Case of Administrative Reconsideration: Dispute over duty payment of Determination of the Dutiable Value

2010-6-29 14:22:53  

1, how it happened

    A company imported a set of equipments in 2006 which contained 8 key parts made in Germany. Each of the Germany parts was worth of 500,000 U.S. dollars. Because of a quality problem of one of the Germany parts, the seller agreed to offer a new one after negotiation. This new one was declared to the Customs, and the declaration value was 100 U.S. dollars, attaching the invoice issued by the seller stating the unit price of 100 dollars. The Customs transfer the case to anti-smuggling department to initiate an investigation for the failure of truthfully declaration of the importer. A fine of 20,000 yuan was imposed for the violation to the regulations on Customs control. The unit price of 10,000 U.S. dollars of the Germany key parts was ascertained.

2, the outcomes of the case

    The importer applied for reconsideration to the higher level Customs, requesting the revoking of the original penalty. The applicant announced that both seller and buyer thought the unit price may be any value because it was a part of compensation. Any expenses such as duties and freight were beard by the seller, and the applicant need not pay for it. So the declaration should not be considered as a violation act.

After handling of the case, the Customs administrative consideration authority ascertained that the duty of truthfully declaration embodied in the Customs Law means that the importer shall declare to the Customs according to the attached documents. In this case, the declaration of the price of the applicant was subject to the invoice and other attached documents. And the respondent did not prove the declaration of the price was a truthfully price. Any other evidence was not issued. The fact that the applicant had imported the similar key parts of the equipments valued by 10,000 dollars should not be the evidence of the value of the parts involved the case.  So the consideration authority revoked the penalty decision of the respondent according to article 28 of the Administrative Reconsideration Law of the People's Republic of China.


    The determination of the dutiable Value is one of the most common reasons of the disputes over duty payment. The key points lay on as follows:

(A) the difference between the Goods Offered at No Cost as Compensation or Replacement and the Ones of Common Trade.

The term Goods Offered at No Cost as Compensation or Replacement  mentioned in the Customs Law and relevant regulations of China refer 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. In this case, the applicant should have declared to the Customs under the term of trade mentioned above instead of the term of Common Trade. But the importer did not knew anything about this term of trade, and was imposed a fine. Though the fine was revoked, the costs of the time and the legal relief could have been avoided.

(B) the procedures of dealing with the disputes over determination of the dutiable Value and the consequences.

The Customs may launch a valuation query and perform valuation consultation and determine the dutiable value of the goods that obviously was declared in the lower prices. If there is any suspecting of violation, the case will be transferred to the external auditing body or anti-smuggling body of the Customs. The best method of protecting oneself is to declare truthfully for the exporters and importers. This can avoid the unexpected loss during the period of clearance.

(C) the requirement of the evidence.

According to the administrative laws and other relevant regulations and rules, the three basic elements of the evidence which a specific administrative act is based on are read as follows:  legitimacy, authenticity and relevance. In this case, the evidence issued by the respondent met the requirement of the legitimacy and authenticity, but did not met the requirement of the relevance, which lead to the unconfirmed situation of the actual value of the goods involved in the case. This was why the original penalty decision of the resonant was revoked.

Tags: Administrative Dutiable Value