The General Administration of Customs (GAC) issued the Announcement on the Smooth Implementation of the Measures for Customs Supervision over Processing Trade Goods on December 31 2010. Announcement 93, which took effect upon issuance, provided additional clarity on provisions in the GAC's Decision to Revise the PRC Customs Processing Trade Goods Supervision and Administrative Procedures (II) (Order 195), issued on November 1 2010 and effective December 5 2010 (for further details please see "Revised procedures for processing trade goods").

Announcement 93 lists eight circumstances in which enterprises are prohibited from using processing trade goods as collateral, and outlines the application requirements to collateralise processing trade goods. The announcement also defines several terms used in Order 195. For example, 'separate management' means that processing trade goods and non-processing trade goods must be separately stored and on separate accounts. Customs will review the enterprise resource planning systems of certain large-scale industries to confirm that they are capable of segregating processing trade good data from non-processing trade good data in compliance with the separate management requirements.

Moreover, 'places registered with Customs' refers to the locations registered when companies applied for processing trade, and companies seeking to change storage locations must obtain Customs' approval. Finally, 'Direct export without returning' of outward processing goods means that the processed goods are exported out of China, shipped to the special supervised zone or bonded supervised area or exported through deep processing and transfer

Furthermore, the announcement states that the amount of the bond or bank guarantee for outsourced processing shall be determined based on the customs duty and tax that would otherwise be payable on the bonded materials used in the processing.

Finally, the announcement states that relevant enterprises should register with Customs in accordance with the Customs Registration Requirement of Enterprise Engaging in Business of Customs Declaration (GAC Order 127).

For further information on this topic please contact Eugene Lim at Baker & McKenzie's Hong Kong office by telephone (+852 2846 2413), fax (+852 2845 0476) or email ([email protected]).