Case of Administrative Reconsideration: Dispute over duty payment of recovering the duties

2010-6-29 16:22:34  

1, how it happened.

    In 2005, a company was found out to failed to truthfully declare to the Customs the tariff heading of a imported chemical goods. On June 22, 2007, the Customs issued a Customs Notification for Duty/Tax Recovery which notified that the inaccurate declaration had resulted in the underpayment of import duties and VAT. According to article 51 of the Regulations of P.R.C. on Import and Export Duties, the Customs decided to recover the unpaid duties from the duty payer and issued the Duty/Tax Payment Record on July 16, 2007.

    The company refused to accept the decision of recovering of the duties and applied for administrative reconsideration. The applicant announced that, according to article 62 of the Customs Law, the Customs should recover the duties and VAT within 1 year as from the date on which the original duties were paid. But the Customs failed to be subject to the rules. Therefore, the applicant asked for revoking the specific administrative act of recovering the duties and VAT.

    The respondent of the application announced that the applicant failed to truthfully declare to the Customs, which is a responsibility of importers according to the Customs Law, the Regulations on Import and Export Duties, and other related laws and regulations. According to article 62 of the Customs Law, if the violation by the duty payer has resulted in underpayment of the duties, Customs shall, within 3 years as from the date on which the original duties are paid, recover the underpaid part of the duties. So the act of the recovering the duties should to be affirmed for the facts ascertained concerning it were clear, the evidence was irrefutable, and the basis of application was correct.

2, the outcomes of the case.

   After handling of the case, the Customs administrative consideration authority ascertained that there were no evidences concerning the samples of the goods, though there were some evidences submitted by the respondent such as the declaration documents, written description, written correspondences, and so on. It was impossible to identify the correct tariff headline of the goods involved the case, neither was it to prove the applicant was in violation of the regulations on Customs control, which results in the underpayment of duties. In addition, the facts of violation were not involved in the Customs Notification for Duty/Tax Recovery issued by the respondent. For above reasons,  which means that the major facts were unclear, and evidences were inadequate, the Customs administrative consideration authority made the decision of revoking the specific administrative act of recovering the duties and VAT, and ordered the respondent to undertake the act anew.

3, case comments

    This is a typical case of duty payment disputes. It is not difficult in such cases to protect the legitimate rights and interests of enterprises if we have a clear understanding about the Customs acts of recovering the duties. The key point lays on as follows:

(A) difference between so-called Collecting Duties and Recovering Duties. According to the Customs Law, Where the Customs finds that the duties are short-levied or not levied on a consignment of import or export goods or on inward or outward articles after the release, the Customs shall COLLECT the money payable from the obligatory duty payer within one year of the previous duty payment or the release of the item. If the short-levied or non-levied duties are attributable to the duty payer's violation of the Customs regulations, the Customs may RECOVER the unpaid amount from him within 3 years. The basis of recovering the duties within 3 years is to proving the duty payer's violation of the Customs regulations. 


(B) the basic points of administrative consideration and the principle of deciding the burden of proof. The points lay on the facts and evidences, and the principle so-called Inversion of the Burden of Proof shall be adopted in the case of administrative considerations, which mean that the respondent shall prove the violation of the Customs regulations of the applicant, otherwise the specific administrative act in point will be revoked for the reason of unclear facts and inadequate evidence.

(3) the legal procedures and basis of dealing with the duty payment dispute. According to article 64 of the Customs Law, where the obligatory duty payer is involved in a dispute  over duty payment with the Customs, he shall pay the duties, and then may apply for administrative reconsideration in accordance with relevant provisions; if the decision is still considered unacceptable, he may file a suit in a people’s court according to law. The point must be understood is that the administrative reconsideration is a necessary pre-action procedure.

Tags: duty recovering the duties