Meaning
Regulatory frameworks for the management of the processing trade specify the conditions under which domestic companies can import raw materials and components without the immediate payment of duties. Decree 213 establishes the detailed rules for the administration of bonded materials and the supervision of the subsequent export of finished products. This decree was issued by the General Administration of Customs to provide a clear legal basis for the development of the manufacturing sector and to prevent the illegal diversion of duty-free goods into the domestic market.
It requires companies to maintain a rigorous system of electronic ledgers to track the consumption of imported materials and the yield of exported goods. The application of these rules is limited to enterprises that have been formally approved to participate in the processing trade regime. It does not apply to goods that are imported for general sale or those that are not subject to a manufacturing process.
Electronic Supervision
Management of the processing trade under the provisions of decree 213 relies on the integration of company records with the customs monitoring network. Each approved enterprise must establish an electronic handbook or a regional computer system that records the entry, storage, and consumption of all bonded materials. This system allows the customs authorities to perform real-time audits and to verify that the imported materials are being used solely for the production of goods destined for export.
The decree specifies the technical standards for these systems and the frequency with which data must be reported to the customs bureau. This digital oversight has replaced the old paper-based manual systems, significantly increasing the efficiency and accuracy of the supervision. Companies are responsible for ensuring the integrity of their data and for reporting any discrepancies immediately.
The customs authorities use this information to calculate the tax liability for any materials that are not accounted for in the final export shipments.
Consumables Management
Rules for the calculation of the material consumption rates are a central part of the regulatory framework defined by decree 213. Manufacturers must declare the quantity of imported materials required to produce a unit of finished product, taking into account the inevitable waste and scrap generated during the process. These rates are verified by the customs bureau and form the basis for the reconciliation of the electronic ledgers.
If a company consumes more materials than allowed by the approved rates, it must pay the deferred duties and taxes on the excess amount. The decree also provides guidelines for the disposal of scrap and by-products, which must be either exported, destroyed under supervision, or sold domestically after paying the relevant taxes. This meticulous control of the manufacturing process ensures that the bonded status is not abused to gain an unfair competitive advantage in the domestic market.
Companies must invest in advanced production tracking systems to meet these requirements.
Operational Compliance
Legal accountability for the proper execution of processing trade activities rests with the corporate management of the approved enterprise. Decree 213 sets out the penalties for violations of the rules, which can range from fines and the suspension of the bonded handbook to the complete revocation of the processing trade license. Common violations include the unauthorized domestic sale of bonded materials, the falsification of consumption records, and the failure to reconcile the electronic ledgers within the specified timeframes.
Customs authorities perform regular on-site inspections and comprehensive audits to ensure that the companies are following the decree’s requirements. The decree also specifies the procedures for the closure of a processing trade handbook once the export project is completed. This final reconciliation is a critical step in the process and requires the submission of detailed reports and supporting documents.
Successful compliance with decree 213 is essential for companies that want to maintain their status as reliable trade partners and enjoy the financial benefits of the processing trade regime.
