The tariff evaders, who use deceptive import and export prices in their fraud, have cost customs more than 80.2 million yuan (US$9.7million) in lost duties this year.

Customs authorities throughout China will join hands with foreign customs to fight against valuation fraud and smuggling with the help of international customs administrative mutual assistance agreements, a leading customs official announced.

Sheng Guangzu, deputy commissioner of the General Administration of Customs (GAC), told a press conference: "Such fraud has become a growing problem in tariff evasion" after China's entry into the World Trade Organization late last year. As part of WTO membership, China scrapped its homegrown method of determining the value of imports and adopted an international pact that assesses a shipment's value based on the actual price of the transaction.

"But unscrupulous businesses are skirting the new rules, dodging tariffs with a variety of tricks such as 'document laundering,'" Sheng said.

Smugglers produce fake papers or contracts that turn high-duty goods into low-duty ones, vastly under-report the size of shipments, or show buying prices below what were actually paid.

"Such lawless businessmen have begun to use valuation fraud as a way of avoiding duties," Sheng said. "Valuation fraud is a prominent means to illegal smuggling."

In the first half of this year, customs throughout China has uncovered 272 cases of valuation fraud that involved evaded duties of 380 million yuan (US$45.9 million), an increase of 3.9 times and 4 times respectively when compared with the same period last year, Sheng said.

Of the cases, 50 have been placed on file for investigation. That number is also an increase - of 4 per cent - over the figure for the corresponding period of last year.

Customs anti-smuggling forces have recovered more than 80.2 million yuan in customs duties evaded by smugglers using valuation fraud during a three-month special campaign against such fraud.

During the special crackdown which began in May, GAC's anti-smuggling forces also detained 160 million yuan (US$19.3 million) as guarantee money while they investigate enterprises suspected of such fraud.

Sheng vowed to crack down on smuggling for the remainder of the year because the problem has worsened. Sheng has made public the names of 14 enterprises involved in such crimes - or suspected of being so - to show the government's firm anti-smuggling stand.

(China Daily September 6, 2002)