As an area with a large number of export production and processing enterprises, besides facilitating enterprises in import and export activities, over the past time, Binh Duong Customs Department has detected and drastically handled origin fraud.

Bicycle assembly at Excel Co., Ltd. Photo T.D

Many tricks of origin fraud are exposed

Implementing the Customs sector’s plan to combat origin fraud and illicit transshipment, and after a period of inspecting enterprises with suspicious signs, Binh Duong Customs Department has detected and fined violators of origin fraud.

Typically, afraud was implemented by Excel Bicycle Company Limited with 100% investment capital by China which was established in 2018 and operates in manufacturing and assembling bicycles, and electric bicycles. However, inspecting the company’s shipment exported to the US in October 2019, Binh Duong Customs force detected that the company imported 100% of the bicycle components, electric bicycles and e-scooters from China to Vietnam for simple assembly into finished products which are exported from Vietnam to the US and bring Vietnamese origin to enjoy preferential import tax that the US government applies to Vietnam.

Similarly, through screening of exported goods via container scanners and conducting port clearance audits, Binh Duong Customs Department discovered items like porcelain sinks, foam mattress, and toothbrushes infringing on origin andlabelling of goods.

From the beginning of 2020 up to now, Binh Duong Customs Department has discovered and strictly handled violations ofVietnamese origin related to wood and wooden products. In the case of D Furniture Company, it mainly imported goods from China, New Zealand and Brazil to Vietnam and then implemented simple processing stages such as drilling, sanding, painting, and assembling. However, these are simple processing stages specified in Article 9 of Decree 31/2018/ND-CP, and are not used to determine origin. Accordingly, the company's origin declaration for these items wasnot consistent with regulations. For this violation, Binh Duong Customs Department issued a decision on administrative sanction, tax arrear collection and additional fines for illicit profits to the tune of VND 293 million.

Facing many difficulties and problems

Although violations have been discovered and prevented, Binh Duong Customs Department has suffered from difficulties and problems in implementing management policies related to goods origin and labelling. For example, after inspection, the Customs determines the goods only underwent simple processing as prescribed in Article 9 of Decree No. 31/2018/ ND-CP so they are not considered as Vietnam’s origin. However, the labelling of goods origin on the exported goods and declaration on origin has not been yet regulated.

During the production process of enterprises, the production stage depends on each specific product andthe determination by the Customs for the production stage as a simple stage faces difficulties and problem. For example, isthe process of aligning bicycle rims and sewing fabric products considered a special skill or not? If enterprises implement simple processing and production stages prescribed in Article 9 of Decree 31/2018/ND-CP, but use specialisedmachinery and equipment or a specific production line, are they factors considered to determine the origin of goods or not?

Facing problems in the implementation of regulations on origin, labels, and declaration methods on export declarations, Binh Duong Customs Department has reported to the General Department of Vietnam Customs for instruction. At the same time, to remove difficulties, problems and create favourable conditions for import and export activities of enterprises in the area, the department issued a document to guide regulations on origin for export goods for customs braches and import and export enterprises in the area to perform.

From the beginning of the year to now, Binh Duong Customs Department has conducted post clearance audit for nine enterprises with signs of origin violation. As a result, fines of more than VND 395 million and the additional fine of VND 915 million, have been levied.