Decree No. 197 of the General Administration of Customs of the P. R. China

Article 6 Any consignee and/or consigner of imported/exported goods under the class AA shall satisfy all of the following requirements:

1. Compliant with conditions of the class A, and having been applied to the class A management for one year or more;

2. Compliant with the error rate of 3% or less in import and export declarations during previous year;

3. Verified by Customs authorities as meeting the requirements for customs administration, enterprise operation & management, and trading safety;

4. Submitting annually an Assessment Report on Enterprise Operation & Management and the audit report for the previous year issued by an accounting firm; and submitting semi-annually a Statement on Import & Export Businesses.

Article 7 Any consignee and/or consigner of imported/exported goods under the class A shall satisfy all of the following requirements:

1. Having been applied to the class B management for one year or more;

2. Neither committed the crime of smuggling and the act of smuggling nor violated Customs supervision provisions during a period of one consecutive year;

3. Never under any Customs administrative punishment for infringement on any intellectual property rights by imported or exported goods during a period of one consecutive year;

4. Having no default on taxes or fines payable during a period of one consecutive year;

5. Having the gross import and export value of USD 500,000 or above for previous year;

6. Having the error rate of 5% or less in import and export declarations during previous year;

7. Having a sound accounting system with truthful and complete business records;

8. Initiative to cooperate with Customs administration by timely going through various customs formalities and submitting truthful, complete and valid documents and certificates;

9. Submitting annually an Assessment Report on Enterprise Operation & Management;

10. Going through according to provisions the replacement and alteration of the Registration Certificate of the Customs of the People’s Republic of China on Customs Declaration by Consignees and Consigners of Imported & Exported Goods;

11. Having no unfavorable records with the administrative departments or agencies of commerce, the People's Bank, industry & commerce, taxation, quality inspection, foreign exchange, supervision, and so on.

Article 8 Any consignee or consigner of imported/exported goods, under any of the following circumstances, shall be subject to the management under class C:

1. Having committed the act of smuggling;

2. Having violated Customs supervision regulations for three times or more within one year, and violation times during previous year exceed 1‰ of the aggregate number of declaration forms and entry/exit filing lists, or having been aggregately fined CNY one million or more for violation of Customs regulations within one year;

3. Having been subject to any Customs administrative punishment twice within one year for infringement on intellectual property rights by imported or exported goods;

4. Having defaulted on taxes or fines payable in the amount of CNY 500,000 or less.

Article 9 Any consignee or consigner of imported/exported goods, under any of the following circumstances, shall be subject to the management under class D:

1. Having committed the crime of smuggling;

2. Having committed the act of smuggling twice within one year;

3. Having been subject to any Customs administrative punishment thrice or more within one year for infringement on intellectual property rights by imported or exported goods;

4. Having defaulted on taxes or fines payable in the amount of over CNY 500,000.

Article 10 Any consignee and consigner of imported/exported goods, uncovered by the circumstances mentioned in preceding Articles 8 and 9 and compliant with any of the following conditions, shall be subject to the class B management:

1. Under registration for the first time;

2. No adjustment in management class after the first-time registration;

3. Any enterprise under the class AA neither meets relevant requirements of the class AA nor meets relevant requirements of the class A;

4. Any enterprise under the class A does not meet relevant requirements of the class A.

Article 11 Any processing enterprises registered with Customs authorities shall be subject to the management classified by consignee and/or consigner of imported/exported goods.

Section 2 Customs Brokerage Enterprises

Article 12 Any customs brokerage enterprise under the class AA shall satisfy all of the following requirements:

1 Compliant with the management conditions under the class A and having been applied to the class A for one year or more;

2. Having declared as a broker for 20,000 or more (5,000 or more for China’s central and western regions) customs declaration forms and entry/exit filing lists during previous year;

3. Compliant with the error rate of 3% or less in import and export declarations during previous year;

4. Verified by Customs authorities as meeting the requirements for Customs administration, enterprise operation & management, and trading safety;

5. Submitting annually an Assessment Report on Enterprise Operation & Management and the audit report for the previous year issued by an accounting firm; and submitting semi-annually a Statement on Customs Brokerage Businesses.

Article 13 Any customs brokerage enterprise under the class A shall satisfy all of the following requirements:

1. Having been applied to the class B management for one year or more;

2. Both the enterprise and its practicing customs declarers have never committed the crime of smuggling and the act of smuggling, and have never violated Customs supervision regulations for one consecutive year;

3. The goods declared under agency have never been confiscated by the Customs authorities due to the infringement on intellectual property rights for one consecutive year;

4. Having no default on taxes or fines payable for one consecutive year;

5. Having declared as a broker for a total of 3,000 or more import/export declaration forms and entry/exit filing lists during previous year;

6. Compliant with the error rate of 5% or less in import/export declarations as a broker during previous year;

7. Having made accounts and business records according to law, and having recorded all the activities regarding the commissioned declaration business in a truthful, accurate and integral manner;

8. Submitting annually an Assessment Report on Enterprise Operation & Management;

9. Going through according to provisions the extension of registration license and the replacement and alteration of the Registration Certificate of the Customs of the People’s Republic of China on Customs Declaration by Customs Brokers;

10. Having no unfavorable records with the administrative departments or agencies of commerce, the People's Bank, industry & commerce, taxation, quality inspection, foreign exchange, supervision, and so on.