Zhiheng case | Successful case of customs administrative punishment: duty-free cosmetics "sample" is suspected of indirect smuggling, lawyers "use beating to promote adjustment", and the fine is reduced by more than 50%!- Zhiheng Law Firm

introduction

ZHIHENG HAIKOU

In recent years, the customs and anti-smuggling departments have maintained a high-pressure crackdown on the smuggling of duty-free "set purchases" on Hainan outlying islands. In this crackdown storm, many practitioners who are in the downstream of sales and only buy and sell duty-free cosmetics "samples" also face huge legal risks of being identified as "indirect smuggling".

Recently, our team of lawyers, Lawyer Zhao Yu and Lawyer Li Shihui, successfully represented an administrative penalty case suspected of indirectly smuggling Hainan duty-free cosmetic samples. In this case, the lawyers keenly grasped the "legal gap in the tax calculation rules of the sample" and the "flaw in the chain of evidence in the whole case". Through procedures such as filing hearings and initiating administrative reconsideration, the customs finally reached a mediation with the parties.

The equivalent amount to be paid by the parties was successfully reduced from the original 363,000 to 170,000 yuan.We have achieved a significant "halving" of the amount of fines and confiscations. At the same time, through this case, our team also calls on relevant departments to improve the legislation and correct the "penalty inversion" phenomenon in the current customs penalties.

The content of the administrative penalty decision before the change:

The content of the revised administrative penalty decision:

Case summary

Purchasing cosmetic samples was suddenly fined 360,000 by the customs

The party, Ms. J (pseudonym), is a merchant in Mingtong Cosmetics Market in Shenzhen. From March to July 2024, Ms. J purchased several batches of cosmetic samples from her colleague L through the Market Mini Program. Later, L was seized by the customs anti-smuggling department for allegedly smuggling cosmetics from Hainan duty-free shops by "set purchasing" and investigated for criminal responsibility.

In the process of investigating and handling Lin's case, a customs in Shenzhen determined that Ms. J constituted an indirect smuggling act of evading customs supervision and evading due taxes on the grounds that Ms. J knew that the goods sold by Ms. L were smuggled in Hainan duty-free shops and still purchased from her. On June 20, 2025, a customs in Shenzhen issued a "Decision on Administrative Penalty", deciding to confiscate the smuggled goods involved, and to recover the equivalent value of the smuggled goods involved in the case according to the domestic market circulation price, totaling 363,708 yuan.

Faced with a high administrative penalty, Ms. J immediately entrusted her team of lawyers to intervene and seek legal remedies.

attorney

Hit the heart of the case and put forward multi-dimensional defense opinions

After accepting the commission, the lawyer team immediately reviewed the case file materials, applied for the hearing procedure according to law, and then filed an administrative reconsideration with Shenzhen Customs. On the basis of fully studying and judging the case, we put forward the following core agency opinions to the review authority:

(1) Debate on the application of law: "Samples" of duty-free goods are worthless gifts, and there is no legal basis for treating them as "taxable goods" and calculating taxes.The premise of finding tax-related smuggling in this case is that the goods involved must be "taxable goods". We point out that the cosmetic samples attached to the duty-free goods on Hainan outlying islands are essentially gifts for formal wear goods, and their sales and transaction prices are "0".

According to the "Measures for the Customs to Verify the Tax Evasion of Suspected Smuggled Goods and Articles", the taxable price should be based on the transaction price of the goods. The customs abandons the actual transaction price and directly uses the domestic market circulation price to calculate the tax on the "sample" of zero value. There are obvious errors in the application of the law.

In addition, if it is believed that the value of the sample has been included in the formal clothes, the case of the upstream smuggler L has been calculated for tax evasion and investigated for criminal responsibility, and the downstream Ms. J is punished for the same part again, which violates the rule of law principle of "no two punishments for one thing".

(2) Fact finding argument: The available evidence is insufficient to prove that the party concerned had "subjective knowledge" of illegally purchasing smuggled goods.The basis for the customs to determine that Ms. J had "subjective knowledge" was mainly based on her confession in the interrogation record, that is, whether the sales order contained the word "set" to distinguish the products.

In this regard, we found and pointed out through the marking: on the one hand, the vast majority of the sample outer packaging does not have an obvious "Hainan tax-free" logo, which is objectively difficult to distinguish; on the other hand, the relevant records are made under the objective environment of the husband in other places, leaving the young daughter at home alone, extreme panic and eager to get away, under the "suggestion" and guidance of the case investigators, there is suspicion of confession, and it is an orphan.

In the absence of other objective evidence to corroborate, it is not possible to determine his subjective knowledge solely on the basis of unilateral confession.

(3) The debate on the rationality of punishment: the punishment result is extremely severe, which seriously violates the principle of proportionality in administrative law.We further point out that the main culprit in the upstream of this case, L, and others, were investigated for criminal responsibility for suspected smuggling crimes, and the property penalty they were punished for was generally only 1 to 1.2 times the tax payable for stealing; while Ms. J, as a "downstream" acquirer with only an administrative violation, was required to bear a recovery fine of more than 7 times the tax evaded.

This phenomenon of "severe punishment and light violation" has led to a serious imbalance in punishment, which violates the basic principle of administrative law that excessive punishment is equivalent. In addition, the lawyer team also raised procedural objections to the jurisdiction of the case.

Case result

Directly attack the weakness of the evidence and facilitate customs mediation to close the case

In the administrative reconsideration and hearing procedures, the detailed and rigorous cross-examination and jurisprudential analysis of the lawyer team has attracted the great attention of the reconsideration authority. In view of the fact that the lawyer's representation opinions accurately target the weak links of the evidence in this case, and the current customs laws and regulations do not have clear and mature regulations on "whether and how duty-free shop samples should be taxed", the case handling is deadlocked.

In order to substantially resolve administrative disputes, the reconsideration organ Shenzhen Customs recommended that the respondent Shenzhen Customs negotiate and mediate with the parties. After multiple rounds of communication and efforts, on May 13, 2026, a Shenzhen Customs made a revised "Decision on Administrative Penalty".The equivalent price of the recovered goods involved in the case was directly adjusted from the original RMB 363,708 to 170,000 yuan!

So far, the case was successfully concluded. The lawyer's professional defense not only directly recovered the economic loss of nearly 200,000 yuan for the parties, but also provided a very valuable defense idea for the handling of similar cases.

Lawyer appeal with compliance reminder

(1) How difficult is it to change the administrative penalty decision already made by the customs?

Many practitioners mistakenly believe that if they encounter customs penalties, they can be reduced or exempted as long as they "communicate and plead". This is a complete misunderstanding. Behind the huge fines made by the customs, there is an extremely strict chain of investigation evidence and an internal "Nuclear Tax Certificate". In judicial practice, it is extremely difficult to overturn the customs' established nuclear tax amount and penalty decisions. This often requires a team of lawyers with strong professional customs background to accurately find legal loopholes and evidence breakthroughs.

During the nearly year-long tug-of-war in this case, our lawyer team did not back down. From the administrative penalty hearing to the administrative reconsideration, to the fierce reconsideration hearing confrontation, we took steps step by step, not only questioning the jurisdiction of the customs involved in the case, but also directly attacking the legal flaw that the customs used "domestic market price" to tax "zero-value gifts".

It is precisely because of the strong legal output of the lawyer team that the reconsideration authority realized that there is indeed a huge controversy in this case on "whether the duty-free shop sample should be taxed", and we successfully forced the original monolithic case to loosen.

(2) Relevant departments should improve legislation to correct the current phenomenon of "penalty inversion" in customs penalties.

In this case and many similar cases, there is an extremely unreasonable and severe punishment phenomenon: the main culprit (smuggler) in the upstream of the case is investigated for criminal responsibility for suspected smuggling crimes, and the property penalty (fine) imposed by his department is often only 1 to 1.2 times the tax payable for evading; while the acquirer, who is downstream of the case and only has the nature of administrative violations, faces a huge administrative fine of more than 7 times the tax evaded according to the equivalent value of the goods.

Administrative counterparties with less illegal circumstances and less harmful to society have to bear much heavier property penalties than criminal criminals, which leads to a serious imbalance in the intensity of punishment and seriously violates the principle of "proportional punishment" in administrative law. We look forward to further improvement of relevant laws and regulations in the future, so that law enforcement has both strength and legal temperature and fairness.

Through this classic case of successful penalty reduction, we not only strive for the best interests of the parties, but also publicly call on relevant legislative and law enforcement departments to urgently amend the provisions of the Customs Law and related regulations to correct the current practice of seriously violating the "principle of proportionality". "Penalty inversion" chaos.

(3) compliance reminder

With the implementation of the "Hainan Free Trade Port Law" and related regulatory policies, the customs department has implemented a full-chain and zero-tolerance crackdown on the "set purchasing" behavior of reselling Hainan duty-free products for profit. For the majority of practitioners engaged in cosmetics wholesale, compliance is the red line for the survival of enterprises:

1. Strictly review the supply:When purchasing duty-free goods, especially "sample" and other ancillary products, it is necessary to review the qualifications of upstream suppliers and the legal origin of the goods to avoid falling into the abyss of smuggling crimes or administrative violations due to the greed for price difference.

2. Seek professional legal support in a timely manner:Customs cases involve complex classification, valuation and taxation rules. When enterprises or individuals face customs administrative investigations, they should not respond blindly. They should appoint a professional team of lawyers to intervene as soon as possible, fully exercise the rights of statement, defense, hearing and administrative reconsideration, and maximize their legitimate rights and interests within the legal framework.

ZHIHENG

Host lawyer

Zhao Yu, lawyer

Member of Zhiheng Haikou Management Committee

Areas of expertise:

Criminal defence, trade compliance and customs matters

Legal Professional Committee of China Overseas Development Association

◆ Member of the International Criminal Business Department

◆ Special Committee of International Trade and International Investment Professional Committee of Hainan Lawyers Association

◆ Special Committee of Criminal Professional Committee of Haikou Lawyers Association

Visiting Professor of Ludong University

Lawyer Zhao Yu,With many years of practical work background and legal professional experience in the customs anti-smuggling system. Since practicing, he has focused on criminal defense, cross-border trade compliance and customs affairs. In criminal defense, he has participated in handling many major smuggling cases supervised by the Anti-Smuggling Bureau of the General Administration of Customs and provincial departments, including many representative inter-provincial smuggling criminal cases. He has accumulated rich experience in the field of smuggling crimes.

With many years of working experience in the customs anti-smuggling system, he also has significant advantages in customs business dispute resolution and enterprise cross-border compliance system construction. During his work in the Anti-Smuggling Bureau, he has won third-class merit and several personal awards for outstanding case handling achievements, and has excellent case analysis, practical processing and communication skills.

His practice focuses on the combination of law and practice, and is dedicated to providing professional and efficient legal support to the parties.

Classic cases or special projects:

The crime of smuggling ordinary goods by Yao Moumou and others (the case supervised by the Anti-Smuggling Bureau of the General Administration of Customs, the first batch of exotic pet smuggling cases in Hainan Province)

The case of smuggling ordinary goods by Shengmou Company, Zhan and Guo (the first batch of smuggling cigars in Hainan Province)

The crime of smuggling ordinary goods by Ma and others (the first case in Hainan Province supervised by the Anti-Smuggling Bureau of the General Administration of Customs)

Zhou Moumou's crime of smuggling ordinary goods (the first case in Shandong Province)

The crime of smuggling ordinary goods in Jing Moumou (the first case in Shanxi Province)

Feng Moumou Crime of Selling Counterfeit and Shoddy Products (Special Case of Hainan Provincial Public Security Department)

Honor:

During the work of the Customs Anti-Smuggling Bureau:

• For leading the case handling team to overcome difficulties, Rongli's personal third-class merit was once

• Received 3 personal awards for outstanding work performance

Li Shihui, Lawyer

Member of Zhiheng Haikou Management Committee

Deputy Director of Zhiheng National Foreign Affairs Committee

Areas of expertise:

Criminal defense and prosecution, cross-border trade compliance, civil and commercial dispute resolution

◆ Member of the Special Committee for Public Welfare Publicity of Haikou Station of Hainan Lawyers Association

◆ Executive Director of Hainan Free Trade Port Customs Declaration Association

◆ Senior corporate compliance officer

Lawyer Li Shihui, a member of the National Revolution, focusing on the criminal field, while holding the qualification of a senior corporate compliance specialist, with both corporate compliance and civil and commercial dispute ********** capabilities. In the criminal field, he is good at the defense and prosecution of various difficult and complex economic crimes and financial crimes; in the field of civil and commercial affairs, with rich practice experience, he takes into account litigation and non-litigation negotiations, efficiently resolves commercial conflicts and reduces the cost of corporate *****************; at the same time, he provides customized legal consulting services for enterprises, covering the whole process of daily operation, risk control compliance and dispute **********, and builds a legal barrier for the stable development of enterprises.

Classic cases or special projects:

The case of acting for the plaintiff Xing to confirm the parent-child relationship was selected as one of the top ten typical cases in the field of marriage and family affairs in Xiuying District, Haikou City in 2024

Liang's crime of smuggling goods prohibited from import and export by the country (smuggling of frozen products)

Zhang evaded commodity inspection and defrauded export tax rebates

The case of smuggling ordinary goods by Shengmou Company, Zhan and Guo (the first batch of smuggling cigars in Hainan Province)

Honor:

• Won the "Advanced Individual for Ancestral Work" in Hainan Province of the 2025 Civil Revolution

• Selected into the professional talent pool of the third-party supervision and evaluation mechanism for the compliance of enterprises involved in the case in the People's Procuratorate of Xiuying District and Meilan District, Haikou City