Tighten inspection and control of imported drop-in anchor and hex nut

Recently, the General Department of Vietnam Customs received warnings about signs of incorrect declarations of the code, quantity and value of drop-in anchors originating in China that aimed to commit tax evasion.

To strictly control this situation, on February 1, 2019, the General Department of Vietnam Customs issued Official Letter No. 790/TCHQ-TXNK on the inspection of the classification and value of imported goods.

Accordingly, the drop-in anchor is a type of internal thread, which can expand, is designed for concrete, stone and other solid blocks that is appropriate with the classification of heading 7318, subheading 7318.19. The hex nut is a mechanical part with an internal threaded hole that is linked to the bolt in the threaded joints, the hex nut is always used with the bolt to clamp two or more details together. The two components are joined together by thread, the medium bolt tension, and the tension of the part. So, it is appropriate with the classification of heading 7318, subheading 7318.16.

Lang Son Customs strictly controlled imported goods to avoid the situation that enterprises declare incorrectly on the names of goods, quantity, tax rates, HS codes and origin. Photo: H.Nụ

According to the Preferential Import Export Tariff issued together with Decree 57/2020/ND-CP dated May 25, 2020 of the Government (effective from July 10, 2020), the preferential import tax rates which are applied to goods item with HS codes 7318.16.xx, 7318.19.xx, 7318.29.xx, are 12%.

According to Vietnam's special preferential import tariff schedule, in order to implement the ASEAN-China trade in goods agreement for the 2018-2022 period, issued together with Decree 153/2017/ND-CP dated December 27, 2017 of the Government (effective from January 1, 2018), the special preferential import tax rate applied for items with HS codes 7318.16.xx, 7318.19.90, 7318.29.xx is 0%; particularly, the special preferential import tariff rate for goods with HS code 7318.19.10 is 5% (in 2018 and 2019 it was 15%).

Thus, it might happen that the imported item is a drop-in anchor, whose outer diameter does not exceed 16mm, suitable for classifying to HS code 7318.19.10 but declared as hex nuts or drop-in anchors without threads in order to cheat the rate of special preferential import tax rate between codes 7318.19.10 and codes 7318.16.xx, 7318.19.90, 7318.29.xx.

It is known that through the customs valuation, the General Department of Vietnam Customs discovered that there were cases where the import declaration registered at Hai Phong Customs Department, Hanoi Customs Department and Lang Son Customs Department had declared prices lower than the reference price, but did not identify any suspicion. In particular, in many cases, the import declaration registered at Hai Phong Customs Department determined that the value after consultation was lower than the reference price in the list of imported goods with risk of value.

In order to strictly control this item, avoiding enterprises taking advantage of tax evasion, the General Department of Vietnam Customs requested the Risk Management Department to set up of criteria for document inspection, conduct physical inspections for import declarations with HS codes 7318.16.xx, 7318.19.xx, 7318.29.xx, belonging to the category of "import for business", indicating risks of goods classification, import quantity and customs valuation.

Provincial Customs Departments should conduct the inspection of customs dossiers and physical inspection of imported goods for new registration declarations in order to classify the correct HS code, determine the correct import tariff rate, quantity and customs valuation of the goods in accordance with the system’s directives. For declarations that have been cleared before October 26, 2020, the General Department of Vietnam Customs requested the units to implement the following: if customs declaration has not been conducted post-clearance audit, it should be conducted post-clearance audit at the headquarters of the customs authority for the import declaration having HS codes of 7318.16.xx, 7318.19.90 7318.29.xx and type of import for business, to classify goods and determine correctly the quantity of imported goods and customs valuation, collecting tax arrears fully and late payment interest as prescribed.

In case the customs declaration has been conducted post-clearance audit but there was no violation detected, the customs authority should conduct a specialized inspection at the enterprise if there is any suspicion of incorrect declarations of code, quantity and customs valuation.

The General Department of Vietnam Customs also requested three customs units – Hanoi, Hai Phong, and Lang Son – to review inspection dossiers, consulting customs valuation of the declarations according to this document. Establishing detailed reporting about the basis and reason for accepting the declared value or determining the consultation value is lower than the reference price as prescribed (attach the notification of suspicion, notice of customs valuation, record of consultation, information used to determine valuation, dossiers submitted for determining the value to calculate tax). In case the value declared by the customs declarant was incorrect, the customs authority would apply professional measures to fully collect the tax.

The Import-Export Duty Department directed provincial Customs Departments to check consignments with suspicious signs of declared valuation, codes, number of item units through the system of the General Department of Vietnam Customs coordinated with the permanent unit of the duty group to monitor, urge and synthesize the results of implementation by provincial customs departments.

Post-clearance Audit Department and Inspectorate Department would monitor and urge customs departments to perform post-clearance audit, specialized inspection for enterprise importing "drop-in anchors", "hex nuts" belonging to HS codes 7318.16.xx, 7318.19,90, 7318.29.xx.