Case Overview

Company A imported hats from Hong Kong. The purchasing manager, C, knew that the declared price did not reflect the actual transaction value and, at the direction of the company’s legal representative Z, arranged for overseas suppliers to issue invoices at a lower price for customs declaration. During Z’s tenure the underpaid duty allegedly exceeded RMB 400,000. Z was released on bail pending trial and the file was transferred to the Third Branch of the Shanghai People’s Procuratorate for review and prosecution.

Issues

(1) Whether the evidence established that Z personally instructed the under-declaration; and (2) whether a non-prosecution decision was available.

Defence

The defence analysed the documentary chain — purchase orders, supplier correspondence, payment records and internal approvals — and demonstrated that the price arrangement was handled at the operational level, that Z’s knowledge could not be inferred from his position alone, and that the company had cooperated fully and made good the shortfall in duty. Under the Criminal Procedure Law and the prosecutorial guidance on economic crime, where the facts are minor, the duty has been recovered and the suspect cooperates, a non-prosecution decision is appropriate.

Outcome

The procuratorate accepted the defence submissions and decided not to prosecute Z.