Regulations of the People's Republic of China on Customs Inspection (Revised in 2016)

Order of the State Council of the People's Republic of China No. 670

June 19, 2106

(Promulgated by Order of the State Council of the People's Republic of China No. 209 on January 3, 1997, amended for the first time according to the Decision of the State Council on Repealing and Amending Certain Administrative Regulations issued on January 8, 2011; and amended for the second time according to the Decision of the State Council on Amending the Regulations of the People's Republic of China on Customs Inspection issued on June 19, 2016.)

Chapter I General Provisions

Article 1 With a view to establishing and improving the Customs inspection system, strengthening the regulation imposed by the Customs, maintaining the normal order of import and export, safeguarding the legitimate rights and interests of parties concerned, guaranteeing the tax revenue of the state, promoting the development of foreign trade, these Regulations are hereby promulgated in accordance with the Customs Law of the People's Republic of China (the "Customs Law").

Article 2 The term "Customs inspection" as mentioned in these Regulations refers to the inspection of accounting books, accounting documents, Customs declaration documents and other related materials (hereinafter collectively referred to as "accounting books, documents and other related materials") of enterprises and entities directly related to imported or exported goods and the related imported or exported goods within three years after the date of release of the imported or exported goods or within the term of the Customs supervision of the bonded goods or imported goods subject to tax reduction or exemption and the following three years by the Customs to oversee the authenticity and legitimacy of the importing or exporting activities.

Article 3 The Customs shall conduct inspection of the following enterprises and entities directly related to imported or exported goods:
1. Enterprises and entities engaged in foreign trade;
2. Enterprises engaged in foreign processing trade;
3. Enterprises engaged in bonded business;
4. Enterprises using or operating imported goods subject to tax reduction or exemption;
5. Enterprises engaged in Customs declaration business;
6. Other enterprises and entities directly related to imported or exported goods as stipulated by the General Administration of Customs.

Article 4 When deeming necessary, the Customs may collect information on the import and export of specific goods and industries from relevant industry associations, governmental departments and enterprises. Where the information collected involves trade secrets, the Customs shall keep it confidential.

Article 5 The Customs and Customs officers shall, when performing the Customs inspection duties, be objective and fair, discern the truth, be honest in performing duties, keep the trade secrets of persons under inspection confidential, and refrain from infringing on the legitimate rights and interests of the persons under inspection.

Chapter II Management of Accounting Books, Documents and Other Related Materials

Article 6 Accounting books, accounting documents, accounting statements and other accounting materials established and complied by enterprises and entities directly related to imported or exported goods shall record and reflect import or export business in a truthful, accurate and complete manner.

Article 7 Enterprises and entities directly related to imported or exported goods shall retain their accounting books, accounting documents, accounting statements and other accounting materials within the time limit as prescribed in the relevant laws or administrative regulations.
The Customs declaration documents, import and export documents, contracts and other materials directly related to import or export business shall be retained within the time limit stipulated in Article 2 hereof.

Article 8 Where enterprises and entities directly related to imported or exported goods have established a sound accounting system through which their accountants can correctly and completely keep accounts and check computation via computers, the accounting records stored and outputted by their computers shall be deemed as accounting materials.

Chapter III Implementation of Customs Inspection

Article 9 The Customs shall, according to the import or export credit records and risks of enterprises and entities directly related to imported or exported goods and the specific status of imported or exported goods, determine the focus of the inspection in compliance with the requirements for Customs supervision.

Article 10 When conducting Customs inspection, the Customs shall notify persons under inspection in writing three days prior to such an inspection. Under the emergencies where persons under inspection are suspected of having committed major violations and their accounting books, documents and other related materials as well as the imported or exported goods may be transferred, hidden or destroyed, with the approval from the director of the directly competent Customs or that of the subordinate Customs authorized thereby, the Customs may conduct an inspection without prior notice.

Article 11 When conducting an inspection, the Customs shall set up an inspection group consisting of at least two members.

Article 12 When the Customs conduct an inspection, the Customs officers shall produce their Customs inspection certificates.
The Customs inspection certificates shall be made and issued by the General Administration of Customs in a unified manner.

Article 13 When the Customs conduct an inspection, the Customs officers having a direct interest relationship with persons under inspection shall withdraw from the inspection.

Article 14 When conducting an inspection, the Customs may exercise the following authority:
1. Examining and copying the accounting books, documents and other related materials of a person under inspection;
2. Entering the premises where the person under inspection is engaged in the production and business operation and the places for storing goods, and inspecting the production and business operation and goods in connection with the importing or exporting activities;
3. Inquiring the legal representative and personnel in charge of the person under inspection or other related personnel of the operation or issues in connection with the importing or exporting activities; and
4. Examining the deposit accounts that the person under inspection has opened at commercial banks or other financial institutions with the approval of the director of the directly competent Customs or that of the subordinate Customs authorized thereby.

Article 15 Where the Customs identify that a person people under inspection may transfer, conceal, alter or destroy the accounting books, documents and other related materials during inspection, the Customs may, with the approval from the director of the directly competent Customs or that of the subordinate Customs authorized thereby, seal up and seize the forgoing documents as well as the related electronic data storage mediums. When taking such actions, they shall not obstruct the normal production and business operation of the person under inspection.
After ascertaining the relevant facts and obtaining evidence, the Customs shall promptly break seal and release the accounting books, documents and other related materials as well as the related electronic data storage mediums.

Article 16 When the Customs identify that a person under inspection is suspected of having imported or exported goods in violation of the provisions of the Customs Law or other relevant laws and administrative regulations during inspection, the Customs may, with the approval from the director of the directly competent Customs or that of the subordinate Customs authorized thereby, seal up and seize the imported or exported goods concerned.

Article 17 Persons under inspection shall assist the Customs with the Customs inspection work, and provide necessary work conditions.

Article 18 Persons under inspection shall subject themselves to the Customs inspection, report the particulars truthfully, provide accounting books, documents and other related materials, and shall not refuse the inspection or postpone the provision of the said materials or conceal any facts.
When using computers to keep accounts, the persons under inspection shall provide the Customs with accounting software, instruction manuals and the related materials.

Article 19 Where the Customs examine or make copies of the accounting books, documents and other related materials of a person under inspection or, enter the premises where the person under inspection is engaged in the production and business operation or the places for storage of goods to conduct an inspection, the legal representative, personnel in charge or the representative appointed by the person under inspection shall arrive at the scene and at the Customs' request, sort out accounting books, open places where goods are stored, move goods or open packages of goods.

Article 20 Where the Customs conduct an inspection, all enterprises and entities having financial contacts or other business contacts with a person under inspection shall truthfully report the relevant particulars of the person under inspection, and provide the relevant information and supporting documents.

Article 21 When conducting an inspection, the Customs may entrust professional agencies with the task of arriving at professional conclusions concerning accounting, tax and other related issues.
The professional conclusions drawn by the agencies entrusted by a person under inspection in respect of accounting, tax and other areas may be used as reference for Customs inspection.

Article 22 The Customs inspection group shall, after conducting an inspection, submit an inspection report to the Customs. Where the inspection report alleges that a person under inspection is suspected of violating laws, the person under inspection shall be solicited for opinions concerning the facts ascertained in the inspection report before the same is submitted to the Customs. The person under inspection shall submit to the Customs such opinions in writing within seven days from the date of receiving relevant materials.

Article 23 The Customs shall, within 30 days from the date of receiving an inspection report, arrive at a conclusion of Customs inspection and serve it to the person under inspection.
The Customs shall set out reasons for arriving at conclusions of Customs inspection, and inform persons under inspection of their rights.

Chapter IV Treatment in Customs Inspection

Article 24 Where, upon the inspection conducted by the Customs, it is identified that Customs duties or taxes at other import stages are short-levied or not levied, the Customs may request the person under inspection to pay the amount of taxes that should be levied in accordance with the provisions of the Customs Law and relevant tax laws or administrative regulations. If any Customs duties and taxes are short-levied or not levied due to any act in violation of the Customs regulations committed by the person under inspection, the Customs may collect the amount of taxes payable in accordance with the provisions of the Customs Law and relevant tax laws or administrative regulations.
Where persons under inspection fail to pay the amount of taxes payable within the prescribed time limit determined by the Customs, the Customs may take mandatory execution measures in accordance with the provisions of Paragraphs 1 and 2 of Article 60 of the Customs Law.

Article 25 Where the imported or exported goods sealed up and seized in accordance with the provisions of Article 16 hereof, upon inspection, have been ruled out of any violation of laws, the Customs shall promptly break the seal and release the goods. Where the goods are ascertained as illicit imports or exports through inspection, the Customs shall deal with the case in accordance with the provisions of the Customs Law and the Implementing Regulations of the Customs on Administrative Punishment.

Article 26 Where the Customs deem, upon inspection, that a person under inspection commits any act in violation of regulations on Customs supervision, the Customs shall deal with the case in accordance with the provisions of the Customs Law and the Implementing Regulations of the Customs on Administrative Punishment.
When voluntarily reporting acts violating regulations on Customs supervision to the Customs and accepting the treatment of the Customs, enterprises and entities directly related to imported or exported goods shall be imposed a lighter or reduced administrative penalty.

Article 27 Where the Customs identify, upon inspection, that a person under inspection commits any smuggling act which constitutes a crime, criminal liability shall be pursued in accordance with the law; if such an act does not constitute a crime, the Customs shall deal with the case in accordance with the provisions of the Customs Law and Implementing Regulations of the Customs on Administrative Punishment.

Article 28 The amount of taxes that are short-levied or not levied and collected by the Customs, the smuggled goods and illicit income confiscated, as well as the fines imposed shall be all turned over to the State Treasury.

Article 29 Where there is any tax dispute arising between a person under inspection and the Customs, such a dispute shall be settled in accordance with the provisions of Article 64 of the Customs Law.

Chapter V Legal Liability

Article 30 Where persons under inspection commit any of the following acts, the Customs shall order them to make corrections within a prescribed time limit; if they fail to do so, a fine of CNY20,000 to CNY100,000 shall be imposed. In serious cases, the registration of Customs declaration shall be canceled; direct responsible personnel in charge and other directly responsible personnel shall be imposed a fine of CNY5,000 to CNY50,000; if such violations constitute a crime, criminal liability shall be pursued in accordance with the law:
1. Providing false information to the Customs or concealing important facts;
2. Refusing or delaying in furnishing the Customs with the accounting books, documents and other related materials as well as related electronic data storage mediums;
3. Transferring, concealing, altering or destroying the Customs declaration documents, import and export documents, contracts and other materials directly related to the import and export business as well as related electronic data storage mediums.

Article 31 Where persons under inspection fail to compile or retain the Customs declaration documents, import and export documents, contracts and other materials directly related to the import and export business in accordance with the relevant provisions, the Customs shall order them to make corrections within a prescribed time limit; if they fail to do so, a fine of CNY10,000 to CNY50,000 shall be imposed. In serious cases, the registration of Customs declaration shall be canceled; directly responsible personnel in charge or other directly responsible personnel shall be imposed a fine of CNY1,000 to CNY5,000.

Article 32 Where persons under inspection fail to establish or compile accounting books according to the relevant provisions, or transfer, conceal, falsify or destroy accounting books, they shall be held legally accountable in compliance with the relevant provisions of the Accounting Law.

Article 33 Where Customs officers neglect duties, play favoritism and commit irregularities, abuse authority, or exercise power to extort or accept bribes from persons under inspection and such violations constitute a crime, they shall be investigated for criminal liability in accordance with the law; if such violations do no constitute a crime, they shall be imposed disciplinary actions according to law.

Chapter VI Supplementary Provisions

Article 34 These Regulations shall take effect as of the date of promulgation.