Customs blunders in punishment; lawyer rights wrongs to resolve predicament

In July 2010, when Jintenglong Technology Co., Ltd. was declaring the import of its 16th batch of integrated circuits, the customs authorities seized the shipment on suspicion of "smuggling" because the customs declarant mistakenly wrote "MX25L8006EM11-12G" instead of "MX25L8006EM1I-12G" in the integrated circuit model number. Subsequently, customs also discovered that the actual unit price of the integrated circuits did not match the declared price, and on this basis determined that Jintenglong Company was suspected of "tax evasion" through falsely declaring prices. In April 2014, an administrative penalty decision was issued: confiscating 88,215 integrated circuits from Jintenglong Company and "recovering" a total of RMB 890,000 as the value of the "smuggled goods" from the company! In fact, the main work of Jintenglong Company was to act as a contract manufacturer for a certain "children's sound book music box" for the American company PIL. The integrated circuits in question used in the music boxes were ordered by PIL from Taiwan and shipped directly to Jintenglong Company for assembly, and after completion, they were exported directly to PIL along with the finished products, none of which were sold domestically.

Although Jintenglong Company later applied for administrative reconsideration to the municipal customs authorities, the reconsideration body did not hear the company's defense and upheld the original penalty decision. Feeling deeply wronged, Jintenglong Company decided to entrust the Zhiming lawyer team of Guangdong Zhiming Law Firm to handle the rights protection matters. With the assistance of lawyer Cao Guanghui, the Zhiming lawyers filed an administrative lawsuit against the district customs office with the municipal intermediate people's court.

Attorney Zhi Ming's arguments primarily consist of three points. First, regarding "smuggling," the model of the integrated circuits in question was mistakenly written with the letter "I" instead of the number "1," which merely indicates the temperature range during production and processing and does not affect the import duty rate of the goods. However, the district customs authorities, disregarding all facts, determined that Jintenglong Company constituted smuggling based solely on this minor clerical error on paper, completely confusing the legally defined distinction between "intentional smuggling acts" and "acts violating customs supervision regulations." Second, regarding "tax evasion," the discrepancy in the declared price by Jintenglong Company constitutes an objective "inaccurate declaration" rather than an intentional false declaration of price. Since the unit prices of the integrated circuits, which are trade secrets, could not be obtained from the U.S. company PIL, Jintenglong Company had no choice but to estimate the prices on its own. Finally, substantial evidence demonstrates that the integrated circuits imported by Jintenglong Company in the first 15 batches were used solely for processing and export, and were consistently declared under the "general trade" regime, subject to customs supervision, and the company even paid additional tariffs for this purpose, making it entirely unnecessary or impossible for them to engage in "low-price tax evasion."

In the subsequent courtroom debate, facing the defense of the head of the district customs department, who insisted, "The plaintiff, Jintenglong Company, was fully aware of the actual transaction price of the goods before making the declaration!" Attorney Zhiming refused to yield and immediately challenged the district customs head in court, asking, "Do you have evidence to support this claim?" He also reiterated that the defendant district customs department should handle this dispute in accordance with the "inaccurate declaration" circumstances stipulated in Article 15 of the "Regulations on the Implementation of Customs Administrative Penalties," rather than arbitrarily harming the plaintiff under the pretext of "smuggling" or "tax evasion."

After intense courtroom debate, the district customs department leadership seemed to realize the illegality and impropriety of their actions. During the mediation meeting, attorney Cao Guanghui from Zhiming Law Firm assisted Jintenglong Company in fully expressing their legitimate claims once again, and sincerely proposed a settlement condition: "As long as the district customs department revokes its previous administrative penalty decision, the company will immediately withdraw the lawsuit and let bygones be bygones." After repeated deliberation, the district customs department largely concurred with Jintenglong Company's legitimate claims. Ultimately, both parties smoothly reached a settlement agreement under the court's mediation, bringing the case to a close with mutual settlement and the plaintiff's withdrawal of the lawsuit.