11. INTEREST ON UNDERPAYMENT/OVERPAYMENT OF DUTY

If there is underpayment of duty because of the fault of the taxpayer, the customs can pursue the underpayment with the interest on overdue (daily 0.05%) within 3 years

from the payment of duty or the clearance of goods. For other reasons of

underpayment, the time is within 1 year from the payment of duty or the clearance of goods.

If the taxpayer overpays the amount of duty that he should pay, the taxpayer can

claim the duty overpayment with the repayment supplement calculated at the bank interest rate prevailing at the period within 1 year from the payment of the duty.

12. APPEAL PROCEDURE

Taxpayer who disagree with the decision of the Customs on the collection, reduction, recovery or refund of the duty shall pay such duty as ascertained by the Custom first and then, within 30 days from the date of issuance of the duty payment notice, submit an application in writing to Customs for a reconsideration of the case. Application submitted beyond the time limit shall not be considered.

The Customs shall make its decision within 15 days from the receipt of the appeal. If the taxpayer refuse to accept the decision, he may appeal to the Customs General Administration for reassessment within 15 days from the date of the receipt of the notice of decision.

The Custom General Administration shall make its decision within 30 days after the receipt of the appeal and if the taxpayers still refuse to accept the decision, he may appeal to the People's Court within 15 days from the receipt of the notice of decision.

An overseas trading company imported some goods in 2002, the CIF is USD

140,000 dollars, Customs prescribed exchange rate 8.21, custom tax rate 28%. If the

company sold them at RMB 1.5 million (not included the value added tax), calculate

all tax payment and payment method.

Importation:

1. Customs duty payable 140,000 x 8.21 x 28% = RMB32 1,832

Import duty is collected by the custom, taxpayer should pay the tax within 15 days after issue of demand notice.

2. Value Added Tax= (140,000*8.21+321,832) x 17%

=1,471,232 x 17%

= 250,109.44

Value Added Tax are collected by the Customs, tax should be paid within 7 days after the issue of the demand notice.

Domestic sales: VAT payable = 1,500,000 x 17% = 255,000

Value added tax payable= 255,000 -. 250, 109.44 = RMB4,890.56

The VAT is collected by the State Tax Bureau and normally the filing date is before

10th next month.

@(Question 7, June 2000)

With the approval of the Customs, Company J temporarily imported 5 machines, without paying the tariff, for the purpose of producing some specially ordered goods. The machines arrived in Shanghai on 3 May 1998. The CIF price for the machines is RMB9,000,000. Company J imported 500 tons of materials with an FOB price of RMB4O,000/ton, among which I ,000/ton is the commission paid to the agent. The shipping, unloading and insurance cost is 2,000/ton. Company J reported the importation on 12 May, 1998, the tariff rate was 110%. Because Company J had difficulty paying the tariff, it was permitted to pay the tariff on 1 June, 1998. The company paid the tariff on 15 June, 1998. After finishing the production, the machines were re-exported on 14 July, 1999. The tariff rate for the machines is 10%.

You are required to

(1) explain the treatment of the temporary importation and calculate the tariff, if any, to be paid on the machines;

(2) calculate the tariff for the importation of the materials;

(3) calculate the fine incurred for the late tariff payment.