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[No.389] Decree of the State Council of the People’s Republic of China No. 389

The Decision of the State Council on Amending the Interim Measures of the Customs of the People’s Republic of China on Supervision and Control of Export Processing Areas is hereby promulgated, and shall be effective as of November 1, 2003.



Premier: Wen Jiabao


September 2, 2003



Decision of the State Council on Amending the Interim Measures of the Customs of the People’s Republic of China on Supervision and Control of Export Processing Areas



(Promulgated by Decree No. 389 of the State Council of the People’s Republic of China on September 2, 2003, and effective as of November 1, 2003)



For the purpose of meeting the requirement of new situation on the supervision of export processing areas by Customs and promoting the healthy development of the areas, an amendment has been made to the Interim Measures of the Customs of the People’s Republic of China on Supervision and Control of Export Processing Areas as follows:



1. Article 20 is amended as: “The goods manufactured by the enterprises within the areas, any scraps, rejects and substandard products, wastes, etc. arising in the course of the processing and production shall be re-exported out of the territory. Where there is a need to transport them to outside areas for home use under special circumstances, Customs duties and taxes shall become payable based on the tariff classification determined on the state as they were imported for home use upon application by the enterprises and verification and approval by the competent Customs offices. If the goods are under the import licensing control, the import licensing certificates shall be exempt. But the import licensing certificates shall be obtained from the environmental protection department according to the existing provisions for those goods prescribed in the Restriction List of Imported Scraps and Wastes Recyclable for Use as Raw Materials. Where scraps and wastes of no commercial value need to be transported to outside areas for destruction, exit formalities shall be completed with the competent Customs office on the basis of the document of approval issued by the administrative committee of the processing area and the environmental protection department, and Customs shall exempt them from import licenses and Customs duties and taxes.”



2. Article 44 is deleted.


In addition, wording in some articles has been modified and the sequence of articles is altered correspondingly.


This Decision is effective as of November 1, 2003.


The Interim Measures of the Customs of the People’s Republic of China on Supervision and Control of Export Processing Areas shall be revised correspondingly in accordance with this Decision and be promulgated anew.



Interim Measures of the Customs of the People’s Republic of China on Supervision and Control of Export Processing Areas


(Approved by the State Council on April 27, 2000, and promulgated by Decree No. 81 of the General Administration of Customs on May 24, 2000; amended on June 6, 2002; amended in accordance with the Decision of the State Council on Amending the Interim Measures of the Customs of the People’s Republic of China on Supervision and Control of Export Processing Areas on September 2, 2003)



Chapter I General Provisions


Article 1 These Measures are formulated in accordance with the Customs Law of the People’s Republic of China and relevant laws and regulations of the State for the purpose of strengthening and improving administration of processing trade, regulating supervision of export processing areas by Customs, promoting a healthy development of export processing areas and encouraging expansion of foreign trade and exports.


Article 2 In order to prevent duplicated construction, export processing areas (hereinafter referred to as processing areas) to be established within the territory of the People’s Republic of China shall be located only in the existing economic and technological development zones that have been approved by the State Council, and shall be reported to the State Council for approval by the people’s governments of the provinces (autonomous regions, municipalities directly under the Central Government).


Article 3 Processing areas are specific areas under supervision and control of Customs. Customs shall establish offices in all processing areas and exercise, pursuant to these Measures, 24-hour supervision over the goods entering or leaving processing areas and over the relevant sites therein.


Article 4 Separation facilities and close circuit television supervision and control systems that meet the requirements of Customs supervision and control shall be installed between processing areas and other areas of the territory of the People’s Republic of China (hereinafter referred to as outside areas). Only after the General Administration of Customs has tested and accepted the separation facilities of processing areas, may business operations related to processing areas be engaged in.


Article 5 An administrative committee of a processing area, export processing enterprises, warehousing enterprises that provide services solely for the production of export processing enterprises, and transportation enterprises that are solely engaged in the transportation of goods into and out of the processing area with Customs approval shall be established therein.


No other persons may live in a processing area except security guards and enterprises’ duty-employees. No profit-oriented consumer facilities may be established.


Article 6 No retailing business, general trade, transit trade and other business irrelevant to a processing area may be conducted therein.


Article 7 All enterprises established within processing areas (hereinafter referred to as enterprises within the areas) shall go through registration formalities with Customs.


Article 8 Enterprises within the areas shall, in accordance with the provisions of the Accounting Law of the People’s Republic of China and the relevant laws and regulations of the State, set up account books and statements that meet the requirements of Customs supervision and control. They shall make entries and conduct accounting on the basis of legitimate and valid vouchers and make a record of such items as inventory, assignment, transfer, sale, processing, use and consumption of the enterprises’ goods and articles entering or leaving the processing areas.


Article 9 Processing areas shall be subjected to computer network control and the Customs auditing system.


Enterprises within the areas shall establish computerized databases that conform to the requirements of Customs supervision and control, connect them to Customs through computer networks and exchange electronic data each other.


Article 10 The bank guarantee ledger system for processing trade shall not be applied to the processing trade business conducted by enterprises within the areas, and Customs shall not exercise administration by the Processing Trade Register.


Article 11 Customs has the power, in accordance with the provisions of the Customs Law of the People’s Republic of China, to conduct inspections and examinations of goods, articles, means of transport and persons entering or leaving a processing area and relevant sites therein.


Article 12 The State does not levy value-added tax on processed products within the areas.


Article 13 No goods or articles that are prohibited by the State from being imported or exported may enter or leave a processing area.


Chapter II Supervision and Control of Goods Moving between Processing Areas and Places outside the Territory


Article 14 With respect to the goods moving between a processing area and a place outside the territory, the owner of the goods or his agent shall fill in a filing list of goods entering or leaving the territory on the basis of the document of approval issued by the administrative committee of the processing area, and file it with the competent Customs office. The filing list shall be uniformly printed and distributed by the General Administration of Customs.


Article 15 With respect to the goods moving between a processing area and a place outside the territory, Customs shall exercise supervision and control through direct release or by transshipment to another Customs office.


Article 16 Import or export quota control and licensing control shall not apply to the goods moving between processing areas and places outside the territory, except those goods to which the passive export control applies.


Article 17 With respect to the goods entering a processing area from a place outside the territory, the import duties and import taxes shall be collected according to the following provisions except where laws and regulations provide otherwise:


(1) Machines and equipment needed for infrastructure construction projects for the production within the area, and materials for capital construction needed for the construction of factory buildings and storage facilities shall be exempted from duties and taxes.


(2) Machines, equipment, modeling tools and parts and components used for the maintenance thereof, which are needed for the production of an enterprise within the area shall be exempted from duties and taxes.


(3) Raw materials, spare parts, components, packing materials and materials for productive consumption, which are needed for the processing of products for export by an enterprise within the area, shall be treated as bonded goods.


(4) Articles for office use in reasonable quantities needed by the enterprises and administrative bodies within the area shall be exempted from duties and taxes.


(5) With respect to means of transport and consumer goods which are used by the enterprises and administrative bodies within the area, Customs declaration formalities shall be fulfilled in accordance with the provisions concerning imported goods and Customs shall collect duties and taxes in accordance with the regulations.


Article 18 The goods manufactured by the enterprises within the areas, any scraps, surplus materials, rejects and substandard products, wastes, etc. arising in the course of the processing and production shall be exempted from export duties if they are to be sold outside the territory except where laws and regulations provide otherwise.


Chapter III Supervision and Control of Goods Moving between Processing Areas and Outside Areas


Article 19 For goods transported from a processing area to outside areas, Customs shall handle declaration formalities in accordance with the provisions concerning imported goods and treat them as manufactured goods in collecting duties and taxes. If the goods are under the licensing control, the valid import licensing certificates shall also be presented to Customs.


Article 20 The goods manufactured by the enterprises within the areas, any scraps, rejects and substandard products, wastes, etc. arising in the course of the processing and production shall be re-exported out of the territory. Where there is a need to transport them to outside areas for home use under special circumstances, Customs duties and taxes shall become payable based on the tariff classification determined on the state as they were imported for home use upon application by the enterprises and verification and approval by the competent Customs offices. If the goods are under the import licensing control, the import licensing certificates shall be exempt. But the import licensing certificates shall be obtained from the environmental protection department according to the existing provisions for those goods prescribed in the Restriction List of Imported Scraps and Wastes Recyclable for Use as Raw Materials. Where scraps and wastes of no commercial value need to be transported to outside areas for destruction, exit formalities shall be completed with the competent Customs office on the basis of the document of approval issued by the administrative committee of the processing area and the environmental protection department, and Customs shall exempt them from import licenses and Customs duties and taxes.


Article 21 Where it is deemed necessary in faith, enterprises within the areas may remove the modeling tools and semi-finished products to outside the areas for processing. An entrusted enterprise located outside the area shall, upon approval of the head of the competent Customs office in the processing area, complete exit formalities after paying a cash security or submitting a letter of guarantee to the competent Customs office in the processing area, the value of which is equivalent to the payable Customs duties and value-added taxes at importation of the same goods.


The period for entrusted processing by an enterprise outside the area shall be determined by the competent Customs office in the processing area with reference to the term of the contract. Upon completion of the processing, the goods shall be transported back to the area within the time limit as scheduled. The enterprise within the area shall complete Customs formalities for examining and releasing the products, verifying and canceling the amounts thereof with the competent Customs office in the processing area on the basis of the application for entrusted processing outside the area and the relevant documents originally written out at the time of their exit from the area. The competent Customs office in the processing area shall return the cash security or the letter of guarantee in a timely manner once it has handled the said formalities.


Article 22 Machines, equipment, modeling tools, etc. which are sold by enterprises within the areas to places outside the areas shall be dealt with in accordance with relevant existing import policies and the relevant provisions of the State.


Article 23 Enterprises within the areas may have their products tested, inspected or exhibited outside the areas upon approval of the competent Customs offices. For products to be tested, inspected or exhibited, formalities pertaining to exit from the areas shall be executed in accordance with Customs regulations on control of temporarily imported goods.


Article 24 Where machines, equipment, modeling tools, articles for office use, etc. which are used in the areas need to be transported to outside areas for maintenance, testing or inspection, enterprises or administrative bodies within the areas shall fill in the Contact Sheet for Examination, Inspection and Maintenance of the Goods Transported from within the Export Processing Area to an Outside Area, submit applications to the competent Customs offices, and may transport those machines, equipment, modeling tools, articles for office use, etc. to outside areas for maintenance, testing or inspection only upon approval, registration and inspection by the competent Customs offices.


Where an enterprise within the area transports modeling tools to an outside area for maintenance, testing or inspection, sample products manufactured by these modeling tools shall be retained for examination by Customs of the modeling tools transported back into the area.


Machines, equipment, modeling tools, articles for office use, etc. transported to outside areas for maintenance, testing or inspection shall not be used for processing, production and use in outside areas.


Article 25 Machines, equipment, modeling tools, articles for office use, etc. transported to outside areas for maintenance, testing or inspection shall be transported back into the processing areas within two months from the date on which they are transported out of the areas. Where they cannot be transported back on time under special circumstances, enterprises within the areas shall, within seven days before the expiry of the period, explain the circumstances to the competent Customs offices and apply for an extension of the period. The extension of the period may only be approved for one time and the period may not be extended more than one month.


Article 26 For machines, equipment, modeling tools, articles for office use, etc. transported to outside areas for maintenance, they may be transported back into the areas only on condition that it is possible for Customs to identify that they are the original articles or new parts, components or accessories of the same specifications, and where new parts, components or accessories have replaced the original ones, the original ones shall be transported back into the areas together with the new ones.


Article 27 Goods entering processing areas from outside areas shall be deemed as exports, and Customs declaration formalities for exports shall be fulfilled. An export tax refund shall be processed in accordance with the following provisions, unless otherwise provided for by laws and regulations:


(1) For domestically produced machines, equipment, raw materials, spare parts, components and packing materials entering processing areas from outside areas for the use of enterprises within the areas, and goods and materials for capital construction in a reasonable amount needed for the construction of infrastructures, production facilities and office buildings for processing enterprises and administrative bodies therein, Customs shall handle declaration formalities in accordance with the relevant provisions on exported goods and issue a declaration form for export tax refunds. Enterprises located outside the areas shall apply to the tax authorities for undergoing export tax refund (exemption) formalities by presenting the export tax rebate voucher of the declaration form, and specific measures for administration of tax refunds (exemptions) shall be provided separately by the State Administration of Taxation.


(2) For consumer goods, means of transport, etc. entering processing areas from outside areas for the use of enterprises and administrative bodies within the areas, Customs shall not issue declaration forms for export tax refunds.


(3) For imported machines, equipment, raw materials, spare parts, components, packing materials, goods and materials for capital construction, etc. entering processing areas from outside areas, the enterprises located outside the areas shall submit a list of the aforesaid goods and articles to Customs and undergo export declaration formalities, and Customs shall release them upon examination. The import taxes already paid for the aforesaid goods and articles shall not be refunded.


(4) Where it is necessary to transport commodities which are prohibited by the State from being exported or which are under State’s centralized management into processing areas for any processing operation due to inadequate domestic techniques to meet the requirements of a product, the matter shall be reported to the Ministry of Commerce for approval, and Customs shall exercise supervision and control according to the measures for administration of exported materials processing, and shall not issue declaration forms for export tax refunds for those goods transported into processing areas.


Article 28 The goods and articles transported into processing areas from outside areas shall be transported to the places or warehouses designated by Customs in the processing areas, and enterprises located outside the areas shall fill in export declaration forms and undergo Customs declaration formalities at the competent Customs offices in the processing areas by presenting purchase invoices and packing lists issued within the territory.


Article 29 The goods transported into processing areas from outside areas shall undergo substantive processing by enterprises within the areas before they can be shipped outside the territory.


Chapter IV Supervision and Control of Goods within Processing Areas


Article 30 Goods which move into or out of processing areas by enterprises within the areas shall be truthfully declared to the competent Customs offices, and Customs shall examine, inspect and release the goods which move into or out of the processing areas by the enterprises within the areas, and cancel accounts through verification on the basis of the memorandum lists and relevant documents.


Customs formalities for filing for the record, declaration, examination and inspection and release of goods moving into or out of processing areas as well as account cancellation through verification shall be undertaken within the processing areas.


Article 31 The goods within processing areas may be assigned or transferred between enterprises within the areas, and both of the parties involved shall report in advance to Customs for the record the names, quantities, values of the goods to be assigned or transferred and other relevant detailed particulars.


Article 32 Processing enterprises within the areas may not sell outside the areas imported raw materials, spare parts and components which have not undergone substantive processing. Enterprises engaging in warehousing service within the areas may not provide raw materials, spare parts and components in their custody to enterprises located outside the areas.


Article 33 Enterprises within the areas shall present the account books and relevant documents of the enterprises to the competent Customs offices and undergo account cancellation formalities every six months, starting from the date on which they began their business of export processing or business of warehousing service.


Article 34 Where the goods which have entered processing areas are reduced in quantity or destroyed due to force majeure during the processing or warehousing period, the processing enterprises or the warehousing enterprises within the areas shall report the circumstances to the competent Customs offices within 10 days from the date of their discovery thereof and give their explanations. Customs shall approve a deduction from their account books upon verification and confirmation.


Chapter V Supervision and Control of Goods Moving between Processing Areas


Article 35 For goods moving between different processing areas, both the parties sending and receiving the goods shall jointly apply to the competent Customs office in the sending area. Upon verification and approval by Customs, the matter shall be handled in accordance with the relevant provisions on Customs transshipment.


Article 36 When goods are transshipped to another processing area, the competent Customs office in the receiving area shall release them to the enterprise or the warehouse after checking and confirming that the sealing marks are intact and the goods tally with the documents.


Article 37 Where goods moving between different processing areas can not be moved as goods in Customs transshipment, the competent Customs office in the receiving area shall collect from the receiving enterprise a guarantee in the amount equivalent to the value of the goods. After goods arrive at the receiving area, and have been verified and confirmed by Customs that no error exists, the competent Customs office shall return the guarantee to the enterprise within 10 working days.


Chapter VI Supervision and Control of Means of Transport and Articles Carried by Persons Entering or Leaving Processing Areas


Article 38 Means of transport and persons shall enter or leave processing areas through specific channels designated by Customs.


Article 39 Processed products to be shipped outside the territory from a processing area and goods to be transported from a processing area to an outside area, after being examined and released by Customs, shall be transported by a specialized transportation enterprise established within the area with approval of Customs. The following goods may be carried by persons specially designated by enterprises or transported by the enterprises themselves after being examined by the competent Customs offices:


(1) petty goods with a value of 10,000 US dollars or less;


(2) articles which are transported back to outside areas to be returned or replaced due to substandard quality;


(3) articles for which formalities for payment of import duties and taxes have been fulfilled; and


(4) other articles examined and approved by Customs.


Article 40 The person responsible for means of transport of the goods entering or leaving processing areas shall fulfill registration and filing formalities with Customs by presenting the business license of the enterprise legal person and a list of names, the number, registered plate numbers of means of transport and the names of drivers.


All the operators of transportation enterprises that undertake the carriage of goods entering or leaving processing areas and the goods in Customs transshipment shall abide by Customs regulations relating to administration of means of transport and goods carried thereon, and bear corresponding legal liabilities.


Article 41 Without approval of Customs, means of transport and persons leaving processing areas for outside areas may not transport or carry goods out of processing areas.


Chapter VII Supplementary Provisions


Article 42 Goods transported from outside the territory into processing areas and goods transported outside the territory from processing areas shall be listed in the import and export statistics. Goods transported from outside areas into processing areas and goods transported from processing areas to outside areas shall be counted in itemized statistics. The statistical measures shall be formulated by the General Administration of Customs separately.


Article 43 Violations of the provisions of these Measures shall be dealt with by Customs in accordance with the relevant provisions of the Customs Law of the People’s Republic of China and the Rules for the Implementation of Administrative Penalty under the Customs Law of the People’s Republic of China.


Article 44 These Measures shall come into force as of May 24, 2000

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STATEMENT

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

Address: No.6. Jianguomennei Avenue, Dongcheng District, Beijing, China        Postcode: 100730