On 23 July 2007, the Ministry of Commerce and the General Administration of Customs issued [Public Notice (2007) No. 44] which announced the Catalogue of Restricted Commodities on Processing Trade. The Notice will be effective on 23 August 2007.  

For enterprises importing commodities under restricted category for processing, actual payments of deposit guarantee are required when they register their contracts with customs offices.  After enterprises complete the processing trade contracts and export the goods within the specified time limit, the deposit plus interest accrued will be refunded upon verification.

Different categories of processing trade enterprises are subject to different treatments.  Categories A and B enterprises importing commodities under restricted category are required to make 50% of the deposit for relevant tariffs and import-related VAT while category C enterprises are required to pay 100% of the deposit.

For formulas calculating the actual deposit, please refer to the Chinese version of the circular.

On processing trade activities conducted by enterprises in the central and western regions, categories A and B enterprises will continue to practise the “nominal payment” for deposit guarantee, i.e. no actual payment of customs duty deposit is required.  Category C enterprises are required to make 100% payment of the deposit.  The central and western regions are referred to areas other than the eastern region, which includes Beijing, Tianjin, Shanghai, and Provinces of Liaoning, Hubei, Shandong, Jiangsu, Zhejiang, Fujian and Guangdong.

For details of the Public Notice (2007) No. 44, in particular issues concerning deep processing and grandfathering clauses, members may refer to the following website:

 http://www.mofcom.gov.cn/aarticle/b/c/200707/20070704918873.html