Pet companies purchase imported pet food and falsely report it as cross-border e-commerce for secondary distribution and smuggling in China

Pet companies purchase imported pet food, falsely report it as cross-border e-commerce for secondary distribution in China, and smuggle it

Q: Our company is a shipping company. For operational needs, our company leases a ship under its name to other companies in the same industry in the form of bareboat charter. In order to carry out the foreign leasing business, the same company went through the formalities for the export of the means of transport at a certain customs, but the vessel did not go through the formalities for exporting the leased goods. It's been more than 3 years, will our company still be punished for this?

Answer: According to the statement, your company's behavior constitutes a violation of the law, and because the violation has exceeded three years, you can be exempted from administrative punishment according to the circumstances. According to Article 25 of the Measures for the Supervision and Administration of Inbound and Outbound Means of Transport, when a means of transport leaves the country, the person in charge of the means of transport shall declare to the Customs according to different modes of transport, and submit the Declaration Form for the Exit of Customs Vessels (Port), the Declaration Form for the Exit of Customs Aircraft, the Declaration Form for the Exit of Railway Trains, the Declaration Form for the Exit of Customs Highway Vehicles (Port), and other documents that shall be submitted for inspection as specified in the above-mentioned declarations. According to the provisions of Paragraph 2 of Article 7 of the Measures, if a means of transport is imported or exported as goods by leasing or other means of trade, in addition to going through the formalities for entering or exiting the country for the means of transport entering or leaving the country in accordance with these Measures, the import and export declaration procedures for the means of import and export shall also be handled in accordance with the relevant regulations. According to the first paragraph of Article 36 of the Administrative Punishment Law, if the illegal act is not discovered within two years, no administrative punishment shall be given; Where citizens' lives, health, safety, or financial security are involved and there are harmful consequences, the above period is extended to five years. Except as otherwise provided by law. In summary, your company's behavior constitutes an illegal act, and in view of the fact that the above-mentioned illegal acts have not been discovered for more than two years, no administrative punishment should be given.

Typical case: After investigation by Y Customs, the party, a pet limited company, has committed the following illegal acts:

Between June 2020 and November 2021, the party distributed part of the pet food purchased from overseas to Hu (handled in a separate case), and Hu put the party's pet food on the shelves in a domestic Taobao store (non-cross-border e-commerce channel), and after the consumer placed an order to purchase, Hu summarized and forwarded the consumer's personal information and order information to the party, and the party integrated and sent these order information to a technology company in Hainan (criminal liability was investigated in a separate case). A technology company in Hainan then forwarded the order of the above-mentioned goods to a supply chain management company in Hainan (criminal liability was investigated in a separate case), and the goods were imported through customs clearance in the form of cross-border e-commerce retail import. The parties and Hu falsely declared the secondary sales of goods as cross-border e-commerce retail imports to enter the country through the above means, with a total of 22,801 pieces and a dutiable value of RMB 6,854,335.01. After calculation, the tax payable for the above-mentioned commodities is 1,023,315.13 yuan, the tax paid is 425,043.52 yuan, and the actual customs tax evaded is 598,271.61 yuan. According to Article 11 of the Discretionary Criteria for Customs Administrative Penalties (I), the dutiable value of the smuggled goods corresponding to the tax evasion by the parties concerned is RMB 4,007,044.25. The above acts are evidenced by evidence such as the decision not to prosecute, the procuratorial opinion, the prosecution opinion, the tax verification certificate, the inquiry record, the copy of the interrogation record, the copy of the interrogation record, the WeChat chat record, the electronic data of the tax verification certificate for suspected smuggled goods and articles, the electronic data such as the public service data obtained, the order data and the "three orders" data, and the letter of commitment to admit wrongs and accept punishment.

Legal Analysis and Compliance Guidelines: According to the provisions of Paragraph 1 of Article 24 of the Customs Law, the consignee of imported goods and the consignor of exported goods shall truthfully declare to the Customs and submit the import and export license and relevant documents for inspection. According to the provisions of Article 86 (3) of the Law, if the import and export goods or articles or transit, transit or transport goods are falsely declared to the customs, a fine may be imposed, and if there are illegal gains, the illegal gains shall be confiscated. According to the provisions of Article 15 (3) of the Regulations on the Implementation of Customs Administrative Penalties, if the name, tariff code, quantity, specification, price, mode of trade, place of origin, place of departure, place of arrival, final destination or other items that should be declared of the imported and exported goods are not declared or the declaration is false, which affects the management of the state license, a fine of not less than 5% but not more than 30% of the value of the goods shall be imposed, and if there are illegal gains, the illegal gains shall be confiscated. According to Article 7, Paragraph 2 of the Regulations on the Implementation of Customs Administrative Penalties, a person who violates the Customs Law and other relevant laws and administrative regulations, evades customs supervision, evades the tax payable, evades the state's prohibitive or restrictive management of entry and exit, evades customs supervision by concealing, camouflaging, concealing, making false declarations or other means, and transports, carries, or mails goods or articles that are prohibited or restricted from entering or leaving the country or goods or articles for which taxes shall be paid in accordance with the law through the place where the customs is established. In accordance with the provisions of Article 9, Paragraph 1 (3) of the Implementing Regulations, whoever commits any of the acts listed in Articles 7 and 8 of these Implementing Regulations, evades the tax payable but does not evade the management of the permit, and smuggles goods or articles for which taxes shall be paid in accordance with the law, shall confiscate the smuggled goods and articles and illegal gains, and may also impose a fine of not more than 3 times the amount of tax payable for evasion. In accordance with the provisions of Article 56 of the Implementing Regulations, if the Customs makes an administrative penalty decision to confiscate the goods, articles or smuggled means of transport, and if the goods, articles or smuggled means of transport cannot or cannot be confiscated, the Customs shall recover the equivalent value of the above-mentioned goods, articles and smuggled means of transport.

In this case, the party, a pet limited company, purchased pet food from overseas and then distributed part of the pet food to Hu (handled in a separate case). The specific distribution model is through Hu's domestic Taobao store (non-cross-border e-commerce channel) to put the party's pet food on the shelves, and after the consumer places an order to buy, Hu summarizes and forwards the consumer's personal information and order information to the party, and the party integrates and sends these order information to a technology company in Hainan (criminal liability is investigated in a separate case). A technology company in Hainan then forwarded the order of the above-mentioned goods to a supply chain management company in Hainan (criminal liability was investigated in a separate case) and imported the goods through customs clearance in the form of cross-border e-commerce retail import, which constituted smuggling. After calculation, the parties and Hu falsely declared the secondary sales of goods as cross-border e-commerce retail imports through the above-mentioned methods, a total of 22,801 pieces, with a dutiable value of RMB 6,854,335.01, the tax payable for the above-mentioned goods was RMB 1,023,315.13, the tax paid was RMB 425,043.52, and the actual customs tax evaded was RMB 598,271.61.

Based on the above, in accordance with Article 7 (2) of the Regulations on the Implementation of Customs Administrative Penalties, the parties, a technology company in Hainan and a supply chain management company in Hainan falsely declare the nature of trade to evade customs supervision and evade taxes, which is an act of smuggling. The parties, a technology company in Hainan, and a supply chain management company in Hainan played an equal role in smuggling activities, and should jointly bear legal responsibility. Hu, as the distributor of the party, participated in the smuggling of the party, and should jointly bear the responsibility of the party. In accordance with the provisions of Article 9, Paragraph 1 (3) of the Regulations on the Implementation of Administrative Penalties of the Customs, Customs Y decided to impose the following administrative penalties on the parties: confiscation of smuggled goods worth RMB 1,115,681.41. Because the smuggled goods have already been sold, they cannot be confiscated. In accordance with the provisions of Article 56 of the Regulations on the Implementation of Customs Administrative Penalties, the equivalent value of the smuggled goods of RMB 1,115,681.41 was recovered from the parties.

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