Promulgation Authorities:  General Administration of Customs

Promulgation Date:  2013.12.25

Effective Date:  2014.02.01

Validity Status:  valid

Document Number:  Decree of General Administration of Customs No. 211

Measures of the Customs of the People's Republic of China on Determination of Dutiable Value of Bonded Goods for Domestic Sale

Measures of the Customs of the People's Republic of China on Determination of Dutiable Value of Bonded Goods for Domestic Sale

Decree of General Administration of Customs No. 211

The Measures of the Customs of the People's Republic of China on Determination of Dutiable Value of Bonded Goods for Domestic Sale, deliberated and adopted at the executive meeting of the General Administration of Customs, are hereby promulgated and come into effect on 1 February 2014.

Director,

25 December 2013

Measures of the Customs of the People's Republic of China on Determination of Dutiable Value of Bonded Goods for Domestic Sale

Article 1    These Measures are formulated pursuant to the provisions of the Customs Law of the People's Republic of China, the Regulations of the People's Republic of China on Import and Export Tariffs and related laws and administrative regulations for the purposes of proper determination of dutiable value of bonded goods for domestic sale.

Article 2    These Measures shall apply to Customs examination and determination of dutiable value of bonded goods sold in domestic markets. These Measures shall not apply to assessment of dutiable value of allegedly smuggled bonded goods for domestic sale.

Article 3    Dutiable value of bonded goods for domestic sale shall be examined and determined by the Customs on the basis of the transaction price of the goods.

Article 4    In the case of domestic sale of materials imported for processing of supplied materials or the finished goods thereof (including defective products), the Customs shall determine the dutiable value on the basis of the transaction price of the imported raw materials.

Where the materials are imported in batches, and it is impossible to determine the corresponding batches of the imported materials at the time of domestic sale, the Customs may examine and determine the dutiable value on the basis of the weighted average price computed from the transaction prices of the materials imported during the validity period of the contract or electronic books verification cycle and in accordance with the principle of same item number, same item description and same tariff code.

Where it is difficult or impossible to determine the weighted average price of transaction prices of materials imported during the validity period of the contract or electronic books verification cycle, the Customs shall examine and determine the dutiable value on the basis of the weighted average price of the transaction prices of objective and quantifiable materials imported during the current period.

Article 5    In the case of domestic sale of materials imported for processing or the finished goods thereof (including defective products), the Customs shall examine and determine the dutiable value on the basis of import transaction prices of materials of identical or similar bonded goods for which declaration of domestic sale is accepted at the same time or around the same time.

Article 6    The dutiable value of scrap or by-products generated by a processing enterprise during the processing for domestic sale shall be examined and determined on the basis of the domestic sale price.

Where the by-products are not generated using merely bonded materials, the Customs shall determine and examine the dutiable value on the basis of the percentage of bonded materials in cost accounting.

In the case of disaster-stricken bonded goods which are subject to tax on the residual value pursuant to the provisions, the Customs shall determine the dutiable value on the basis of the domestic sale price. In the case of levying of tax upon conversion to material and parts pursuant to the provisions, the Customs shall determine and examine the dutiable value on the basis of the percentage of each the bonded materials to all the materials for the finished goods (including defective products).

In the case of domestic sale by way of auction of scrap, by-products and disaster-stricken bonded goods which are subject to tax on residual value pursuant to the provisions approved by the Customs, the Customs shall examine and determine the dutiable value on the basis of the auction price.

Article 7    In the case of domestic sale of deep processing transit goods, the Customs shall examine and determine the dutiable value on the basis of the transfer price of the transferred goods.

Article 8    In the case of domestic sale of imported materials for bonded processing or the finished goods thereof of enterprises in bonded areas, the Customs shall examine and determine the dutiable value on the basis of the domestic sale price.

Where the finished goods of bonded processing sold to enterprises in bonded areas contain materials purchased in China, the Customs shall examine and determine the dutiable value on the basis of the import transaction price of overseas-purchased materials used in the finished goods.

Where the dutiable value for domestic sale of materials imported for bonded processing or the finished goods thereof to enterprises in the bonded areas cannot be determined pursuant to the provisions of the two preceding paragraphs of this Article, the Customs shall examine and determine the dutiable value on the basis of the domestic sale price of identical or similar bonded goods to be sold in domestic markets for which declaration of domestic sale is accepted at the same time or around the same time.

Article 9    In the case of domestic sale of bonded processing materials or the finished goods thereof by enterprises in special Customs supervision areas other than bonded areas, the Customs shall examine and determine the dutiable value on the basis of the domestic sale price.

Where the domestic sale price of bonded processing materials or the finished goods thereof by enterprises in special Customs supervision areas other than bonded areas cannot be determined, the Customs shall examine and determine the dutiable value on the basis of the domestic sale price of identical or similar bonded goods for which declaration of domestic sale is accepted at the same time or around the same time.

Where the domestic sale price of bonded processing finished goods, identical or similar bonded goods sold by enterprises in special Customs supervision areas other than bonded areas cannot be determined, the Customs shall examine and determine the dutiable value on the basis of the price computed from the costs of manufacturing the goods, profits and general expenses.

Article 10    In the case of domestic sale of scrap, waste products, defective products and by-product generated in the bonded processing by enterprises in special Customs supervision areas, the Customs shall examine and determine the dutiable value on the basis of the domestic sale price.

In the case of domestic sale by way of auction of scrap, waste products, defective products and by-products by enterprises in special Customs supervision areas with Customs approval, the Customs shall examine and determine the dutiable value on the basis of the auction price.

Article 11    In the case of domestic sale of bonded logistics goods by enterprises in special Customs supervision areas or bonded supervision areas, the Customs shall examine and determine the dutiable value on the basis of the domestic sale price at the time of shipping the goods out from the special Customs supervision areas or bonded supervision areas; insurance premiums, storage charges and freight and related expenses incurred in special Customs supervision areas or bonded supervision areas which can be listed separately and inclusive in the said domestic sale price shall be excluded from the dutiable value.

Article 12    In the case of domestic sale of research and development goods by enterprises in special Customs supervision areas, the Customs shall examine and determine the dutiable value pursuant to the provisions of Article 8, Article 9 and Article 10 of these Measures. In the case of domestic sale of inspection and exhibition goods by enterprises in special Customs supervision areas, the Customs shall examine and determine the dutiable value pursuant to the provisions of Article 11 of these Measures.

Article 13    Where the dutiable value of bonded goods for domestic sale cannot be determined pursuant to the provisions of Article 4 to Article 12 of these Measures, the Customs shall assess the dutiable value of the goods based on the following prices in sequential order:

(1) the transaction price for domestic sale of identical goods at the same time or around the same time in the People's Republic of China;

(2) the transaction price for domestic sale of similar goods at the same time or around the same time in the People's Republic of China;

(3) the unit price of the largest sale quantity of the said imports, identical or similar goods sold in the first sales phase to buyers without special relationship at the same time or around the same time as importation of the said goods, but shall exclude the following items:

(a) common profits, general expenses and usually paid commission for the same grade or type of goods at the time of the first sales phase in the People's Republic of China;

(b) freight and related expenses as well as insurance premiums after unloading at the place of arrival of the imports in the People's Republic of China; and

(c) import duties and domestic taxes.

(4) the price calculated from the sum of the following items: costs of materials used for manufacturing of the said goods and processing expenses thereof, common profits and general expenses for the same grade or type of goods sold in the People's Republic of China, freight and related expenses, and insurance premiums after unloading at the place of arrival of the imports in the People's Republic of China;

(5) a price assessed using reasonable method(s).

Upon provision of the relevant materials to the Customs, a taxpayer may submit an application to reverse the application sequence of item (3) and item (4) of the preceding paragraph.

Article 14    The following terms used in these Measures shall be defined as follows:

Bonded goods for domestic sale shall include goods that are subject to tax after conversion to domestic sale for some reason, including processing trade goods, goods in special Customs supervision areas, goods in bonded supervision areas, as well as bonded goods subject to tax for domestic sale due to any other reason, but shall exclude the following items:

(1) machinery and equipment required for manufacturing infrastructure projects in special Customs supervision areas and bonded supervision areas as well as construction materials required for construction;

(2) machinery, equipment, moulds and spare parts for repair that are required for carrying out of manufacturing or integrated logistics services by enterprises in special Customs supervision areas and bonded supervision areas; and

(3) office supplies, consumption goods and transportation vehicles used by enterprises and administrative organisations in special Customs supervision areas and bonded supervision areas.

Domestic sale price shall mean the price concluded by the buyer and the seller at the time of sale of bonded goods to domestic enterprises, and it is the total price paid or payable by the domestic enterprise to the seller (bonded enterprise) for purchase of bonded goods, but shall exclude Custom duties and import-linked taxes levied by the Customs on behalf.

Auction price shall mean the price for which a bidder obtains the subject matter of auction pursuant to auction provisions in legitimate and valid auction procedures for bonded goods approved by the Customs and performed by an auction organisation registered with the State.

Transfer price shall mean the price concluded between two deep processing transit enterprises at the time of sale and purchase of processing trade goods, and it is the total price paid or payable by the transfer-in enterprise in deep processing transit for purchase of processing trade goods from the transfer-out enterprise in deep processing transit.

Article 15    Taxpayers who disagree with the dutiable value determined by the Customs shall pay taxes pursuant to the relevant administrative decision made by the Customs, and may apply to the higher-level Customs for review pursuant to the law. Taxpayers who disagree with the review decision may file an administrative lawsuit with a People's Court pursuant to the law.

Article 16    Violation of the provisions of these Measures which constitute smuggling or violation of Customs regulatory provisions shall be dealt with by the Customs pursuant to the relevant provisions of the Customs Law of the People's Republic of China and the Regulations of the Customs of the People's Republic of China on Implementation of Administrative Punishment; where the case constitutes a criminal offence, criminal liability shall be pursued in accordance with the law.

Article 17    The General Administration of Customs shall be responsible for interpretation of these Measures.

Article 18    These Measures shall be effective 1 February 2014.