The so-called "Border People's Market Trade" refers to the exchange of commodities by border people in border areas within 20 kilometers of China's land borders at government-approved open points or designated bazaars, within a specified amount or quantity. According to the relevant provisions, in line with the conditions of the border trade, import tariffs and import taxes on incoming goods are exempted. As a result, the practice of enterprises to take advantage of the policy, the need to import goods "into zero", through the border people to bring in the way of transport into the country, in order to avoid the customs tax supervision, at this time, the enterprises and personnel involved in the case are usually facing the risk of being characterized as a criminal smuggling. Starting from this issue, we will write a series of articles to discuss and analyze the smuggling problems caused by the "border trade", with a view to providing assistance to relevant enterprises and personnel.

I. Brief description of the case: False declaration of the import of spices in the border market, two defendants were convicted of smuggling

(I) Basic facts of the case

Qiu Keming and Qiu Guanglin were engaged in spice business activities in Yulin City, Guangxi, Qiu Guanglin was responsible for most of the capital contribution, Qiu Keming was responsible for a small part of the capital contribution and specific operation. 2017 to 2019, Qiu Keming and Qiu Guanglin learned that Zhao Qingyi (handled separately) violated the regulations on the management of imported and exported commodities of the border trade in the border trade in the border trade for the importation of goods to declare the business, and the two of them, in order to pay less tax, handled foreign spices in the way of falsely reporting the border trade in the border trade through Zhao Qingyi, and were convicted of smuggling spices. In order to pay less tax, the two of them, through Zhao Qingyi, handled the formalities for the entry of foreign spices by means of false declaration of border trade. In the process of implementation, Qiu Keming is responsible for contacting foreign suppliers such as India to order spices, docking with Zhao Qingyi to act as an agent for importation, paying the payment and agency fees, and being responsible for the handover and sale of goods, etc. Qiu Guanglin is responsible for providing most of the goods, and is also responsible for the importation of spices. Qiu Guanglin was responsible for providing most of the payment and import fees, and participated in the negotiation with Zhao Qingyi on the commissioning of import agency. The proceeds from the sale of spices were equally divided between Qiu Ke Ming and Qiu Guanglin.

From October 18, 2017 to February 28, 2019, Qiu Keming and Qiu Guanglin imported a total of 21 containers of cumin, cumin, allspice and other spices through Zhao Qingyi by using the channel of the border trade and declaring the importation of such spices in the name of goods of Vietnamese origin. After the Customs Taxation Department's verification, the total taxable price of the above spices was RMB 3.5 million, and the total tax evasion amount was RMB 991,900. On September 1, 2020, Qiu Keming and Qiu Guanglin were arrested and returned to the case. After being arrested, Qiu Keming and Qiu Guanglin pleaded guilty and admitted punishment, and voluntarily refunded the tax evasion amount of RMB 991,900 yuan.

(II) Court judgment:

The Liuzhou Intermediate Court held that Qiu Keming and Qiu Guanglin, knowing that the imported goods did not meet the requirements of the border trade, still collaborated with others to falsely declare their entry into the country to the Customs by way of the border trade, evading the supervision of the Customs, and evading the payable tax amount of RMB 991,900 yuan, and that their behaviors had violated Article 153 of the Criminal Law of the People's Republic of China, constituting the crime of smuggling ordinary goods, and that the amount of the crime was huge. The public prosecution authorities accused of the crime is established, should be punished in accordance with the law. In the joint crime, Qiu Keming, Qiu Guanglin are actively involved, are the principal offender, should be in accordance with their participation in all the crime punishment, but Qiu Guanglin's role is relatively small, the culpability is relatively light. After their return to the case, they truthfully confessed to their crimes, with frank circumstances, pleaded guilty and admitted their punishment, and were liable to a lighter punishment according to the law. Qiu Guanglin and Qiu Keming took the initiative to refund the tax evaded and sincerely repented of their crimes, so they can be punished less severely as appropriate. Qiu Keming and Qiu Guanglin's facts, nature and circumstances of the crime, as well as the degree of social harm, Qiu Guanglin's prepayment of the fine, it was decided that they should be given a lighter punishment, and Qiu Guanglin should be given a suspended sentence. Finally, Qiu Keming was sentenced to three years and two months' imprisonment, and Qiu Guanglin was sentenced to three years' imprisonment and three years and six months' probation.

II the "border people's mutual market" trade tax exemption policy has induced a large number of smuggling cases.

(I) In the past five years, there have been many smuggling cases related to the "Border People's Mutual Market" trade.

With the keywords of "Border People's Mutual Market" and "Smuggling Crime", the author retrieved 182 relevant criminal case documents in the adjudication documents network, while in 2017-2021, this number accounted for 164, which to a certain extent indicates that in recent years, the number of smuggling cases related to the "Border People's Mutual Market" trade has increased. This indicates to a certain extent that in recent years, criminal cases involving smuggling triggered by false declaration of "Border People's Mutual Market" trade have been on the rise. Among the ten typical cases of anti-smuggling in 2021 released by the General Administration of Customs, there is a case of false declaration of "Border People Hutu" trade being investigated and punished for smuggling.

Top 10 Typical Cases of Combating Smuggling in 2021 Released by General Administration of Customs

For example, Shantou Customs Anti-Smuggling Bureau investigated the case of "830" smuggling seafood into the country.

Shantou Customs Anti-smuggling Bureau investigated the case of "830" smuggling of seafood into the country, and seized about 50 tons of seafood with a value of 11.3 billion yuan. After investigation, the gang involved in the case will order seafood from abroad, and smuggle them into the country from the border of Guangxi and Yunnan through the channel of the border people's mutual market by misrepresenting the nature of trade.

The General Administration of Customs released the top ten anti-smuggling cases in 2017, the top ten typical cases of customs anti-smuggling in 2018, and the top ten typical cases of anti-smuggling in 2020, and the same can be seen in the smuggling cases related to the "Border People's Mutual Market" trade:

5,Fuzhou Customs Anti-smuggling Bureau investigated "4.12" smuggling imported frozen seafood case.

On December 27, 2017, Fuzhou Customs Anti-smuggling Bureau carried out "4.12" smuggling of frozen seafood case investigation and arrest action. Upon investigation, the company involved in the case ordered frozen aquatic products abroad and shipped them to Haiphong, Vietnam, and commissioned "customs clearance" gangs to smuggle frozen aquatic products that should be imported by way of general trade into the country under the guise of border trade, and then centrally loaded into frozen containers and transported to Fuzhou, Shanghai, Guangzhou, Qingdao, Beijing and other places for sale. The company smuggled imported frozen cod, Arctic shellfish, king crab, lobster and other high-grade frozen aquatic products about 702 cabinets, the value of about 1.36 billion yuan.

6,Qingdao, Zhanjiang, Nanning and other nine customs anti-smuggling bureau "607" to combat the smuggling of frozen aquatic products centralized net operation

In October 2018, the Anti-smuggling Bureau of the General Administration of Customs (GAC) unified the command of Qingdao and other customs anti-smuggling bureaus to take net action against the smuggling of frozen seafood through the channels of the border market, knocked down 16 criminal gangs, and on-site seized 1,350 tons of frozen seafood involved in the case. After investigation, the smuggling gangs will purchase India, South America and other real estate white shrimp transported to China's neighboring countries, to take the false trade declaration smuggled into the country through the border market channel, the smuggling of white shrimp and other frozen aquatic products was found to be 30,700 tons, the case value of 1.45 billion yuan.

Such as: Gongbei, Nanning, Kunming and other customs anti-smuggling bureau "903" to combat border trade channel fruit smuggling centralized net action

On October 20, 2020, Gongbei, Nanning, Kunming, Changsha, Shenzhen, Chengdu, Guiyang, Guangzhou, Chongqing Customs Anti-Smuggling Bureau in Guangxi, Yunnan, Chongqing, Guangdong, Hunan, Sichuan, Guizhou and many other places, synchronized to carry out the "903" to combat border trade channel fruit smuggling concentrated net action, arrested 81 smuggling suspects, knocked down 25 smuggling gangs, the case value of 1.45 billion yuan. Smuggling gangs 25, the value of 160 million yuan. After investigation, from 2017 to the crime, the gang involved in the case will be Thailand, Vietnam produced longan, dragon fruit and other fruits, through the Nanning, Kunming customs area border land ports to take the general trade, border trade understated prices, border trade falsely declare the nature of the trade in the way of smuggling into the country.

(II) The "border-people mutual market" tax-exemption policy is an important reason for the high incidence of smuggling cases.

The so-called "Border People's Market" trade refers to the exchange of commodities by border people in the border areas within 20 kilometers of the land border of China, at open points or designated bazaars approved by the Government, within the limits of the amount or quantity stipulated. At present, China in Inner Mongolia, Xinjiang, Tibet, Guangxi, Yunnan, Heilongjiang, Jilin, Liaoning and other eight land border provinces in the existence of the border people's mutual market trade, and there are hundreds of border trade mutual market points.

The "Border People's Mutual Market" trade is aimed at promoting the healthy development of mutual trade among residents in border areas and prospering the border economy. Over the years, border trade has become an important force in promoting the economic and social development of China's border areas and an important hand in opening up to the outside world and prospering the people. However, according to Article 5 of the Measures for the Administration of Border Mutual Trade (Decree No. 56 of the General Administration of Customs), if the daily value of daily necessities imported by border residents through the mutual trade (except for those included in the list of goods imported by border residents in the mutual trade that are not exempted from tax) is less than RMB 8,000 per person per day, they shall be exempted from import tariffs and import linkage taxes. If the value exceeds RMB 8,000, import tariffs and import link taxes will be levied on the excess portion in accordance with the regulations. However, this preferential policy aimed at prospering the border and enriching the people has been exploited by unscrupulous people. In practice, some people make use of this tax exemption policy to organize border people to "ants move", and smuggle the goods that should be declared to be imported in the way of general trade through the pseudo-declaration of "Border Mutual Market" trade, so as to avoid the importation of the goods. The border people organize the border people to import the goods which should be declared in the way of general trade in the form of "ants moving", and then smuggle them into the country by falsely declaring "border people's mutual market" trade, so as to evade the payment of tariffs, value-added tax and consumption tax in the import link.

In order to maintain the import order and prevent the loss of national tax revenue, the Customs and Excise Department has been cracking down on the smuggling of imported goods by means of false declaration of "Border People's Mutual Market", however, due to the influence of a number of factors, the relevant smuggling cases have still occurred from time to time in recent years:

1, the shortage of customs supervision resources: China's border areas at the grass-roots level of the Customs shortage of human resources, coupled with the port infrastructure is relatively backward, many ports of entry lack of complete customs clearance facilities, resulting in loopholes in customs supervision, law enforcement is more difficult.

2, the border people's legal system is weak: border people for "border market" policy and the related risks of cognitive understanding is insufficient, coupled with the border areas of the economic base is weak, the border people's standard of living is relatively low, in order to earn the benefits of fees, the border people do not hesitate to participate in illegal acts, some border people also take the initiative to join the smuggling gangs to help smuggling transportation of goods, surveillance of law enforcement agencies, etc., forming a community of interest. Some of them even join criminal smuggling gangs to help transport smuggled goods and spy on law enforcement agencies, forming a community of interest.

3, the local government one-sided pursuit of economic benefits: the border area government has always been the border trade as an important part of the policy of "prospering the border and enriching the people" and vigorously publicize it, and actively encourage the development of foreign trade and logistics industry through the border trade to promote the development of the local economy, but neglected to publicize the warning and prevention of illegal acts.

4, the enterprise for the pursuit of interests of non-compliance: in practice, through the general trade mode of importing goods through the high cost of taxation and lost market competitiveness, ignoring the risk of compliance, turn to import goods through the border trade routes, so that the market tax evasion has become a market subterfuge, aggravating the outbreak of such cases.

III false declaration of "border market" imports if characterized as smuggling, will face serious criminal risk

(I) False declaration of "Border Mutual Market" smuggling imports usually constitute the crime of smuggling ordinary goods and articles.

According to the provisions of Article 153 of the Criminal Law of China, the crime of smuggling ordinary goods and articles refers to the violation of customs regulations, evading customs supervision, illegal transportation, carrying, mailing weapons, ammunition, nuclear materials, counterfeit currency, precious animals and their products, rare plants and their products, obscene articles, drugs, and cultural relics, gold, silver and other precious metals other than the goods that are prohibited by the state from being exported, goods entering or leaving the country and evading the tax payable. In terms of the manner of behavior, the specific behaviors for the establishment of this crime are varied, and generally speaking, they usually include: (1) smuggling through customs: it means that the perpetrator enters or leaves the country through customs and adopts the means of smuggling by means of false declaration, concealment, under-declaration, disguise and concealment, etc.; (2) subsequent smuggling: it means that the perpetrator first legally imports the goods and articles, and then sells them without authorization in violation of the Customs Law and the relevant laws and regulations; (3) smuggling bypassing the customs: That is, not through the customs supervision area and illegal smuggling around the customs.

In the case of smuggling related to "Border People's Mutual Market" trade, the perpetrator falsely reported that the goods should be imported in accordance with the general trade mode as "Border People's Mutual Market" trade to realize tax-free importation, and violated customs supervision and evaded payment of taxes, which belongs to the type of smuggling behavior through customs. Moreover, in this type of smuggling cases, usually smuggled goods are frozen aquatic products, agricultural by-products, so once the behavior constitutes a crime, the establishment of the crime is usually smuggling of ordinary goods, articles.

(II) If characterized as the crime of smuggling ordinary goods, articles, both individuals and units face heavy penalties.

In terms of sentencing, according to the provisions of Article 153 of the Criminal Law, China has made a ladder of punishment standards for the crime of smuggling general goods and articles according to the amount of tax evaded and the circumstances of the crime:

(1) If the amount of tax evaded is large or if a person has been given two administrative penalties for smuggling within one year and then smuggles again, he shall be sentenced to fixed-term imprisonment of not more than three years or criminal detention, and shall be fined not less than one and not more than five times the amount of tax evaded;

(2) Where the amount of tax evaded is huge or there are other serious circumstances, the offender shall be sentenced to fixed-term imprisonment of not less than 3 years and not more than 10 years, and shall be fined not less than one and not more than five times the amount of tax evaded.

(3) Where the amount of tax evaded is particularly large or there are other particularly serious circumstances, the penalty shall be imprisonment for a term of not less than 10 years or life imprisonment, and a fine of not less than one but not more than five times the amount of tax evaded or confiscation of property.

If a unit commits a crime, the unit shall be sentenced to a fine and the corresponding penalties shall be imposed on its directly responsible supervisors and other directly responsible persons.

According to the Interpretation of the Supreme People's Court and the Supreme People's Procuratorate on Several Issues Concerning the Application of Law in Handling Criminal Cases of Smuggling (Legal Interpretation [2014] No. 10), Article 16 and Article 24, for a natural person, the aforesaid evasion of tax payable shall be deemed to be a "large", "huge", "special", "large", "huge", "huge", "huge", "huge", "huge" and "special", respectively. For natural persons, the standards of "larger", "huge" and "especially huge" are more than 100,000 yuan but less than 500,000 yuan, more than 500,000 yuan but less than 2.5 million yuan, and more than 2.5 million yuan, respectively. As for the unit, the sentencing standard of the crime is twice the amount of a natural person, i.e., the three steps of the sentencing standard are above 200,000 yuan but less than 1 million yuan, above 1 million yuan but less than 5 million yuan, and above 5 million yuan respectively.

Overall, the sentencing for the crime of smuggling ordinary goods and articles is heavy, and like the crime of false VAT invoices, the crime of cheating export tax rebates and other tax-related crimes, the maximum sentence can be up to life imprisonment, and once the crime is constituted, the relevant enterprises and personnel will face heavy criminal liability.

IV Summary

In order to prosper the border and enrich the people, the state has implemented the policy of "border market" trade tax exemption in the border areas, and this policy benefit, coupled with the shortage of customs supervision resources, the border people's weak concept of the rule of law, the local government's lopsided pursuit of economic benefits, and the enterprise's non-compliance for the pursuit of interests and other factors, has induced a large number of smuggling cases. Once suspected of smuggling crimes, the relevant enterprises and personnel will face the risk of heavy criminal liability. In practice, in the face of such cases, how to find the right defense points, related to the conviction and sentence of the parties in the case, in the next issue of the article, the author will continue to focus on this type of case for research and discussion, and analysis of the innocence of this type of cases and misdemeanor defense points, readers are invited to pay attention to.