General Department of Vietnam Customs explain case of Posco’s imported steel

illustration image. Source: Internet

According to the General Department of Vietnam Customs, Posco Hanoi processing Center Co., Ltd., (later merged with POSCO VHPC into POSCO Vietnam Holdings Ltd.), registered to import hot rolled alloy steel items without plating, declaring HS code as 7225.40.90, and import duty rate of 0%.

Furthermore, this enterprise opened two declarations (10093377723 / A41, dated 6/7/2016, and 10097871546 / A41 dated 5/8/2016) at the Investment/Processing Customs Branch (Hai Phong Customs Department).

According to the analysis result from the Customs Assessment Branch No. 2, the company’s imported products were identified as rolled steel sheets.

On that basis, the General Department of Vietnam Customs issued Announcement 1905 / TB-TCHQ dated 20/1/2017, and concluded that the item was, ‘flat-rolled products of other alloy steel of a width of 600 mm or more, not further worked or hot-rolled, not plated or coated, code 7225.40.90’.

After the goods were cleared, Hai Phong Customs Department conducted the post-clearance audit of the shipment and discovered that Posco Vietnam Holdings Limited sold to Viet Han Steel Company. And these two items were used by Viet Han Steel Corporation to make steel billet for rolling into construction steel.

Additionally, the commercial contract between the two companies demonstrated the signing of a bilateral agreement on trading steel billet (on page 1 of the contract). Therefore, the views of the Hai Phong Customs Department for the above imported item was steel billet, HS code is 7224.90.00.

However, in order to have a basis for concluding the item’s codes, the Hai Phong Customs Department has issued an official document to the Trade Remedies Authority (Ministry of Industry and Trade).

On 15/10/2017, the Trade Remedies Authority issued a document to respond to the Hai Phong Customs Department with the following direction, ‘the import of steel sheets cut into billet for production of construction steel showed signs of evasion of safeguard duties in accordance with Law on Foreign Trade Management No. 05/2017 / QH14 dated 12/6/2017 ‘.

Thus, the post-clearance audit results and opinions of the Trade Remedies Authority raised questions of tax evasion. However, there was not enough sufficient basis to confirm the act of incorrect declaration by the enterprise.

In order to have accurate conclusions, the General Department of Vietnam Customs conducted verification for the two imported goods shipments in the exporting country. According to the verification results, the two above items were hot rolled steel sheets, HS code 7225.40.90.

On 29/6/2018, the General Department of Vietnam Customs issued a document to announce verification results and sent it to Posco Vietnam Holdings Co., Ltd., and Hai Phong Customs Department for implementation.