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    How Should Cotton Textile Enterprises Avoid Illegal Operation?

    2016/2/25 10:13:00 32

    CottonTextileShandongImportExportFiber

    In the past two years, the State Customs has deployed cotton In the field of processing trade inspection, we intensified efforts to investigate cotton smuggling and irregularities in processing trade channels, and seized a large number of criminal cases involving cotton smuggling involving cotton. Spin More than 100 enterprises have aroused great repercussions in the industry.

    Since 2015, the number of smuggling cases investigated by the Customs has been increasing. The impact of case investigation on cotton spinning industry has become increasingly prominent. Some enterprises have ceased production and even entered bankruptcy proceedings. For example, Shandong An enterprise in Yantai was investigated in 2014. The person in charge of the enterprise was arrested and detained. In July 2015, the company declared bankruptcy. An enterprise in Shangcai, Henan, was investigated in 2015. The person in charge of the enterprise was arrested and detained. The company immediately shut down and hundreds of workers lost their jobs. In addition, some enterprises have been inspectors or administrative penalties for breaches in the cotton processing trade, and some enterprises have been asked to pay hundreds of millions of dollars in taxes.

    In this regard, relevant enterprises responsible persons and legal personages call for cotton processing trade enterprises to understand all links in processing trade, raise awareness of the law, communicate with customs in time, arrange professional customs personnel to carry out reasonable operation, and do not take risks for small profits. At present, the quota of cotton imports has been issued in 2016. Cotton textile enterprises should fully understand the erroneous understanding existing in the process of cotton import processing trade, and avoid incorrect operation so as not to cause losses to their own interests.

       Does illegal operation constitute "smuggling"?

    In order to ease the difficulties of textile enterprises, the national development and Reform Commission issued a large number of cotton processing trade in 2012. Imported Quotas, many textile enterprises have been engaged in cotton processing trade since then, and the original enterprises engaged in cotton processing trade have expanded the scale of processing trade. However, due to the fact that market supply and demand have not improved, business difficulties have been aggravated, the market mechanism and regulatory procedures are not matched, and some textile enterprises are not familiar with customs policies.

    Sun Guodong, lawyer of Guanghe law firm in Guangdong, said that the trade violation phenomenon of cotton textile enterprises is generally on the export of products and domestic sales. In the normal cotton processing trade process, cotton spinning enterprises generally adopt the cotton yarn "one day tour of the bonded area" to cancel the processing trade manual. That is: the cotton will be exported to the bonded area after processing cotton imported from processing trade. After that, cotton will be declared to import in general trade mode, and the corresponding tariff and VAT will be paid according to the import tariff of cotton yarn. At the same time, enterprises apply to the Customs for domestic sales of cotton waste, and pay the corresponding customs duties and value-added tax. Through this process, enterprises import cotton into the country and sell them with the import tariff of cotton yarn. The actual tax paid is about 25% to 30% of the value of imported cotton, about half of the tax on imported cotton without quotas.

    In the case of smuggling cotton in processing trade channels, the enterprises involved in the sale of imported cotton in China also adopted the cotton yarn "one day tour of the bonded area" to cancel the processing trade manual. Some enterprises use other cotton instead of processed cotton yarn to carry out "one day tour in the bonded area", while others use a small amount of cotton yarn to export and import through the bonded area for several times. Sun Guodong introduced that in the trade cases that appeared in cotton textile enterprises, the difference between the operation of enterprises and the requirements of customs supervision is an important reason for the emergence of trade violations.

    Generally speaking, cotton processing trade of domestic cotton textile enterprises usually has three modes. One is to sell finished cotton yarn in the territory, the other is to use the same car for a day trip; the second mode is "string material processing"; the third way is to complete the process of export re import tax with the same vehicle cotton yarn in the regulatory area, so as to achieve a certain amount of processing to meet the requirements of verification. So, what is the gap between the three modes of trade and the strict supervision of customs? Sun Guodong said that customs supervision on processing trade is very strict, requiring that bonded goods be strictly separated from non bonded goods, but many enterprises are unable to do so. In fact, enterprises do not evade taxes or tax evasion in trade operation. That is to say, the violation phenomenon of cotton textile enterprises in trade operation is not for profit making, nor is it a smuggling crime. {page_break}

       Weak legal consciousness is the main cause.

    In cotton processing trade, enterprises generally apply for processing trade manuals according to the quota of 100% imported raw materials according to the quota quantity they have obtained. However, due to the requirement of spinning process, different batches of cotton must be put in order. fibre The use of collocation is to ensure the stability of product quality and continuity of production. "Material exchange" is a behavior which the processing trade enterprises often have to do. For the bonded cotton remaining after the "swap", some enterprises continue to be used to produce cotton yarn, and then sell it with cotton yarn in the domestic market, while others sell it directly in the domestic market.

    This phenomenon has existed in the cotton spinning industry for more than 20 years. Cotton spinning enterprises generally exist as long as they can export cotton yarns and write out processing trade manuals on a regular basis. They will not evade taxes. Even if they break the law, they are just against the wrong understanding of customs supervision regulations. In the past, the customs also gave a high degree of tolerance to this process. This general misconception is an important reason for the smuggling of cotton.

    Data show that in 2014 1~9, the customs accumulated 44 cases of cotton smuggling crimes (including 35 processing trade). The value of the case is 1 billion 773 million yuan, 476 million yuan for tax evasion and 106 thousand tons of cotton. Due to the fact that many cotton textile enterprises are involved, many executives are arrested and imprisoned. Some of them pay too much tax and seriously affect the production of enterprises.

    "These things are disastrous, and it is possible for them to get back to their original form overnight." Xiao Jingyao, deputy general manager of Huafang textile, regrets this. In view of the problems in the processing trade, Shi Donghai, a lawyer at Tak ho Heng law firm, suggested that cotton processing trade enterprises should reflect on the one hand, learn from experiences and lessons, and enhance their awareness of the law; on the other hand, they should arrange professional customs personnel to make reasonable arrangements according to the actual situation.

    Shi Donghai stressed that if the cotton processing trade enterprises really appear illegal and irregularities, they must not evade, and seek professional or counsel for help at the first time. At the same time, we must mobilize the influence of our own enterprises to find solutions to the problems, and timely feedback the situation to the customs and ask for lenient treatment.

    "Cotton processing trade enterprises must make clear every link and every step of processing trade, act according to the law, and do not take risks for small profits." Ceng Xionghui, deputy general manager of Yueda textile import and Export Co. Ltd.

       Strengthen communication and avoid trade risks

    At present, the global economy is still in the process of deep adjustment. Fierce competition at home and abroad, business operations are generally more difficult, cotton textile industry is facing a particularly grim situation. Domestic cotton prices are still significantly higher than the international market, the quality of domestic cotton has dropped, the gap of high-grade cotton has been enlarged, and the comprehensive cost of enterprises has been raised. The pressure is still outstanding. Shi Donghai said that some cotton spinning enterprises appeared to sell bonded cotton without authorization, but they had their own weak sense of law and the pursuit of illegal interests. They also had extremely difficult business operations, unreasonable cotton purchase and storage policy, unreasonable quota allocation mechanism, and widespread recognition errors in the industry. On the whole, compared with most smuggling cases in the past, the cases of smuggling of cotton in the processing trade channels were relatively small, and the subjective malicities of the production enterprises were relatively small, mostly due to the ignorance of the trade rules and the weak awareness of the law. For this reason, Sun Guodong suggested that enterprises should take the principle of reliance interest protection and actively communicate with administrative law enforcement departments. For example, "string up" problem, if the enterprise reports to the customs honestly, actively communicate with customs, and make clear the proportion of raw materials in cotton production, even if there is customs action, the government can not accuse enterprises of smuggling. In the days to come, no matter whether the government officials are changing or policy changes, they can not accuse enterprises of being criminal or illegal.

    For these situations in cotton processing trade, the relevant people of China Cotton Textile Industry Association said that the customs, procuratorate and court strictly cracked down on smuggling and regulated the order of cotton trade according to law, and the Chinese cotton textile industry association fully affirmed and supported it. However, it is also hoped that relevant departments should adhere to the principle of seeking truth from facts, make accurate and reasonable assessments, prevent aggravating the responsibilities of enterprises involved, prevent the tendency of mechanization and crack down on enlargement of the law enforcement. At the same time, we should also prevent such unfavorable situations as falling exports, bankruptcies and unemployment.

    In addition, the relevant textile enterprises also called on the NDRC to make every effort to increase the quota of processing trade, so that enterprises with export advantages can not only sell cotton globally, but also buy cotton all over the world.

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