Company fined for buying salt, high court retrial restores innocence

[2] Compiled from: Shandong High Court
 
Case review
On May 15, 2014, the former Xintai Salt Industry Bureau discovered during an enforcement inspection that Xintai Haina Salt Industry Co., Ltd. (hereinafter referred to as Haina Company) was suspected of illegally purchasing industrial salt. Following an investigation, the former Xintai Salt Industry Bureau determined that the company had illegally purchased 52 tons of industrial salt, in violation of Article 21 of the Shandong Province Salt Industry Management Regulations, which states that “no unit or individual shall be prohibited from purchasing salt products without authorization in violation of the provisions of these Regulations.” Accordingly, pursuant to Article 44 of the Shandong Province Salt Industry Management Regulations, an administrative penalty decision was made to confiscate the company’s 52 tons of industrial salt and impose a fine of 55,000 yuan. Haina Company refused to accept the decision and filed a lawsuit seeking to revoke the administrative penalty decision.

 
[1] Relevant laws and regulations
[3] Article 11 of the "Administrative Penalty Law of the People's Republic of China"
[4] Local regulations may establish administrative penalties other than those restricting personal freedom or revoking business licenses. Where laws or administrative regulations have already stipulated administrative penalties for illegal acts, and local regulations need to provide specific provisions, they must do so within the scope of the acts, types, and ranges of administrative penalties prescribed by the laws or administrative regulations.
 
[5] Article 21 of the "Shandong Province Salt Industry Management Regulations"
[6] Edible salt is allocated and distributed by the provincial salt industry administrative department according to the mandatory plans issued by the state, and is sold by salt product wholesale enterprises at all levels. Industrial salt for soda ash and caustic soda production is subject to contract ordering; other salt products are uniformly managed by salt product wholesale enterprises at all levels, and units and individuals using salt must purchase from local salt product wholesale enterprises as required. No unit or individual may purchase salt products without authorization in violation of these regulations.
 
 
Article 44 of the Shandong Province Salt Industry Management Regulations
In violation of these regulations, purchasing or selling salt products through improper channels or unauthorized resale of salt products shall be ordered by the salt industry administrative department to rectify within a specified period, with confiscation of salt products and illegal gains, and may be fined between one and three times the value of the salt products; in severe cases, the salt industry administrative department shall revoke the wholesale or retail license for edible salt.
 
[1] Court Opinion
The Xintai City People's Court held in the first instance that Haina Company's purchase of industrial salt violated Article 21 of the Shandong Province Salt Industry Management Regulations, and the administrative penalty imposed by the former Xintai Salt Affairs Bureau under the relevant provisions of the Shandong Province Salt Industry Management Regulations was not improper, thus dismissing the company's lawsuit. The Tai'an Intermediate People's Court upheld the first-instance judgment in the second instance. Dissatisfied, Haina Company applied for retrial to the Shandong Provincial High People's Court.
 
The Shandong Provincial High People's Court held upon trial that the former Xintai Salt Affairs Bureau's administrative penalty against Haina Company for purchasing industrial salt, based on local regulations, exceeded the scope of administrative penalties stipulated in the Salt Industry Management Regulations, and thus revoked the first- and second-instance court judgments and the contested administrative penalty decision.

 

 
[1] The author's perspective
As salt resources are important materials vital to the national economy and people's livelihood, the competent department of salt industry administration shall, in accordance with laws and regulations, supervise the relevant production and business activities, deepen the reform of “streamlining administration, delegating powers, improving regulation and optimizing services,” and meet the needs of market and enterprise development. The Regulations on the Administration of the Salt Industry, as an administrative regulation governing the field of salt industry administration, sets corresponding administrative penalties for acts violating the Regulations, but does not set administrative penalties for acts of enterprises other than salt companies purchasing salt for business operations. The competent department of salt industry administration shall not make administrative penalty decisions beyond the scope of acts subject to administrative penalties as prescribed by the Regulations on the Administration of the Salt Industry.
 
As a typical case of the Supreme People's Court on administrative litigation concerning property rights protection, its significance lies in the Shandong Provincial High People's Court clarifying the authority to impose administrative penalties through the retrial review procedure, highlighting the judicial oversight and correction function, protecting the normal production and operation rights of enterprises, and helping to further stimulate market vitality and promote the healthy development of the private economy.