The Shanghai Municipal Commission of Commerce, in collaboration with four other authorities, released a notice on Nov 11 to implement a regulatory plan to smoothly promote pilot temporary entry repairs in the China (Shanghai) Pilot Free Trade Zone.

According to the plan, in the customs-supervised areas (hereinafter referred to as pilot areas) within the Shanghai FTZ (including the Lin-gang Special Area), bonded treatment is applied to goods temporarily permitted to enter from abroad for repairs. The goods, when re-exported, will be exempt from customs duties. When the goods are not re-exported but instead converted for domestic sales, customs duties will be levied in accordance with regulations.

I. Pilot conditions and procedures

1. Eligibility requirements for pilot enterprises

1) Enterprises applying to engage in pilot temporary entry repairs shall have independent legal status, with market entities registered in the Yangshan Special Comprehensive Bonded Zone, Shanghai Pudong Airport Comprehensive Bonded Zone, Shanghai Waigaoqiao Port Comprehensive Bonded Zone, Shanghai Waigaoqiao Free Trade Zone, or other customs special supervision areas approved by the State Council within the Shanghai FTZ (including the Lin-gang Special Area). The enterprises shall comply with relevant industry management norms and technical standards, and possess the corresponding business scope, production site, production qualifications, and technical personnel necessary for conducting temporary entry repairs.

2) The enterprises shall clearly define the source of the goods to be repaired, and an arrangement for the destinations of the repaired goods (either for re-export or for domestic sales).

3) Goods eligible for temporary entry repairs fall into the following categories: (1) Goods listed in the maintenance and repair product catalog for comprehensive bonded zones jointly formulated by the Ministry of Commerce, the Ministry of Ecology and Environment, and the General Administration of Customs; (2) Other goods permitted for bonded maintenance and repair within the customs special supervision areas of the Shanghai FTZ (including the Lin-gang Special Area) in accordance with relevant regulations.

* Unless permitted by laws, administrative regulations, or provisions made by the State Council or its authorized departments, repair operations involving goods prohibited from import and export are not allowed within the pilot areas, nor are allowed to be dismantled or scrapped under the guise of repair methods. Enterprises engaged in repair operations shall strengthen quality control of repair materials to minimize the generation of solid waste and ensure that the solid waste generation rate remains within reasonable limits.

4) The enterprises shall develop practical and feasible repair operation specifications, safety operation procedures, and pollution prevention and control plans. Repair operations shall comply with relevant industry management norms and technical standards, perform quality assurance in accordance with laws, ensure that exhaust gas, wastewater, and noise are discharged in compliance with legal standards, dispose of solid waste according to laws, fulfill obligations such as soil and groundwater pollution prevention and safety production, and recommend the use of coatings and cleaning agents with low-volatile organic compound content.

5) The enterprises shall establish an information management system that complies with customs supervision requirements, which can achieve full-process tracking of repair-related consumption and other information. The system should also provide specialized management for goods awaiting repair, damaged parts replaced during the process of repairs, residual materials generated during repairs, and waste materials left after repairs.

2. Pilot application processes

Applying enterprises shall submit application materials according to the requirements of the administrative committees of their respective customs-supervised areas. These committees, in collaboration with local commerce, ecology and environment, and customs authorities, will determine the list of pilot enterprises, which will then be reported to the Shanghai Municipal Commission of Commerce, Shanghai Customs, Shanghai Municipal Bureau of Ecology and Environment, Shanghai Municipal Bureau of Finance, and Shanghai Municipal Tax Service for filing. If pilot enterprises undergo significant changes in business scope, production qualifications, types of goods repaired, or repair and operation processes, they shall promptly notify the relevant administrative committees. The committees may require pilot enterprises to submit supplementary materials or reapply accordingly, and relevant information shall be reported to the five aforementioned municipal authorities.

II. Regulatory requirements

1. Strictly manage the destinations of goods

The destinations of goods for temporary entry repairs shall, in principle, be specified when relevant enterprises handle entry procedures. The customs shall handle relevant procedures under bonded maintenance and repair arrangements. Goods re-exported after repairs will be exempt from customs duties, import VAT, and consumption tax. Goods not re-exported but converted for domestic sales must complete import procedures as required, with relevant permits verified on the basis of the actual statuses of the repaired goods after declaration and inspection. Import duties, import VAT, and consumption tax will be levied in accordance with regulations. Goods that are prohibited from import by China, or restricted from import without prior approval, or require pre-shipment inspection but have not undergone such inspection because of temporary entry repairs, must be re-exported after repair and are not permitted to be converted for domestic sales.

2. Strengthen the supervision of the repair process

Regarding goods for temporary entry repairs, from the time of entry until the completion of customs procedures for re-export or domestic sales, pilot enterprises shall bear the primary management responsibility, and strictly store, repair, and transport these goods in accordance with customs supervision requirements, relevant industry management norms, and technical standards. Relevant administrative committees and local customs departments shall supervise the pilot enterprises according to the relevant bonded maintenance and repair requirements. The pilot enterprises shall establish information management systems as required, and upload repair-related consumption and other information to relevant information systems. Relevant departments shall strengthen supervision and risk prevention through information technology and other means, and promptly investigate and punish violations. In principle, all residual materials, old parts, and defective parts generated or replaced during the repair processes shall be re-exported. When re-export is not possible, the materials and parts must not be sold domestically, and enterprises shall dispose of them in compliance with relevant regulations. For materials requiring disposal outside the pilot areas, the enterprises must complete the necessary customs exit procedures.

3. Strengthen ecological and environmental protection

Pilot enterprises shall assume primary responsibility for environmental protection, discharge exhaust gas, wastewater, and noise according to legal standards, and fulfill obligations such as soil and groundwater pollution prevention and control. They shall establish a solid waste management record, and declare information, including the types, quantities, flow directions, storage, utilization, and disposal of solid waste generated, in accordance with laws and regulations through the National Management Information System for Solid Waste. Relevant administrative committees and ecological environment departments shall conscientiously fulfill their supervisory and management responsibilities, formulate ecological and environmental supervision plans, clarify the requirements for the subject, content, and methods of supervision, and strengthen the entire process of ecological and environmental supervision.

III. Standards for violations and exit procedures

1. Circumstances requiring rectification

Pilot enterprises will be required to make corrections by local customs, ecological environment departments, or other relevant authorities under the following circumstances:

1) Failure to establish an information management system as required;

2) Failure to promptly report and submit supplementary materials or reapply when there are significant changes in the business scope, production qualifications, types of repaired goods, repair and operation processes, and so forth;

3) Information declared to the customs or uploaded during import, repair, domestic sales, and other processes contains false content, provided it has not caused substantial impact;

4) Failure to declare related information through the National Management Information System for Solid Waste as required;

5) Minor violations of other regulatory requirements set by ecological environment, customs, or other related departments;

6) Inadequate implementation of safe production responsibilities in minor circumstances.

2. Circumstances for removal from the pilot program

Pilot enterprises will be removed from the list of temporary entry repair pilot enterprises under any of the following circumstances:

1) Relocation out of the customs-supervised area within the Shanghai FTZ (including the Lin-gang Special Area) where it is currently located;

2) Bankruptcy or revocation of business qualifications by government regulatory authorities;

3) Downgrading of the enterprise's credit status by the customs to "dishonest enterprise";

4) Engaging in or assisting in false declarations during the process of import or domestic sales, resulting in substantial impacts such as tax evasion, violation of inspection regulations, or violations of import restrictions or prohibitions;

5) Engaging in dismantling, scrapping and other operations in violation of regulations under the guise of temporary entry repairs;

6) Improper disposal of old or damaged parts replaced during the repair process, as well as residual materials generated during the repair process;

7) Severe violations of other regulatory requirements set by customs, ecological environment, or related departments, or refusal to make corrections;

8) Due to inadequate implementation of safe production responsibilities, major accidents concerning safe production or major safety hazards occur;

9) Other circumstances under which pilot enterprises fail to meet requirements for conducting pilot temporary entry repairs.

3. Exit procedures

Relevant administrative committees, in collaboration with local commerce, ecological environment, and customs authorities, shall make a joint decision on the removal of enterprises from the list of the pilot operations, and report relevant information to the Shanghai Municipal Commission of Commerce, Shanghai Customs, Shanghai Municipal Bureau of Ecology and Environment, Shanghai Municipal Bureau of Finance, and Shanghai Municipal Tax Service. Enterprises that have been removed from the list must resubmit applications if they wish to resume operations.

IV. Other matters

During the implementation of the regulatory plan, in the event of significant adjustments to relevant laws, regulations, and policies, the content of the regulatory plan shall be promptly adjusted accordingly. Specific issues arising during the implementation of the regulatory plan will be jointly interpreted by the five aforementioned municipal authorities.

 

Source: Shanghai Municipal Commission of Commerce

Note: The English version of the regulatory plan is for reference only; the official Chinese document shall prevail.