Announcement of the General Administration of Customs of P. R. China, No. 55, 2010

In order to standardize the Customs administration over processing trade enterprises and facilitate enterprise operations under effective Customs supervision, the General Administration of Customs of P. R. China (GACC) formulated the Rules of Merging by Classification for Imports and Exports through Processing Trade under Networked Supervision (Trial) (hereinafter referred to as Rules of Merging, please see the Annex for details).

Relevant matters concerning the implementation of the Rules of Merging are hereby announced as follows:

I. The Rules of Merging are applicable to processing trade enterprises under networked Customs supervision (hereinafter referred to as "networked enterprises") by using electronic account books in accordance with the Customs Measures of the People's Republic of China on Applying Networked Supervision to Processing Trade Enterprises (Decree of the GACC, No. 150).

II. The networked enterprises shall, based on their actual situation, orderly adopt the 6 rules in the Rules of Merging, which shall be verified by relevant Customs authorities upon their examination of the merging relationships.

III. As of the date of enforcement of this Announcement, new networked enterprises shall register and change their electronic account books with the Customs in accordance with the Rules of Merging.

IV. In the event that any in-use electronic account books of existing networked enterprises do not comply with the Rules of Merging, the enterprise concerned is required to apply to the Customs for registration of a new electronic account book in accordance with the Rules of Merging prior to December 31, 2011.

Upon the registration of new electronic account books, the original electronic account books shall be verified and then written off after any remaining materials are carried over to the new account books.

Any networked enterprises, in the case of temporary inability to adopt the 4th rule due to the developing progress of the auxiliary information management platform for processing trade, may still continue with their current practices at present. And the time of implementing the Rules of Merging is to be otherwise announced by relevant Customs authorities in the light of the developing progress of the platform.

V. Major materials refer to the major imported materials and parts constituting finished products; and non-major materials refer to other imported materials and parts constituting finished products.

Where implementing classified management by computer systems as per the importance of imported materials and parts, the networked enterprises may apply to relevant Customs authorities for distinguishing between major materials and non-major materials in Customs supervision.

The relevant Customs authorities may, according to regulatory needs, identify major materials and non-major materials based on factors such as trade control conditions, values, and unit consumptions of the imported materials and parts.

VI. The "auxiliary information management platform for processing trade" refers to an information management platform established to work with the electronic account-book system for the networked supervision over processing trade; the platform is used to help Customs authorities conduct verification, write-off and accounting of part-number-based commodities for many processing trade enterprises under networked supervision.

Such information management platforms shall pass the inspection and acceptance of the GACC prior to their entry into operation.

VII. Contents of this Announcement shall take effect as of September 1, 2010.

Annex: Rules of Merging by Classification for Imports and Exports through Processing Trade under Networked Supervision (Trial).doc