How much do you know about the returned goods?

Return the goods

        For the implementation of the CPC Central Committee and state council on intensify efforts to stabilize the market economic policy decisions, the General Administration of Customs has further measures to help enterprises to bail out foreign trade enterprises to reduce costs, promote the foreign trade keep stable quality, one is “cancel goods andthe enterprises shall be exempted from customs duties and import VAT special application of the third party testing requirements”.

        What are the requirements and precautions for the return of goods ? Let’s go to Q&A and find out!

        Q1  What is returned cargo?

        Returned goods refer to the original import and export goods returned to or from China due to damage, shortage, poor quality, inconsistent specifications, delayed delivery or other reasons. The supervision code is “4561”.

        Q2  What is the suitable range of returned goods?

        Q3  What circumstances do not apply to returned goods?

        I. For goods returned after entry and before clearance, the supervision mode is “direct return” (4500).

        II. For the return of import and export goods of processing trade, the supervision mode is “Return and exchange of incoming materials and parts” (0300), “Return and exchange of incoming materials and parts” (0700), “Return and exchange of incoming finished products” (4400), and “return and exchange of incoming finished products” (4600).

        III. For the return of processing trade equipment, the supervision mode is “Return of processing equipment” (0466).

        IV. The return of goods in leasehold trade with lease term less than one year shall be supervised by “lease term less than one year” (1500).

        V. “Duty-free goods” (1741) shall be returned to and exported by “other” (9900).

        VI. For the return of equipment into and out of export processing zones, the supervision mode shall be “Return of Equipment in the Zones” (5361).

        VII. Import and export goods without compensation at any cost, and the original imported goods that have been replaced shall be returned to the country by means of “other” (9900).

        Q4  What kind of returned goods are duty-free?

        According to the Regulations of the People’s Republic of China on Import and Export Duties, Article 43 of the Order of The State Council [2003] 0392: “If the exported goods are transported into the country unchanged due to quality or specification reasons within one year from the date of export, import duties shall not be levied. Export duties shall not be levied on imported goods that are transported out of the country undisturbed within one year from the date of import due to quality or specification reasons.”

        01 Reason for return

        Reason for return — “due to quality or specification reasons”

        It refers to the quality defects (including internal quality, surface quality and appearance quality) of the goods or the specification, model, composition, content and technical indicators of the goods, which are not in conformity with the quality or specification requirements agreed by the buyers and sellers in the transaction contract or agreement. If the quality defect of the goods or the error of the specifications of the goods is within the scope permitted by the contract, it shall not be considered as a problem of quality or specifications.

        02Tax exemption Period requirement

        Tax exemption Period Requirement — “within 1 year”

        The starting period of one year shall be the date of export of the exported goods, and the end period shall be the date of re-shipment of the exported goods into the country.

        03 Conditions and Requirements

        Condition requirements – “Return of original condition”

        It means that the form of the returned goods when they are transported back into or out of the country should be the same as that of the original export or import goods, without any processing, repair or modification, but can still be regarded as “original” after unpacking, inspection (chemical) inspection, installation and debugging. In general, returned goods can not be used, but only after the use of the case can be found poor quality. Part of the goods returned can also be identified as “original condition”, that is, the quality or specifications of some of the original import and export goods do not meet the relevant provisions of the contract, only this part of the goods returned shall be regarded as “original condition”.

        Q5What materials should be submitted to the Customs when handling the return formalities?

        I. The original import (export) customs declaration form, the agreement between the consignee and the consignor on the return of goods and other documents and supporting materials. In the process of returning the goods to and from the territory, if, after examination and verification by the Customs, the goods can be returned for quality or specification reasons, the enterprise may no longer be required to apply for inspection by a third party.

        II. For returned goods that are transported into the country undisturbed within one year from the date of export due to quality or specification reasons, a certificate of no tax refund or tax payment for export issued by the tax authorities shall also be submitted.

        III. Other documents deemed necessary by the Customs.

Special note

        When making declaration, the enterprise shall fill in the 18-digit original import and export declaration number in the “Associated Declaration” column of the customs declaration, and fill in the other columns according to the relevant requirements of the customs declaration filling specification.

The instance

        The theoretical question and answer is over, now into the practical operation, to test the learning results!

        Example: In October 2021, an enterprise exported a batch of electric kettles in the way of general trade. After receiving the goods, the overseas buyer found that the electric kettles could not be heated. After negotiation, the seller and the buyer decided to return the goods because the quality of the goods did not meet the requirements. In January 2022, the company declared the import of the batch of electric kettles to the customs in the form of “returned goods” supervision.

        After the customs examination, the materials submitted by the enterprise can prove that the export goods are returned for quality reasons, and the goods are returned to the country within one year, so they are granted duty-free release.

Set pieces

        What other types of common goods can be returned into the country without tax?

        Such as: By leasing trade (1523) for the goods will be shipped within a prescribed period after, foreign contracted projects under the export (3422) after the expiry of the time limit prescribed by the contract of engineering will be shipped within 3 months after the equipment used in the construction, equipment and supplies, etc., the above companies to “return goods” approach to declare to the customs after entering, Upon examination and confirmation by the Customs, no duty shall be levied on the original export goods that are re-transported into the country.

Article source：12360 Customs hotline