Where the Tariff Law Sits
The Customs Tariff Law is the foundational statute for tariff administration in China. Before it, the legal basis for tariff collection rested on the Regulations on Import and Export Duties and on customs departmental rules.
Moving from a regulation to a statute changes more than the legal rank. A statute sets out the collection procedure in more detail, states taxpayer rights more clearly, and defines liability for violations more strictly.
The implementing regulations carry those principles down to the operating level.
Procedure for Rate Adjustments
Who decides
Authority to adjust the tariff schedule rests with the State Council. The Tariff Commission handles the technical work.
How adjustments happen
Adjustments fall into annual routine revisions and ad hoc changes. Annual revisions are published with the annual tariff schedule, typically in step with budget arrangements. Ad hoc adjustments address specific situations and carry defined periods of application.
What it means for companies
Putting the adjustment procedure on a statutory footing gives companies more stable expectations about future rate movements. Judging the direction of rates no longer depends on informal channels.
The corollary is that companies can no longer expect to learn about pending adjustments ahead of publication.
Reduction, Refund and Recovery
Reduction
Statutory and specific duty reductions have defined conditions, approval procedures and post-clearance supervision.
One point deserves attention: goods imported under reduced duty usually carry a supervision period. Transferring them or diverting them to other uses within that period requires payment of the duty.
Refund
Refund situations include overpayment, erroneous payment, return shipment, and re-export of goods in their original state due to quality or specification issues.
Refund applications carry a deadline. Miss it and the right lapses.
Recovery
Recovery applies where duty was underpaid or omitted. Where the shortfall results from the declarant’s error, customs has authority to recover. Where it results from a customs error, the recovery period and scope are governed separately.
That distinction matters in practice. A declaration error is the company’s responsibility; a classification error by customs is handled differently.
Origin Administration
The Tariff Law and its regulations address origin management, which bears directly on certificate work.
Determining origin
At the statutory level, two principles are established: wholly obtained goods and goods that have undergone substantial transformation. The specific tests are set by agreements and regulations.
The status of certificates
A certificate of origin is the document that supports a claim to an agreement rate. But the document is form; the substance is whether the goods meet the origin rules.
The regulations make this explicit: customs may require evidence of origin status beyond the certificate itself.
Declaration responsibility
Responsibility for the origin declared on imported goods rests with the declarant, who must be able to demonstrate that the declared origin is true.
This cuts both ways. Importers cannot rely entirely on the certificate furnished by the exporter, and in practice importing customs increasingly verify directly with exporters.
Customs Valuation
Transaction value
Dutiable value is based on the transaction price, subject to conditions: a genuine sale, no unreasonable restrictions, and no conditions affecting price that cannot be determined.
Adjustments
Freight and insurance up to the point of unloading within the territory must be included. Buying commissions and royalties are included subject to specific conditions.
Related parties
Where buyer and seller are related, the acceptability of the transaction value requires additional assessment, and the company must be able to show that the relationship did not affect price.
What Companies Should Prepare
A classification management routine
Classification is not a one-off exercise. A change in formulation, use or packaging can change the tariff line.
Build in a reclassification review whenever a product changes, and check whether the annual schedule revision affects any line in use.
Complete declaration records
Customs audits generally reach back three years. Contracts, invoices, transport documents, payment records and classification rationale should be retained for imported goods.
Distinguish liability categories
Declaration errors caused by the declarant’s own conduct and errors arising from differing interpretations of policy are treated differently. Early disclosure and voluntary reporting generally produce a more favourable outcome than waiting to be found.
An Assessment
What the implementing regulations change, at root, is the shift from administrative management to statutory procedure.
For compliant companies, the rules are more transparent and the expectations more stable.
For companies accustomed to operating on ambiguity, the adjustment cost will be noticeable. But it is not optional.
*This article is based on the Customs Tariff Law and its implementing regulations. Application is subject to GACC announcements and interpretations.*