“Untruthful Declaration” Shall be Inevitably Imposed of Administrative Punishment?

In the procedure of the import and export declaration, to identify the commodity classification (“CC”, viz choosing the Tariff Code) is a skill requires high technicality and professionalism. In practice, different enterprises, even different administrations of customs (“AC”) may identify different CCs for even same goods. Where an enterprise declares a Tariff Code which is different from the identification of AC, it may be deemed by AC as an untruthful declaration (“UD”) and imposed of administrative punishment (“AP”), or be deemed as smuggling and imposed of criminal punishment. Those punishments may not only bring loss to those enterprises, but also bring other bad effects, such as the customs grade may go down, or the reputation may be damaged. However, there are also some enterprises which have not been imposed of any punishments.

Why UD related to CC will bring different results? What is the standard to identify UD? How to prevent and deal with UD?

Article 24 of “Customs Law” (amended in 2000), and Article 7 of “Provisions on Declaration of Import and Export Goods” (comes into effect in 2003) have stipulated that the consignor and consignee shall make an accurate declaration to AC, but these articles have not defined, or clarified the constitutive requirements of UD. Article 86 of “Customs Law”, Article 15 and 16 of “Regulation on the Implementation of Customs Administrative Punishment” (comes into effect in 2004) have simply stipulated the measures of AP on UD. Till now, there is no definite criterion to identify the subjective aspect of UD, whether intention is required. Because of the above reasons, different ACs, even different departments of the same AC may have different ideas, which leads the different judgments on similar cases.

In terms of administrative law, the intention is the essential condition on judging a party’s liabilities, although under some special circumstances, the principle of presumptive fault may be applied, but if the party can prove that it has no intention, it dose not need to undertake the administrative liabilities. This rule shall be applied to AP by AC. For this reason, once an enterprise declares CC which is different from the identification of AC, it is improper to impose AP without considering whether it has intention or not.

Maybe AC has been aware of this problem, Article 9 of “Rules on the Administration of the Levying of Duties on Imported and Exported Goods” (comes into force in 2005) has stipulated that “……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.” Article 12 of “Provisions on the Administration of the Commodity Classification of Import and Export Goods”(“Provision on CC”) has stipulated that “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, …… the AC may re-determine a new tariff code as required……, and shall inform the consignor or consignee or the agent thereof to modify or delete the customs declaration.” Comparing with “UD”, “incorrect tariff code”, “incorrect CC” in the above two decrees show that the party does not have intention on the subjective aspects, but have the fault in the objective aspects. This conclusion can be proved in accordance with Article 26 of the “Provisions on CC,”” anyone that is in violation of the present Provisions, ……, or is in violation of the customs surveillant provisions ……, shall be punished by the customhouse in accordance with the Customs Law and the Regulation of the Customs of the PRC on the Implementation of Administrative Penalties; ……”, which means the action in Article 12 of this Provisions shall add intention as the element of subjective aspects.

For an enterprise, it shall try it best to prevent UD in the procedure of the import and export declaration. TO prevent this, the enterprise can stipulate the liabilities of the agent in the contract, strictly conduct the inner supervision procedures for the department of import and export, and apply for the preliminary CC on the imported commodities to AC.

In practice, where there is a dispute between the CC declared by enterprise and identified by AC, if enterprise does not have intention, it is suggested enterprise may communicate with the AC’s staffs, state truth and provide relevant evidence to persuade AC. If necessary, enterprise can negotiate with AC in accordance with the procedures stipulated in “Promulgation of the negotiation and oppugnation procedures concerning commodity classification”. Last but not least, if enterprise insists that it has identified the commodity correctly, and AP imposed by AC is incorrect, it can apply for the administrative review to protect its rights.