Company fined for buying salt, high court retrial restores innocence

[2] Compiled from: Shandong High Court
 
Case review
[2] On May 15, 2014, the former Xintai Salt Affairs Bureau discovered during a law enforcement inspection that Xintai Haina Salt Industry Co., Ltd. (hereinafter referred to as Haina Company) was suspected of illegally purchasing industrial salt. After investigation, the former Xintai Salt Affairs Bureau determined that the company had illegally purchased 52 tons of industrial salt, violating Article 21 of the "Shandong Province Salt Industry Management Regulations," which states that "no unit or individual may purchase salt products without authorization in violation of these regulations." Therefore, based on Article 44 of the same regulations, an administrative penalty decision was made, confiscating the 52 tons of industrial salt and imposing a fine of 55,000 yuan. Haina Company disagreed and filed a lawsuit 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 an important material related to the national economy and people's livelihood, salt resources should be regulated by the salt industry administrative department in accordance with laws and regulations for relevant production and business activities, deepening the reform of "streamlining administration, delegating power, improving regulation, and upgrading services" to meet market and enterprise development needs. The Salt Industry Management Regulations, as an administrative regulation governing the salt industry, set corresponding administrative penalties for violations of the regulations but do not impose administrative penalties on enterprises other than salt companies for purchasing salt for business use. The salt industry administrative department cannot impose administrative penalties beyond the scope of acts subject to administrative penalties as stipulated in the Salt Industry Management Regulations.
 
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.