Customs enforcement in China has been an effective way for foreign brand owners to stop counterfeit shipments. Brand owners can utilize such practical enforcement strategy even more now in view of the newly effective amended Law on Administrative Penalty and the Amended Provisions of the PRC Customs on the Procedures for Handling Administrative Penalties Cases, both of which just came into force on July 15, 2021. The Amended Provision is the first substantive revision since 2014. The Amended Law and the Provisions provide concrete guidance to the Customs administrative penalties and its highlights are as follows:-
I. IMPOSING A 6-MONTH EXAMINATION TIMEFRAME FOR ADMINISTRATIVE PENALTY CASES
Importantly, the Amended Provisions imposed timeline on the Customs to examine administrative penalty cases, which was not clearly stipulated before. The Amended Provision requires the Customs to make a decision on administrative penalty within six months from the date the case was placed on file. If it is necessary to extend the examination period, it shall be approved by the Head of the customs, and the extension period shall not exceed six months.
Such examination timeframe would increase the efficiency of Customs administrative enforcement, prevent delay in adjudication and grant timely remedy to right owners.
II. INCREASING THE ROLE OF HEARING
The Amended Law added that a hearing can be requested for cases involving “the seizure of a large amount of illegal income, the seizure of large value of illegal property”. The specific measures as applied to Customs administrative enforcement have been detailed in the Amended Provisions as follows:
When intending to make the following decisions on administrative penalties, the Customs shall notify the parties to request for a hearing, and where a party requests for a hearing, the Customs shall organize a hearing:
- Imposing a fine of not less than RMB 10,000 (~US$1,600) upon a natual person, or imposing a fine of not less than RMB100,000 (~US$16,000) upon a company or organization;
- Confiscating illegal gains of not less than RMB 10,000 (~US$1,600) upon a natural person, or confiscating illegal gains of not less than RMB100,000 (~US$16,000) upon a company or organization;
- Confiscating relevant goods, articles, and smuggled means of transport, etc.
Broadening the application of the hearing system would allow the brand owners to make their case in front of the Customs, especially when the authenticity of products was in dispute. Previously, where the case involves complicated submissions, the Customs would often not make a decision, but instead direct the parties to file a separate civil action in court to request for a court order to continue the seizure of products. The increased use of the hearing system would equip the Customs to handle more complicated cases, streamlining the enforcement procedures of brand owners.
III. CONCLUSION
We are pleased to see that the amended Law and provision is introducing a series of concrete and specific articles to enhance Customs enforcement. It is recommended that brand owners register their trademarks with the Customs to take advantage of such effective enforcement mechanism. Brand owners should also archive customs declaration documents and correspondence in daily operations, and provide relevant evidence to the customs when necessary. Brand owners are also advised to enhance communication with Customs during the enforcement process, fully state their case and defence, explain the situation to the Customs, submit evidence to help the Customs ascertain facts and take full advantage of the hearing procedure.