On January 4, 2007, to regulate the administration of unit consumption in processing trade and promote the sound development of processing trade, the General Administration of Customs (GAC) promulgated the Measures of the Customs of the People's Republic of China for the Administration of the Unit Consumption in Processing Trade (the “Measures”). With the Measures that became effective on March 1, 2007, the former Measures of the Customs of the People's Republic of China for Administering the Unit Consumption in Processing Trade (2002), promulgated by the Order No.96 of the GAC on March 11, 2002) was concurrently repealed.
Under the Measures, a processing trade enterprise (PTE) shall, in the filing procedure of processing trade, report the unit consumption to the customs for record. A maximum upper value shall be set for the standards for unit consumption and an additional minimum lower value shall be set for the standards for the unit consumption of the export taxable finished products. The standards for unit consumption (the “standards”) shall be formulated by the customs in conjunction with the departments concerned and publicized in the form of public announcement. The standards shall be applicable to the PTE beyond the areas under the special customs supervision or bonded supervision (“PTE beyond the areas”) but shall not apply to PTEs within such areas.
According to the Measures, a PTE beyond the areas shall make filing of or declare the unit consumption to the customs within the standards. In case the unit consumption declared by a PTE beyond the areas falls within the standards, the customs shall, on the basis of the declared unit consumption, verify and write-off the bonded materials; if the declared unit consumption is beyond the standards, the customs shall, on the basis of the maximum upper value or minimum lower value of the standards, verify and write-off the bonded materials. In case the standards are not publicized yet, a PTE shall declare the actual unit consumption to Customs, and Customs shall verify and write-off the bonded materials in accordance with the actual unit consumption of the PTE. A PTE shall declare the following contents for its unit consumption: i) name, serial number, unit, specification, mode, and quality of the materials and finished products under the processing trade; ii) unit consumption for the finished products under the processing trade; and iii) in case a same kind of materials for processing trade is composed of both bonded ones and non-bonded ones, the proportion, name, unit, specification, mode, and quality of the non-bonded materials shall be declared. The following circumstances may not be listed into the scope of technique consumption: i) any consumption of bonded materials, semi-finished or finished products owing to the sudden failure of power, water, or gas or any other artificial reason in the process of production; ii) any consumption of bonded materials, semi-finished or finished products owing to loss, damage, or for any other reason; iii) any consumption as the loss, damage, or lack in amount of bonded materials, semi-finished or finished products due to force majeure; iv) any consumption incurred from the increase of materials because the quality or specification of any import bonded material or finished product fails to comply with the requirements of the contract; v) any consumption of the nonbonded materials used as technical ingredients; and vi) any consumption of consumptive materials in the processing process.
The Measures also stipulate that a PTE may apply to Customs for conducting the formalities for changing or revoking the unit consumption, except it is under any of the following conditions: i) export declaration for the bonded finished product has already been finished; ii) deep processing for the bonded finished product has already been carried forward; iii) the bonded finished product has already been applied to be distributed in domestic market; iv) the unit consumption has already been verified by Customs; or v) the PTE has already been put on record by Customs for investigation.