first copy (receipt) shall be given to the payment-making organization or the duty and/or tax payer, after being sealed by the bank upon receipt of the payment. The second copy (certificate of payment) shall be kept by the deposit bank of the payment-making organization as a certificate of payment made. The third copy (certificate of payment collection) shall be kept by the State treasury to which the payment is made as a certificate of payment received. The fourth copy (return receipt) shall be returned to the financial department of the Customs, after being sealed by the State treasury. For the fifth copy (verification copy), after the State treasury has received the payment, the Customs duty payment record shall be returned to the Customs, and the Customs tax payment record for import taxes shall be sent to the local tax authority. The sixth copy (stub) shall be archived by the record-issuing unit.

Article 20 A duty and/or tax payer shall make the payment to the designated bank within 15 days as from the date on which the Duty/Tax Payment Record is issued by Customs. Any duty and/or tax payer failing to make the payment within such time limit shall pay a late fine of 0.05% of the amount of the outstanding duties and/or taxes per day from the day on which the time limit expires until the day on which the outstanding duties and/or taxes are paid. The duty and/or tax payer shall pay the late fine to the designated bank within 15 days as from the date on which a Late Fine Payment Record is issued by Customs. The format of the Late Fine Payment Record is the same as that of the Duty/Tax Payment Record.

In case the day on which the time limit expires falls on an off day such as Saturday or Sunday or any statutory national holiday, the first working day after the off day or the statutory holiday shall be the alternate due date. If the off and working days are adjusted on a temporary basis by the State Council, Customs shall calculate the time limit in light of the adjustment.

Article 21 The Customs duties, import taxes, late fines, etc. shall be calculated and levied in terms of RMB and rounded off to RMB fen.

The threshold for a late fine shall be 50 RMB yuan.

Article 22 The day on which the bank receives the payment of all the duties and/or taxes payable shall be regarded as the day on which the duty and/or tax payer settles the duties and/or taxes. The duty and/or tax payer shall, after paying the duties and/or taxes to the bank, send the Duty/Tax Payment Record sealed by the bank upon receipt of the payment in a timely manner to the Customs issuing the record for verification. Customs shall then make a note on the record accordingly.

If a bank is found to have failed to transfer the duties and/or taxes in good time and in full amount to the State treasury in accordance with the relevant provisions, Customs shall notify the latter of such information.

Article 23 In case a duty and/or tax payer has lost the Duty/Tax Payment Record inadvertently before the payment is made, it may file a written application with the issuing Customs for re-issuance of the record. The Customs shall, within two (2) working days upon receipt of the application as filed by the duty and/or tax payer, examine the application and re-issue the Duty/Tax Payment Record upon verification. The contents in the record re-issued by Customs shall be completely identical with those in the original.

Should a Duty/Tax Payment Record be lost after the payment of duties and/or taxes is made, the duty and/or tax payer may, within one (1) year as from the date on which the payment is made, file a written application with the issuing Customs for confirming the payment. Upon verification, the Customs shall make a confirmation but shall not re-issue the record to the duty and/or tax payer.

Article 24 Where a duty and/or tax payer is unable to pay the duties and/or taxes within the time limit due to force majeure or change of the tax policies of the State, it shall, before the goods are imported or exported, file a written application for time limit extension with the regional Customs that supervises the Customs house where its import/export declaration and duty/tax payment formalities are handled, with the relevant materials attached, and provide a payment plan to the regional Customs.

When the goods have been physically imported or exported, if the duty and/or tax payer requests Customs to release the goods before duty and/or tax payment, it shall provide the latter with a security for the duties and/or taxes payable.

Article 25 The regional Customs shall, within 10 days upon receipt of the duty and/or tax payer’s application for extension of the time limit for duty and/or tax payment, verify the circumstances as stated in the application. If the circumstances as stated in the application are found to be true, the regional Customs shall immediately submit the application materials to the General Administration of Customs. The General Administration of Customs shall, within 20 days upon receipt of the application materials, make a decision on whether or not to approve the time limit extension, and if yes, how long the extended time limit will be, and then notify the regional Customs that has submitted the application materials of its decision. In case it is impossible to make a decision within 20 days due to special circumstances, another 10 days may be allowed at the discretion of the General Administration of Customs.

The extended time limit for duty and tax payment shall not exceed six (6) months as from the date on which the goods are released.

If the duty and/or tax payer pays the duties and/or taxes within the extended time limit approved by Customs, no late fine will be imposed. Failure to pay within the extended time limit will result in a late fine of 0.05% of the amount of the outstanding duties and/or taxes per day as from the day on which the extended time limit expires until the day on which the outstanding duties and/or taxes are paid.

Article 26 Where the General Administration of Customs disapproves an application for time limit extension for duty and/or tax payment, the regional Customs shall, within three (3) working days upon receipt of the decision of disapproval issued by the General Administration of Customs, notify the duty and/or tax payer of the decision and issue the Duty/Tax Payment Record.

The duty and/or tax payer shall pay the duties and/or taxes to the designated bank within 15 days as from the date on which Customs issues the Duty/Tax Payment Record. Failure to pay within the time limit will result in a late fine of 0.05% of the amount of outstanding duties and/or taxes per day as from the day on which the time limit expires until the day on which the outstanding duties and/or taxes are paid.

Article 27 When the quantity of goods imported or exported in bulk is more or less than that specified in the contract or invoice, the following provisions shall apply:

(a) Where the actual quantity is more than that specified in the contact or invoice but within a 3% margin, or less than that specified in the contract or invoice, Customs shall calculate and levy duties and/or taxes on the basis of the unit price of the goods determined and the quantity specified in the contract or invoice; or

(b) Where the actual quantity is over 3% more than that specified in the contract or invoice, Customs shall calculate and levy duties and/or taxes on the basis of the unit price determined and the actual quantity of the goods imported or exported.

Article 28 If a duty and/or tax payer or its surety fails to pay the duties and/or taxes or the late fine within three (3) months as from the date on which the time limit for duty and/or tax payment expires, Customs may impose mandatory measures in accordance with Article 60 of the Customs Law.

Where there are obvious signs that a duty and/or tax payer is trying to transfer or hide its dutiable goods or other assets within the prescribed time limit for duty and/or tax payment, Customs may order it to provide a security on the duties and/or taxes. Where the duty and/or tax payer is unable to provide such a security, Customs may take duty and/or tax revenue preservation measures in accordance with Article 61 of the Customs Law.

The detailed rules for the application of mandatory and duty and/or tax revenue preservation measures are to be formulated separately.

Chapter III Levying of Duties and Taxes on Special Imports and Exports

Section One Goods Offered at No Cost as Compensation or Replacement

Article 29 Imported goods offered at no cost as compensation or replacement are exempted from import duties and import taxes. Exported goods offered at no cost as compensation or replacement are exempted from export duties.

The term “goods offered at no cost as compensation or replacement” as mentioned in the preceding paragraph refers to the goods identical with the original imported or exported goods or conforming to the contract, which are, after the original goods are released by Customs, offered free of charge by the consigner, carrier or insurer of the original goods as compensation or replacement, due to such reasons as damage, short shipment, inferior quality, or incompatible specification, of the original goods.

Article 30 With respect to the import or export of goods offered at no cost as compensation or replacement, the duty and/or tax payer shall go through the declaration formalities within the claim period as stipulated in the original import or export contract and within three (3) years as from the day on which the original goods are imported or exported.

Article 31 In declaring to Customs import goods offered at no cost as compensation or replacement, the duty and/or tax payer shall present the following papers:

(a) the declaration form for the original imports;

(b) the export declaration form for shipping the original imports out of the Chinese mainland or the Goods Abandoned Certificate proving the abandonment of the original imports to Customs;

(c) the Duty/Tax Payment Record or the Duty/Tax Levied/Exempted Certificate for the original imports; and

(d) the claim agreement signed by and between the seller and the buyer.

With respect to import of goods offered at no cost as compensation due to short shipment of the original imports, papers as specified in Item (b) of the preceding paragraph will not be required.

Where Customs considers it necessary, the duty and/or tax payer shall also present the inspection certificate confirming the damage, short shipment, inferior quality, or incompatible specification of the original imports, as issued by a qualified commodity inspection agency, or other relevant evidentiary documents.

Article 32 In declaring to Customs export goods offered at no cost as compensation or replacement, the duty and/or tax payer shall present the following papers:

(a) the declaration form for the original exports;

(b) the import declaration form for shipping the original exports back to the Chinese mainland;

(c) the Duty/Tax Payment Record or the Duty/Tax Levied/Exempted Certificate for the original exports; and

(d) the claim agreement signed by and between the seller and the buyer.

With respect to export of goods offered at no cost as compensation due to short shipment of the original exports, papers as specified in Item (b) of the preceding paragraph will not be required.

Where Customs deems it necessary, the duty and/or tax payer shall also present the inspection certificate confirming the damage, short shipment, inferior quality, or incompatible specification of the original exports, as issued by a qualified commodity inspection agency, or other relevant evidentiary documents.

Article 33 Where goods offered at no cost as compensation or replacement as declared by the duty and/or tax payer for import or export are not completely identical with the original goods that are shipped out of or back to the Chinese mainland as returned goods, or are not in full conformity with the stipulations of the contract, the duty and/or tax payer shall state the reason(s) to Customs.

Where, upon examination, Customs considers the reason(s) justifiable, and the tariff code of the goods has remain unchanged, Customs shall, in light of the relevant provisions on determining the dutiable value of imports or exports and the applicable exchange rate, tariff rate and tax rate for the original imports or exports, assess and determine the dutiable value and the duties and/or taxes payable by the duty and/or tax payer. If the duties and/or taxes payable surpass those already paid for the original imports or exports, the difference between them shall be levied. In case the duties and/or taxes payable fall short of those already paid for the original imports or exports, and the consigner, carrier or insurer has refunded the goods payment, Customs shall refund the corresponding duties and/or taxes for the refunded goods payment. In case such goods payment fails to be refunded, the difference between the duties and/or taxes payable and those already paid shall not be refunded.

For any goods offered free of charge as compensation or replacement as declared by the duty and/or tax payer for import or export, if their tariff code fails to conform to that of the original goods, relevant provisions on “goods offered at no cost as compensation or replacement” shall not apply. In such a case, Customs shall levy duties and/or taxes on them according to the relevant provisions on regular import or export goods.

Article 34 With respect to any goods offered at no cost as compensation or replacement as declared by the duty and/or tax payer for import or export, if the original imports thus replaced fail to be shipped out of the Chinese mainland or be abandoned to Customs, or if the original exports thus replaced fail to be shipped back to the Chinese mainland, Customs shall re-assess the dutiable value of the original imports or exports and levy duties and/or taxes on them in accordance with relevant provisions on the basis of the applicable tariff rate, tax rate and exchange rate valid for the day on which the import or export declaration for the goods offered at no cost as compensation or replacement is accepted by Customs.

Article 35 No export duties will be levied on the original imports as have been replaced when they are shipped out of the Chinese mainland.

No import duties or import taxes will be levied on the original exports as have been replaced when they are shipped back to the Chinese mainland.

Section Two Goods Imported on Lease

Article 36 In importing any goods on lease, a duty and/or tax payer shall, unless otherwise provided for, go through the import declaration and duty/tax payment formalities with the Customs at the place of its location.

In filing an import declaration for leased goods, the duty and/or tax payer shall present to Customs the lease contract and other relevant documents. Where Customs deems it necessary, the duty and/or tax payer shall also provide Customs with a security on duties and/or taxes payable for the goods.

Article 37 Goods imported on lease shall be subject to Customs control from the date of entry until the day on which the Customs formalities are concluded with the termination of the lease.

Where the duty and/or tax payer pays the lease fee in a lump sum, it shall go through the duty/tax payment procedures and pay the duties and/or taxes at the time when the import declaration of the leased goods is filed.

Where the duty and/or tax payer pays the lease fee by installment, it shall, at the time when the import declaration of the leased goods is filed, go through the duty/tax payment formalities and pay the duties and/or taxes in proportion to the first installment of the lease fee. When paying any of the subsequent installments of the lease fee, the duty and/or tax payer shall, no later than the 15th day as from the date on which the subsequent installment is paid, go through the declaration and duty/tax payment formalities with Customs. Where the duty and/or tax payer fails to go through such formalities for any subsequent installment within the time limit, Customs shall levy the corresponding duties and/or taxes on the basis of the applicable exchange rate, tariff rate and tax rate valid on the 15th day as from the date on which the subsequent installment is paid, and impose a late fine of 0.05% of the amount of the duties and/or taxes payable per day as from the day on which the time limit for declaration and duty/tax payment as prescribed in this Article expires until the day on which such declaration and payment is made by the duty and/or tax payer.

Article 38 Customs shall exercise follow-up oversight over the goods imported on lease and urge the duty and/or tax payer to go through the declaration and duty/tax payment formalities in time, so as to ensure the timely, full-amount handover of the duties and/or taxes payable to the State treasury.

Article 39 A duty and/or tax payer shall, within 30 days as from the date on which the lease of the imported goods expires, file an application for clearing the Customs, and ship the goods imported on lease out of the Chinese mainland. In case the duty and/or tax payer needs to purchase the goods or renew the lease, it shall, no later than the 30th day as from the date on which the lease of the imported goods expires, declare to Customs and go through the relevant procedures with Customs.

With respect to purchase of the goods imported on lease, Customs shall determine the dutiable value and levy the duties and/or taxes payable in accordance with the relevant provisions on the determination of dutiable value of imported goods, as well as the applicable exchange rate, tariff rate and tax rate valid for the day on which Customs accepts the declaration for the purchase and handles the relevant formalities.

With respect to renewal of lease of the goods that have been imported, the duty and/or tax payer shall present the lease renewal contract to Customs, and go through the declaration and duty/tax payment formalities according to the relevant provisions of Articles 36 and 37 of these Rules.

Article 40 Where the duty and/or tax payer fails to, within the time limit as prescribed in Paragraph 1 of Article 39 of these Rules, go through the declaration and other relevant formalities for purchasing the goods imported on lease, Customs shall determine the dutiable value in accordance with the relevant provisions on the determination of dutiable value of import goods and levy the duties and/or taxes payable on the basis of the applicable exchange rate, tariff rate and tax rate valid on the 30th day as from the date on which the lease of the goods expires. In addition, Customs shall impose a late fine of 0.05% of the amount of the duties and/or taxes payable per day as from the 30th day upon expiration of the lease until the day on which the declaration and duty/tax payment is made by the duty and/or tax payer.

Where the duty and/or tax payer fails to, within the time limit as prescribed in Paragraph 1 of Article 39 of these Rules, go through the declaration and other relevant formalities for renewing the lease of the goods that have been imported, Customs shall not only levy the duties and/or taxes payable for the goods imported on a renewed release in accordance with Article 37 of these Rules, but also impose a late fine of 0.05% of the amount of the duties and/or taxes payable per day as from the 30th day upon expiration of the lease until the day on which the declaration and duty/tax payment is made by the duty and/or tax payer.

Article 41 Where the lease of the imported goods is terminated prior to its expiration, the date on which the lease is terminated shall be regarded as the date of expiration.

Section Three Temporary Entry and Exit of Goods

Article 42 Customs shall, according to relevant provisions, oversee the goods that temporarily enter or leave the Chinese mainland upon its approval.

Article 43 Payment of duties and taxes for goods temporarily admitted into or shipped out of the Chinese mainland as listed in Paragraph 1 of Article 42 of the Regulations on Duties may be exempted on a temporary basis within the time limit as prescribed by Customs.

If any of the goods temporarily admitted into or shipped out of the Chinese mainland as mentioned in the preceding paragraph are not to be re-exported out of or shipped back to the Chinese mainland after the time limit expires, the duty and/or tax payer shall go through the import or export declaration and duty/tax payment formalities with Customs prior to the expiration of the time limit. Customs shall then levy duties and/or taxes in accordance with the relevant provisions.

Article 44 For any of the goods temporarily admitted into or shipped out of the Chinese mainland as are not listed in Paragraph 1 of Article 42 of the Regulations on Duties, Customs shall, according to relevant provisions on the determination of dutiable value of imports or exports and on the basis of the applicable exchange rate, tariff rate and tax rate valid for the day on which the entry or exit declaration of the goods is accepted by Customs, determine the dutiable value of the goods and levy the duties and/or taxes payable for the goods either on a monthly basis or at the time when the goods are re-exported out of or shipped back to the Chinese mainland within the prescribed time limit.

The time limit for the assessment and levying of the duties and/or taxes shall be 60 months. If the goods stay for more than 15 days but less than one month, it shall be regarded as a full month for the assessment and levying of duties and/or taxes. In case the goods stay for less than 15 days, no duties or taxes will be levied. Such time limit shall be counted as from the date on which the goods are released by Customs.

The formula for calculating the duties and taxes on a monthly basis shall be:

Monthly Amount of Duties = Total Amount of Duties × (1/60)

Monthly Amount of Import Taxes = Total Amount of Import Taxes × (1/60)

Where any of the goods temporarily admitted into or shipped out of the Chinese mainland as mentioned in the first paragraph of this Article are not to be re-exported out of or shipped back to the Chinese mainland after the time limit expires, the duty and/or tax payer shall, prior to the expiration of the time limit, go through the import or export declaration and duty/tax payment formalities with Customs and pay the outstanding duties and/or taxes.

Article 45 Where any of the goods temporarily admitted into or shipped out of the Chinese mainland fail to be re-exported out of or shipped back to the Chinese mainland within the time limit, if the duty and/or tax payer fails to go through the import or export declaration and duty/tax payment formalities with Customs prior to the expiration of the time limit, Customs shall not only levy the duties and/or taxes payable in accordance with relevant provisions, but also impose a late fine of 0.05% of the amount of the duties and/or taxes payable per day as from the date on which the time limit expires until the day on which the declaration and payment is made by the duty and/or tax payer.

Article 46 The “time limit” as mentioned in Articles 43 to 45 of these Rules shall cover the extended period granted by Customs for the goods temporarily admitted into or shipped out of the Chinese mainland to be re-exported or shipped back.

Section Four Entry and Exit of Goods for Repair and Exit of Goods for Processing

Article 47 When going through the import declaration procedure for entry of any goods for repair, the duty and/or tax payer shall present to Customs the maintenance and repair contract of the goods (or the original export contract that contains a warranty clause), and provide a security on the import duties and/or taxes or subject the goods to the administration of Customs under the category of bonded goods. The goods temporarily admitted into the Chinese mainland for repair shall be re-exported within the time limit prescribed by Customs.

When the import of any raw materials or spare/component parts is needed for fixing the goods temporarily admitted for repair, the duty and/or tax payer shall, when going through the import declaration procedure for the raw materials or spare/component parts, submit to Customs the maintenance and repair contract of the goods (or the original export contract that contains a warranty clause) and the import declaration form for the goods (not required for the raw materials or spare/component parts which are imported and declared together with the goods), and provide a security on the import duties and/or taxes or subject the goods to the administration of Customs under the category of bonded goods. The raw materials or spare/component parts thus imported shall be used exclusively for repairing the goods. All of their residuals upon completion of the repair shall be re-exported out of the Chinese mainland together with the goods.

Article 48 When going through the re-exportation declaration procedure for any goods temporarily admitted for repair as well as the residuals of the raw materials or spare/component parts imported for repairing the goods, the duty and/or tax payer shall submit to Customs such papers as the original import declaration form for the goods and the raw materials or spare/component parts subsequently imported, as well as the maintenance and repair contract (or the original export contract that contains a warranty clause). Upon the strength of those documents, Customs shall then handle relevant formalities for canceling the security on the duties and/or taxes as provided by the duty and/or tax payer when the goods as well as the raw materials or spare/component parts were temporarily admitted. If they have been put under Customs control under the category of bonded goods, relevant provisions on the administration of bonded goods shall apply.

Where, due to justifiable reasons, any of the goods temporarily admitted for repair are unable to be re-exported out of the Chinese mainland within the time limit as prescribed by Customs, the duty and/or tax payer shall, prior to the expiration of the time limit, make a statement of the reasons and file an application with Customs for time limit extension.

Article 49 Where any goods temporarily admitted for repair fail to be re-exported out of the Chinese mainland within the time limit (including the extended period; the same below) as permitted by Customs, Customs shall exercise control over them in accordance with relevant provisions on the levying and administration of duties and taxes for regular import or export goods, and convert the security on the duties and/or taxes, as provided by the duty and/or tax payer when the goods were temporarily admitted into the Chinese mainland, into the payment of the duties and/or taxes.

Article 50 When going through the export declaration procedure for goods to be temporarily shipped out of the Chinese mainland for repair, the duty and/or tax payer shall submit to Customs the maintenance and repair contract of the goods (or the original import contract that contains a warranty clause). Such goods shall be shipped back to the Chinese mainland within the time limit as prescribed by Customs.

Article 51 When going through the import declaration procedure for goods temporarily shipped out of the Chinese mainland for repair and then shipped back, the duty and/or tax payer shall submit to Customs such papers as the original export declaration form for the goods, the maintenance and repair contract of the goods (or the original import contract that contains a warranty clause), and the maintenance and repair invoice.

Customs shall determine the dutiable value and levy the import duties and/or taxes on the goods in accordance with relevant provisions on the determination of dutiable value of imported goods and the applicable exchange rate, tariff rate and tax rate valid for the day on which the declaration for shipping the goods back to the Chinese mainland is accepted by Customs.

Where, due to justifiable reasons, any of the goods temporarily shipped out of the Chinese mainland for repair are unable to be shipped back within the time limit as prescribed by Customs, the duty and/or tax payer shall, prior to the expiration of the time limit, make a statement of the reasons and file an application with Customs for time limit extension.

Article 52 Where any of the goods temporarily shipped out of the Chinese mainland for repair are shipped back beyond the time limit as permitted by Customs, Customs shall levy import duties and/or taxes on the goods in accordance with relevant provisions concerning the levying of duties and/or taxes on regular import goods.

Article 53 When going through the export declaration procedure for goods temporarily shipped out of the Chinese mainland for processing purpose, the duty and/or tax payer shall submit to Customs the contract of entrusted processing of the goods. If such goods fall into any category of commodities that are subject to payment of export duties, the duty and/or tax payer shall provide Customs with a security on export duties. The goods shall be shipped back to the Chinese mainland within the time limit as prescribed by Customs.

Article 54 When going through the import declaration formalities for goods temporarily shipped out of the Chinese mainland for processing purpose and then shipped back, the duty and/or tax payer shall submit to Customs such papers as the original export declaration form and the contract of entrusted processing of the goods, as well as the processing invoice.

Customs shall determine the dutiable value and levy import duties and/or taxes on the goods in accordance with relevant provisions on the determination of dutiable value of imported goods and the applicable exchange rate, tariff rate and tax rate valid for the day on which the declaration for shipping the goods back to the Chinese mainland is accepted by Customs, and handle relevant formalities for canceling the security on the duties and/or taxes, as provided by the duty and/or tax payer when the goods were temporarily shipped out of the Chinese mainland.

Where, due to justifiable reasons, any of the goods temporarily shipped out of the Chinese mainland for processing purpose are unable to be shipped back within the time limit as prescribed by Customs, the duty and/or tax payer shall, prior to the expiration of the time limit, make a statement of the reasons and file an application with Customs for time limit extension.

Article 55 Where any of the goods temporarily shipped out of the Chinese mainland for processing purpose fail to be shipped back within the time limit as permitted by Customs, Customs shall exercise control over them in accordance with relevant provisions concerning the levying of duties and/or taxes on regular import or export goods, and convert the security on the duties and/or taxes, as provided by the duty and/or tax payer when the goods were temporarily shipped out of the Chinese mainland, into the payment of the duties and/or taxes. When such goods are subsequently shipped back to the Chinese mainland, Customs shall levy import duties and/or taxes in accordance with relevant provisions concerning the levying of duties and/or taxes on regular import goods.

Article 56 The “time limit as prescribed by Customs” and the “time limit as permitted by Customs” as mentioned in Articles 47 to 55 of these Rules shall be determined by Customs on the basis of relevant contractual stipulations on the goods temporarily shipped out of or into the Chinese mainland for repair or the goods temporarily shipped out of the Chinese mainland for processing, as well as the specific circumstances.

Section Five Returned Goods

Article 57 Where, due to the reason of quality or specification, any exported goods are shipped in their original shape back to the Chinese mainland as returned goods within one (1) year as from the date on which they are released by Customs, the duty and/or tax payer shall, when going through the import declaration procedure for such goods, submit relevant papers, certificates and other evidentiary documents in accordance with the relevant provisions. Upon verification and approval by Customs, no import duties or import taxes will be levied on such original exports that are shipped back to the Chinese mainland.

Article 58 Where, due to the reason of quality or specification, any imported goods are shipped in their original shape out of the Chinese mainland as returned goods within one (1) year as from the date on which they are released by Customs, the duty and/or tax payer shall, when going through the export declaration procedure for such goods, submit relevant papers, certificates and other evidentiary documents in accordance with the relevant provisions. Upon verification and approval by Customs, no export duties will be levied on such original imports that are shipped out of the Chinese mainland.

Chapter IV Refund and Recovery of Duties and Taxes for Imports and Exports

Article 59 Where Customs detects any overpaid duties and/or taxes, it shall immediately notify the duty and/or tax payer to go through the duty and/or tax refund formalities. The latter shall then go through the duty and/or tax refund formalities within three (3) months upon receipt of the notification.

Article 60 Where a duty and/or tax payer discovers any overpaid duties and/or taxes, it may, within one (1) year as from the date on which the duties and/or taxes are paid, file an application with Customs for Customs to refund the overpaid duties and/or taxes and pay the current deposit interest of the corresponding period.

When filing the application with Customs for Customs to refund the overpaid duties and/or taxes and pay the interest, the duty and/or tax payer shall submit the following materials:

(a) the Duty/Tax Refund Application Form (see format in Annex 3); and

(b) the original Duty/Tax Payment Record, and the materials that justify the refund.

Article 61 Where any imported goods with duties and/or taxes paid are shipped in their original shape out of the Chinese mainland as returned goods due to the reason of quality or specification, the duty and/or tax payer may, within one (1) year as from the date on which the duties and/or taxes are paid, file an application with Customs for Customs to refund the duties and/or taxes.

When filing the application with Customs for Customs to refund the duties and/or taxes, the duty and/or tax payer shall submit the following materials:

(a) the Duty/Tax Refund Application Form;

(b) the original import declaration form, the Duty/Tax Payment Record, and the invoice;

(c) the export declaration form for shipping the goods out of the Chinese mainland; and

(d) the agreement signed by and between the consigner and the consignee on returning the goods.

Article 62 Where any duty-paid export goods are shipped back in their original shape to the Chinese mainland as returned goods due to the reason of quality or specification, if the duty and/or tax payer has repaid the internal taxes rebated for export, it may, within one (1) year as from the date on which the duties are paid, file an application with Customs for Customs to refund the duties.

When filing the application with Customs for Customs to refund the duties, the duty and/or tax payer shall submit the following materials:

(a) the Duty/Tax Refund Application Form;

(b) the original export declaration form, the Duty/Tax Payment Record, and the invoice;

(c) the import declaration form for shipping the goods back to the Chinese mainland; and

(d) the agreement signed by and between the consigner and the consignee on returning the goods, and the evidentiary document proving the repayment of the internal taxes rebated for export as issued by the tax authority.

Article 63 Where an application is filed for canceling the declaration of duty-paid export goods that fail to be loaded and exported for any reason, the duty and/or tax payer may, within one (1) year as from the date on which the duties are paid, file an application with Customs for Customs to refund the duties.

When filing the application with Customs for Customs to refund the duties, the duty and/or tax payer shall submit the following materials:

(a) the Duty/Tax Refund Application Form; and

(b) the original export declaration form and the Duty/Tax Payment Record.

Article 64 Where any imports or exports in bulk are short shipped, yet the duties and/or taxes have been paid and the goods released by Customs, if the consigner, carrier or insurer has refunded or compensated for the payment of the short shipped part of the goods, the duty and/or tax payer may, within one (1) year as from the day on which the duties and/or taxes are paid, file an application with Customs for Customs to refund the corresponding duties and/or taxes for the short shipped part of the goods.

When filing the application with Customs for Customs to refund the duties and/or taxes, the duty and/or tax payer shall submit the following materials:

(a) the Duty/Tax Refund Application Form;

(b) the original import or export declaration form, the Duty/Tax Payment Record, and the invoice;

(c) the relevant inspection certificate issued by a qualified commodity inspection agency; and

(d) the evidentiary document(s) proving that the refund of or compensation for the payment of the short shipped part of the goods has been made.

Article 65 Where relevant payment for the imports or exports are compensated for by the consigner, carrier or insurer due to damage, inferior quality, or incompatible specification of the goods, or in connection with any circumstances of short shipment of goods except those as prescribed in Article 64 of these Rules, the duty and/or tax payer may, within one (1) year as from the day on which the duties and/or taxes are paid, file an application with Customs for Customs to refund the corresponding duties and/or taxes for the compensated amount of the goods payment.

When filing the application with Customs for Customs to refund the duties and/or taxes, the duty and/or tax payer shall submit the following materials:

(a) the Duty/Tax Refund Application Form;

(b) the original import or export declaration form, the Duty/Tax Payment Record, and the invoice; and

(c) the evidentiary document(s) proving that the compensation for the goods payment has been made.

Article 66 Customs shall examine the refund application as filed by the duty and/or tax payer upon receipt of the application. If the application materials so submitted are complete and conform to the prescribed format, Customs shall accept the application, and regard the day on which the materials are received as the day on which the application is accepted. In case the application materials so submitted are incomplete or fail to conform to the prescribed format, Customs shall, within five (5) working days as from the day on which the application materials are received, notify the duty and/or tax payer, at one time, of all the materials or information to be added or modified, and regard the day on which all such materials and information are received as the day on which the refund application is accepted.

Where the duty and/or tax payer files an application for Customs to refund the duties and/or taxes in accordance with Articles 61, 62 or 65 of these Rules, if Customs considers it necessary, it may demand the duty and/or tax payer to provide the inspection certificate as issued by a qualified commodity inspection agency confirming the inferior quality, incompatible specification, short shipment of, or damage to, the original imports or exports, or any other relevant evidentiary document.

Customs shall, within 30 days as from the day on which the refund application is accepted, verify the facts, and notify the duty and/or tax payer of its decision on whether or not to refund the duties and/or taxes. The duty and/or tax payer shall, within three (3) months upon receipt of the Customs notification approving the refund, go through the relevant refund formalities with Customs.

Article 67 When handling the refund formalities, Customs shall fill out and issue a Payment Refund Record (see format in Annex 4) and observe the following provisions:

(a) Where interest shall also be paid for the overpaid duties and/or taxes refundable in accordance with Article 60 of these Rules, the interest payable shall be calculated on the basis of the current deposit interest rate as posted by the People's Bank of China on the day on which the Payment Refund Record is issued by Customs. The period for which the interest shall be paid shall be from the day on which the duty and/or tax payer pays the duties and/or taxes until the day on which the Payment Refund Record is issued by Customs.

(b) Any import VAT that has already been deducted shall be nonrefundable, unless otherwise provided for by the State.

(c) Any late fine that has already been paid shall be nonrefundable.

Should the refundable duties and/or taxes as well as the interest payable need to be withdrawn from the State treasury, such withdrawal shall be carried out in accordance with the provisions of laws and administrative regulations regarding the administration of the State treasury as well as the relevant detailed implementation rules.

Article 68 Where Customs detects any duties and/or taxes underpaid after the imported or exported goods are released, it shall, within one (1) year as from the date on which the original duties and/or taxes are paid, recover the unpaid part of the duties and/or taxes from the duty and/or tax payer. Where Customs detects any duties and/or taxes that should have been but fail to be levied, it shall, within one (1) year as from the date on which the goods are released, recover the duties and/or taxes that fail to be levied, from the duty and/or tax payer.

Article 69 Where it is the violation of relevant provisions by the duty and/or tax payer that has resulted in the underpayment of the duties and/or taxes, Customs shall, within three (3) years as from the date on which the original duties and/or taxes are paid, recover the underpaid part of the duties and/or taxes. Where it is because of the violation of relevant provisions by the duty and/or tax payer that duties and/or taxes fail to be levied, Customs shall, within three (3) years as from the date on which the goods are released, recover the duties and/or taxes that fail to be collected. Customs shall ask the duty and/or tax payer to pay, in addition to the duties and/or taxes underpaid or not collected, a late fine of 0.05% of the amount of the duties and/or taxes underpaid or not collected per day as from the day on which the original duties and/or taxes are paid or the day on which the goods are released until the day on which Customs detects the violation.

Where the duties and/or taxes on any goods subject to Customs control are underpaid or fail to be collected due to violation of relevant provisions by the duty and/or tax payer, Customs shall, within three (3) years as from the day on which the duties and/or taxes should have been paid by the duty and/or tax payer, recover the duties and/or taxes underpaid or not collected and impose a late fine of 0.05% of the amount of the duties and/or taxes underpaid or not collected per day as from the day on which the duties and/or taxes should have been paid until the day on which Customs detects the violation.

The term “the day on which the duties and/or taxes should have been paid” as mentioned in the preceding paragraph refers to the day when the violation by the duty and/or tax payer occurs. If the day on which the violation occurs is unable to be determined, the day on which Customs detects the violation shall be regarded as the day on which the duties and/or taxes should have been paid.

Article 70 For recovery of the duties and/or taxes underpaid or not collected, Customs shall issue a Customs Notification for Duty/Tax Recovery (see format in Annex 5). The duty and/or tax payer shall, within 15 days upon receipt of such notification, go through the remedial payment formalities with Customs.

Where the duty and/or tax payer fails to go through the remedial payment formalities within the time limit as prescribed in the preceding paragraph, Customs shall issue the Duty/Tax Payment Record on the day on which such time limit expires.

Article 71 Where, resulting from its violation of relevant provisions, a duty and/or tax payer is required to pay, in addition to the duties and/or taxes, a late fine in accordance with Articles 37, 40, 45 and 69 of these Rules, if it fails to pay the duties and/or taxes within the prescribed time limit of 15 days, Customs shall, in accordance with Article 20 of these Rules, impose another late fine for the outstanding duties and/or taxes as from the day on which such time limit expires until the day on which the outstanding duties and/or taxes are paid.

Chapter V Duty and Tax Reduction and Exemption for Imported and Exported Goods

Article 72 Where a duty and/or tax payer imports or exports any goods with duty and/or tax reduction or exemption, it shall, before the import or export of the goods, go through the duty and/or tax reduction or exemption approval formalities with Customs in accordance with the relevant provisions upon the strength of the papers required. No such approval formalities are required for any of the following import or export goods with duty and/or tax reduction or exemption:

(a) any goods of a consignment on which the amount of duties, import VAT or import consumption tax payable is less than 50 RMB yuan;

(b) any advertising articles and samples of goods, which are of no commercial value;

(c) any goods suffering damage or loss before being released by Customs;

(d) any necessary fuels, materials, foods and drinks for use en route that are loaded onto any incoming or outgoing means of transport; or

(e) any other goods granted duty and/or tax reduction or exemption of which relevant formalities for approval are not required.

Article 73 For any of the goods as specified in Item (c) of Article 72 of these Rules, the duty and/or tax payer shall, when going through the declaration formalities or within 15 days as from the day on which the goods are released by Customs, make a written explanatory statement and provide relevant evidentiary document(s) to Customs. Where Customs deems it necessary, it may ask the duty and/or tax payer to provide the inspection certificate as issued by a qualified commodity inspection agency confirming the severity of damage and loss of the goods. Customs shall then grant the goods duty and/or tax reduction or exemption in light of the severity of damage and loss of the goods.

Article 74 Unless otherwise provided for, the duty and/or tax payer shall go to the competent Customs house to apply for approval of duty and/or tax reduction or exemption for its goods. Customs shall examine the application in accordance with the relevant provisions and issue the Duty/Tax Levied/Exempted Certificate upon verification.

Article 75 Special goods imported with duty and/or tax reduction or exemption for special areas, special enterprises or special purposes shall be subject to Customs control.

The duration of Customs control over special goods imported with duty and/or tax reduction or exemption is as follows:

(a) Vessels and aircrafts: 8 years;

(b) Motor vehicles: 6 years;

(c) Other goods: 5 years.

Such duration shall be calculated as from the date on which the imported goods are released by Customs.

Article 76 Within the duration of Customs control over the special goods imported with duty and/or tax reduction or exemption, the duty and/or tax payer shall report once a year to the competent Customs house regarding the conditions of such goods as from the day on which the goods are released by Customs. Except for the transfer of such goods to a project unit that enjoys equivalent preferential duty or tax treatment upon the approval of Customs, the duty and/or tax payer shall not transfer or otherwise dispose of the goods until after settling the duties and/or taxes payable and going through the formalities for lifting Customs control.

When the duration of Customs control over the special goods imported with duty and/or tax reduction or exemption expires, the Customs control shall be lifted automatically. Where the duty and/or tax payer needs a certificate proving the lifting of Customs control, it may, within one (1) year as from the day on which such duration expires, file an application with Customs and submit the relevant papers in order to obtain such certificate. Customs shall, within 20 days upon receipt of the application, verify the facts and issue the certificate upon verification.

Chapter VI Security on Duties and/or Taxes for Imports and Exports

Article 77 Under any of the following circumstances, if the duty and/or tax payer requests Customs to release its goods prior to the payment of duties and/or taxes, it shall, in light of the amount of the duties and/or taxes payable as determined on a preliminary basis by Customs, provide Customs with a security sufficient to guarantee the payment of the duties and/or taxes:

(a) The essential elements for levying duties and/or taxes, such as the classification, dutiable value and origin of the goods, have yet to be determined by Customs;

(b) The duty and/or tax payer is going through the formalities for approval of duty and/or tax reduction or exemption with Customs;

(c) The duty and/or tax payer has filed an application for extension of the time limit for payment of duties and/or taxes;

(d) The goods of the duty and/or tax payer are only temporarily admitted into or shipped out of the Chinese mainland;

(e) The goods of the duty and/or tax payer, except those administered under the category of bonded goods, are imported only for repair or exported only for processing purpose;

(f) The duty and/or tax payer has filed a declaration for the import or export of goods offered at no cost as compensation or replacement due to damage, inferior quality, or incompatible specification of the original goods, but the original imports have not been re-exported out of the Chinese mainland or abandoned to Customs, or the original exports have not been shipped backed to the Chinese mainland; or

(g) Any other circumstances under which a security on duties and/or taxes is required in accordance with the relevant provisions.

Article 78 Unless otherwise provided for, the duration of the security provided for duties and/or taxes shall, in general, not exceed six (6) months. Under special circumstances, such duration may be reasonably extended upon the approval of the director-general of the competent regional Customs or the person authorized thereby.

The security on duties and/or taxes shall normally take the form of cash deposit or a letter of guarantee as issued by a bank or a non-bank financial institution, unless otherwise provided for.

The letter of guarantee as issued by a bank or a non-bank financial institution shall be a joint liability one. If the duration of security has been explicitly stipulated in the letter of guarantee, such duration shall not fall short of the duration of security as approved by Customs.

Article 79 In case a duty and/or tax payer fulfils its duty and/or tax payment obligation within the duration of security as approved by Customs, the latter shall, within five (5) working days as from the day on which such obligation is fulfilled, handle and conclude the relevant formalities for lifting the security.

In case the duty and/or tax payer fails to fulfill its duty and/or tax payment obligation within the duration of security as approved by Customs, if a cash deposit has been provided as a security, Customs shall, within five (5) working days as from the day on which the approved duration of security expires, complete the formalities for converting the cash deposit into the payment of the duties and/or taxes. If a letter of guarantee has been provided by a bank or a non-bank financial institution as a security, Customs shall, within six (6) months as from the day on which the approved duration of security expires or within the duration of security as stipulated in the letter of guarantee, demand that the surety fulfill the corresponding duty and/or tax payment obligation.

Chapter VII Supplementary Provisions

Article 80 In case a duty and/or tax payer or its surety disagrees with Customs on who should be the payer of the duties and/or taxes, or on the determination of the dutiable value, classification, origin of the goods, the applicable tariff rate, tax rate or exchange rate, the duty and/or tax reduction or exemption, the duty recovery or refund, the levying of any late fine, the method employed for calculating and levying duties and/or taxes, or the location of duty and/or tax payment, it shall, as required by law, pay the duties and/or taxes in accordance with the relevant administrative decision made by Customs, but may file an application with the Customs at a higher level for reconsideration in light of the Administrative Reconsideration Law of the People's Republic of China and the Rules of the General Administration of Customs of the People's Republic of China on the Implementation of the Administrative Reconsideration Law. In case the duty and/or tax payer disagrees with the decision of reconsideration, it may institute a proceeding with a people's court in accordance with law.

Article 81 Acts in violation of these Rules that constitute smuggling or breach Customs control regulations or rules shall be dealt with in accordance with the Customs Law, the Regulations of the People’s Republic of China on Implementing Customs Administrative Penalty, as well as other relevant laws and administrative regulations. Where such an act constitutes a crime, criminal liability shall be imposed accordingly.

Article 82 The administration of the levying of duties and/or taxes on bonded goods and on goods entering or leaving bonded areas, export processing zones, bonded warehouses, and any other similar Customs control premises shall be carried out in accordance with the relevant provisions of these Rules. In the absence of such provisions in these Rules, the provisions of relevant laws, administrative regulations and Customs rules shall be observed.

Article 83 The rules for the administration of declaration and payment of duties and/or taxes through electronic data interchange (EDI) are to be formulated separately.

Article 84 The right of interpretation of these Rules shall remain with the General Administration of Customs.

Article 85 These Rules shall be effective as of March 1, 2005. The Rules of Customs for the Administration of the Levying of Duties and Taxes promulgated by the General Administration of Customs of the People's Republic of China on September 30, 1986 shall be repealed simultaneously.

(All information in this document is authentic in Chinese. English is provided for reference only. In case of any discrepancy, the Chinese version shall prevail.)