Recent torrential rainfall in Dongguan has caused significant damage to bonded goods held by some processing trade enterprises. Huangpu Customs has promptly initiated emergency response measures to address the situation of processing trade enterprises affected by the torrential rains and proactively reached out to collect enterprises' concerns and inquiries regarding the disposal of disaster-hit bonded goods, while providing professional guidance on proper claims filing procedures. This document outlines the official criteria for identifying disaster-hit bonded goods and approved disposal methods.
Immediate Action Required: Mandatory Reporting to Supervising Customs Authorities
I. Definition and Scope of Disaster-hit Bonded Goods
Disaster-hit bonded goods refer to bonded imported materials and products in processing-based export operations of the processing trade enterprises that have become non-exportable due to force majeure events or other legitimate reasons subject to Customs verification and approval, resulting in complete loss, quantity shortage, or quality damage.
Force majeure events: As defined in Article 180 of China's Civil Code, force majeure constitutes objective circumstances that are unforeseeable, unavoidable and insurmountable. For example, earthquakes, typhoons, floods, and other natural disasters as well as social events such as military operation can be regarded as force majeure events. As irresistible forces beyond human control, their key characteristics include objective contingency and inevitability, subjective unpredictability, and destructive social impact.
II. Proper Disposal Procedures for Disaster-hit Bonded Goods by Processing Trade Enterprises
1. Immediate Reporting to Supervising Customs Authorities
In the event of complete loss, quantity shortage, or quality damage occurring during the transportation, storage, or processing of disaster-hit bonded goods, processing trade enterprises must promptly report the incident to their supervising Customs authorities. Customs may conduct on-site verification and evidence collection as necessary.
Key Requirement: Regarded as customs-regulated goods, disaster-hit bonded goods shall not be sold or repurposed without Customs authorization by any enterprise, organization, or individual.
2. Disposal of Disaster-hit Bonded Goods Affected by Force Majeure Events
For disaster-hit bonded goods in processing trade affected by force majeure events, Customs shall grant duty-free write-off upon verification if those goods are either completely lost or retain no usable value for recycling even though they are not completely lost.
For disaster-hit bonded goods that have lost their original utility but remain partially usable, Customs will assess applicable duties and deferred tax interest based on the verified damage valuation of such disaster-hit bonded goods and corresponding import material tax rates before processing write-off.
The original imported materials corresponding to disaster-hit bonded goods shall be exempted from import license submission requirements, provided such materials normally fall under the import license control regulations of the National Development and Reform Commission, Ministry of Commerce, Ministry of Ecology and Environment or their authorized agencies.
Key Requirement: When submitting write-off applications within specified periods, enterprises must provide insurance claim statements from insurers along with other valid documentation approved by the Customs.
3. Disposal of Disaster-hit Bonded Goods due to Other Customs-Approved Causes
For disaster-hit bonded goods in processing trade due to other legitimate reasons subject to Customs verification and approval, other than force majeure events, the Customs authorities shall process the write-off procedures after assessing applicable duties and deferred tax interest in accordance with relevant regulations upon submission of certification documents issued by competent authorities and insurance claim statements provided by insurers.
Regarding the original imported materials corresponding to the above-mentioned disaster-hit bonded goods, enterprises shall obtain relevant import licenses as required provided that such materials fall under import license control regulations.
4. Domestic Sales of Disaster-hit Bonded Goods
For domestic sales applications of any disaster-hit bonded goods, enterprises shall conduct declaration using the original imported material descriptions from their processing trade records.
Disposal of Two Special Categories of Goods
(1) Domestic Sales of Disaster-hit Bonded Goods Subject to Tariff-Rate Quotas
For disaster-hit bonded goods affected by force majeure events whose corresponding imported materials fall under tariff-rate quota administration, Customs shall assess duties at the applicable quota rates. For disaster-hit bonded goods due to other legitimate reasons subject to Customs verification and approval, where the corresponding imported materials are subject to tariff-rate quota administration, Customs shall assess duties at the applicable tariff-quota rates upon the enterprise's submission of required import quota licenses in compliance with regulations. Where such import quota licenses are not properly submitted as required by the Customs, the matter shall be processed in accordance with relevant administrative provisions.
(2) Domestic Sales of Disaster-hit Bonded Goods Subject to Additional Special Duties
For disaster-hit bonded goods affected by force majeure events losing original usable value with corresponding imported materials subject to special tariffs, additional duties shall be waived by Customs. For disaster-hit bonded goods due to other legitimate reasons subject to Customs verification and approval with corresponding imported materials subject to special tariffs, additional duties shall be levied as prescribed by Customs.
5. Re-exportation Procedures of Disaster-hit Bonded Goods
Where processing trade enterprises apply for outbound re-export of disaster-hit bonded goods, Customs shall process the application in accordance with re-export regulations and complete the write-off procedures upon submission of valid documentation for the re-export.
6. Destruction Procedures of Disaster-hit Bonded Goods
For disaster-hit bonded goods unsuitable for domestic sales or re-export, processing trade enterprises must engage legally qualified entities to conduct destruction disposal. Customs shall complete the write-off procedures based on relevant materials, including required documentation, the receiving vouchers and disposal certificates issued by the authorized disposal entity.
Processing trade enterprises must declare all income derived from the disposal of such goods to Customs in good faith, whereupon Customs shall assess and collect applicable taxes in accordance with the administrative provisions governing domestic sales taxation of leftover bits and pieces.
III. Documentation Requirements for Disposal Applications of Disaster-hit Bonded Goods
1. A formal written report detailing the disaster-hit bonded goods submitted by enterprises
2. Official endorsement from the competent commerce administration
3. Insurance claim statements issued by the underwriting insurer
Tips
Customs Advisory: Processing trade enterprises experiencing workplace damage or production disruption due to extreme weather events may submit applications to their supervising Customs authorities for modification of storage locations for bonded goods, extension of validity periods for processing trade manual and approval for outsourced processing operations. These measures aim to facilitate swift business resumption and operational stabilization during recovery periods, overcoming all kinds of difficulties as soon as possible.
IV. Regulatory Reference
Measures of the Customs of the People's Republic of China for the Administration of Leftover Bits and Pieces, Surplus Materials and Parts, Defective Products, By-products and Disaster-hit Bonded Goods in Processing Trade (Order No. 111 of the General Administration of Customs of the People's Republic of China, as amended by Order No. 273)
Disclaimer：The above content is translated from Chinese version of Huangpu Customs Service Hotline 12360. The Huangpu Customs Service Hotline 12360 version shall prevail.
Hot News
