Circular No. 11/2009/TT-BCT dated May 20, 2009 of the Ministry of Finance detailing a number of articles of Decree No.107/2008/ND-CP dated September 22, 2008 of the government defining on sanction of administrative violation for the acts of goods speculation and hoarding, excessive price hiking, rumor spreading, smuggling and trade frauds

CIRCULAR

DETAILING A NUMBER OF ARTICLES OF DECREE NO.107/2008/ND-CP DATED SEPTEMBER 22, 2008 OF THE GOVERNMENT DEFINING ON SANCTION OF ADMINISTRATIVE VIOLATION FOR THE ACTS OF GOODS SPECULATION AND HOARDING, EXCESSIVE PRICE HIKING, RUMOR SPREADING, SMUGGLING AND TRADE FRAUDS

Pursuant to Decree No.189/2007/ND-CP dated December 27, 2007 of the Government providing for function, duties, authorities of organizational structure of the Ministry of Industry and Trade;

Pursuant to Decree No.107/2008/ND-CP dated September 22, 2008 of the Government defining on sanction of administrative violation for the acts of goods speculation and hoarding, excessive price hiking, rumor spreading, smuggling and trade frauds;

The Ministry of Industry and Trade details a number of Articles of Decree No.107/2008/ND-CP dated September 22, 2008 of the Government defining on sanction of administrative violation for the acts of goods speculation and hoarding, excessive price hiking, rumor spreading, smuggling and trade frauds (hereinafter referred to as Decree No.107) as follows:

Item I. SCOPE OF GOVERNING AND CONDITIONS OF APPLICATION

Article 1. Scope of governing

This Circular details the sanction of administrative violations for the violations provided in Articles 4, 5, 6, 7, 8, 9,10,11, 12, 13 of Decree No.107.

Article 2. Conditions of application

1. The administrative sanction for acts specified in Article 4, Article 5, Article 6 and Article 7 is only applied when meeting full two conditions:

a) For goods and services of the list of price stabilization in Decree No.75/2008/ND-CP dated June 09, 2008 of the Government amending and supplementing some Articles of Decree No.170/2003/ND-CP of December 25, 2003 of the Government detailing some Articles of the Ordinance on Prices and Circular No.104/2008/TT-BTC dated November 13, 2008 of Ministry of Finance guiding the implementation of Decree No.170/2003/ND-CP of December 25, 2003, Decree No.75/2008/ND-CP dated June 09, 2008 amending and supplementing some Articles of Decree No.170/2003/ND -CP.

b) In the case of market’s irregular fluctuations of supply and demand, prices of goods and services due to natural disasters, fires, epidemics, war or other unexpected developments announced the decision to apply measures to stabilize prices in the country, each region by the Prime Minister or Minister of Finance (to be sanctioned the violations specified in the above Articles in the whole country or region to be announced) or announced the decision to apply measures to stabilize prices within the localities by the Presidents of provincial People s Committees (to be sanctioned only the violations specified in the Articles in the areas to be announced by the presidents of provincial-level People s Committees).

Article 3. Stripping the right to use certificate of satisfactory conditions of business, the types of business licenses

On stripping the right to use certificate of satisfactory conditions of business, the types of business licenses prescribed in Decree No.107 shall be applied as follows:

- Stripping the right to use the above types of papers with term is the stripping the right to use the above types of papers for a maximum period of twelve months; determination of the term of the stripping the right to use the above types of papers must be based on the value of the goods of violation, the nature and seriousness of violations.

- Stripping the right to use the above types of papers indefinitely is the stripping the right to use the above types of papers for the period from twelve months or more and only apply to multiple violations or repeated administrative violations; determination of multiple violations or repeated violations complies with the provisions of clause 2 and clause 3, Article 6 of Decree No.128/2008/ND-CP of December 16, 2008 of the Government detailing implementation of some Articles of the Ordinance on Handling of Administrative Violations in 2002 and Ordinance amending and supplementing some Articles of the Ordinance on Handling of Administrative Violations in 2008.

- The duration of stripping the right to use license or certificate of practice is calculated from the time of temporary keeping of certificate of satisfactory conditions of business, license, or certificate of practice.

Item II. VIOLATIONS AND APPLICATION OF FORMS AND LEVELS OF SANCTION

Article 4. Sanction against acts of speculation of goods

1. Regarding violations

Where in the time and areas announced to apply the measures to stabilize the prices at which traders buy goods outside the area to bring to region with irregular fluctuations announced to apply measures to stabilize the prices by the competent authorities to sell for market stability is not considered as acts of commodity speculation, not be sanctioned administrative violation for acts of commodity speculation.

2. The method to calculate the value of goods, determine the amount and price of stampeded goods:

The value of stampeded goods = price of purchase x amount of stampeded goods.

In which:

- Determination of price:

Bases to determine price is implemented in accordance with provisions in Article 63 of Decree No.06/2008/ND-CP dated January 16, 2008 of the Government defining sanction of administrative violations in trade activity, Circular No.15/2008/TT-BCT dated December 02, 2008 of Ministry of Industry and Trade guiding Decree No.06/2006/ND-CP dated January 16, 2008 of the Government defining handling of administrative violations in the trade activity and Article 34 of Decree No.128/2008/ND-CP dated December 16, 2008 detailing the implementation of some Articles of the Ordinance on Handling of Administrative Violations in 2002 and Ordinance amending and supplementing a number of Articles of the Ordinance on Handling of Administrative Violations in 2008.

- Determination of the amount includes:

+ Goods are being stampeded;

+ Stampeded goods are stored in warehouse, shop;

+ Stampeded goods were sold.

3. Confiscation of the proceeds benefit amount applies to goods sold, calculated as follows:

Proceeds benefit amount required to confiscate = (price of selling - purchase price) x quantity of stampeded goods sold

Article 5. Sanction against acts of hoarding goods

1. Regarding violations

The acts prescribed in clause 1, clause 2, clause 3 and clause 4 of Article 5 of Decree No.107/2008/ND-CP are sanctioned in the case with full two conditions specified in Article 2 of this Circular when having goods in the stores, warehouses, sale place as an act of hoarding goods.

2. The sanction of acts of hoarding goods specified at point c, clause 5 of Article 5 of Decree No.107 is applied as follows:

a) Where supermarkets, trade centers, other modern goods distribution facilities (shopping centers, membership shops as warehouses, supermarkets, cheap-price selling shops, department store) trading goods with acts of hoarding goods, then subjects to sanction of administrative violation are organizations or individuals who own supermarkets, trade centers, other modern goods distribution facilities.

b) Where organizations or individuals trading in supermarkets, trade centers, other modern goods distribution facilities having acts of hoarding goods, then subjects to sanction of administrative violation are organizations or individuals who trade in supermarkets, trade centers, other modern goods distribution facilities.

3. "Legitimate reason" is interpreted as follows: the violations specified in the above clauses occur, however, the organization or individual violates them because of objective reasons of force majeure.

For example:

- Loss of power throughout the area as selling fuel;

- At the time of the inspection, goods in both warehouse and sales locations are all up so it’s no longer for sale.

- Cutting of business locations to reduce costs or such business locations have no buyers, few people to buy because type, color of goods does not match the tastes of the consumers at the locations of cutting.

When determine reason that is legitimate or not, the persons who are competent to inspect and sanction make a conclusion, are responsible for their conclusions and must be recorded in inspection reports.

4. "Previous time" is interpreted the time before the competent authorities announce the measures to stabilize prices in effect.

5. The method of calculation of average inventory of goods of the 3 preceding months in clause 4, Article 5 of Decree No.107/2008/ND-CP as follows:

The average inventory of goods of the 3 months = Total average inventory of goods of each month of the 3 preceding months: (divide) 3

In which the method of calculation "average inventory of goods of a month": based on the specific data to apply one of the following ways:

- Having sufficient inventory data of each day:

The average inventory of goods of a month = Total average inventory of goods of each day of the month: (divide) Number of days in month

- Having no sufficient data of each day:

The average inventory of goods of a month = (amount of inventory of earlier of month + amount of inventory of mid of month + amount of inventory of end of month): (divide) 3

- Having no inventory data of mid month:

The average amount of inventory a month = (amount of inventory of earlier of month + amount of inventory of end of month): (divide) 2

Article 6. Sanction of administrative violations on price declaration and registration of price

1. Price declaration

List of goods subject to price declaration, the enterprises required to declare the price, form, content and procedures of price declaration, the dossier-receiving agency of price declaration, powers and responsibilities of the dossier-receiving agency of price declaration and the enterprises to declare price comply with the provisions of Item VII of Circular No.104/2008/TT-BTC November 13, 2008 of Ministry of Finance.

2. Registration of price

The list of goods and services subject to registration of price and enterprises required to register price, form, content and procedures of price registration, the dossier-receiving agency of price registration, powers and responsibilities of the dossier-receiving agency of price registration and the enterprises to register price comply with the provisions of Item VI of Circular No.104/2008/TT-BTC November 13, 2008 of Ministry of Finance.

Article 7. Sanction of administrative violations on the prices listing of goods and services

1. Acts of violation

Acts of not listing the prices of goods and services, foreign currency, gold; price listing not in compliance with regulations, unclear causing confusion to customers; sale of goods, collection of service charge of more than listed prices; listing prices of goods and services in foreign currencies or collection of money from selling goods and services in foreign currencies without permission are violations of the price listing sanctioned for administrative violations as stipulated in Article 9 of Decree No.107.

2. Listing of price and listed price

a) The listing of price complies with provisions in Article 29 of the Ordinance on prices, specifically:

Organizations and individuals of production and trade must list prices of goods and services at their stores, places where buy and sell goods and provide services; the listing of price should be clear, not cause confusion to customers.

For goods and services valued by the State, organizations and individuals of production and trade must list the proper prices decided by the competent State agencies and purchase, sell in accordance with the listed prices.

For goods and services which are not of the list of valued by the State, they shall be listed according to the prices decided by organizations and individuals of producing and trade.

b) For goods and services subject to price registration, they are the prices of enterprises registered prices with the competent state management agency under provisions in clause 5.2, Item VI of Circular No.104/2008/TT-BTC of the Ministry of Finance.

c) For goods and services required to declare prices, they are the prices of enterprises declared prices with the competent state management agency.

Article 8. Administrative sanction for the acts of smuggling petrol across the border

1. Acts of violating the export of goods not in compliance with the contents of license in point b, clause 2 and violations of export of goods without a license as prescribed at point đ, clause 4, clause 10, Article 1 of Decree No.18/2009/ND-CP dated February 18, 2009 of the Government amending and supplementing some Articles of Decree No.97/2007/ND-CP on June 07, 2007 of the Government defining the handling of administrative violations and enforcement of administrative decisions in customs field that export commodities are petroleum, then apply penalty for administrative violations in Article 10 of Decree No.107 for sanctioning.

2. Acts of counterfeiting, unauthorized use of quotas, license of export, import of goods and acts of export and import of goods without quotas, license of export, license of import of goods as prescribed in clause 2, clause 3, Article 34 of Decree No.06/2008/ND-CP dated January 16, 2008 of the Government that export commodities are petroleum, then apply penalty for administrative violations in Article 10 of Decree No.107 for sanctioning.

3. Guidance on the method to calculate the value of petroleum for the application of sanctions provided for in Article 10 of Decree as follows:

The value of gas (oil) = amount of gas (oil) price seized X price
Bases to determine price comply with provisions in Article 63 of Decree No.06/2008/ND-CP dated January 16, 2008 of the Government sanctioning administrative violations in trade activity, Circular No.15/2008/TT-BCT dated December 02, 2008 of Ministry of Industry and Trade guiding the implementation of Decree No.06/2006/ND-CP dated January 16, 2008 of the Government sanctioning administrative violations in the trade activity and Article 34 of Decree No.128/2008/ND-CP dated December 16, 2008 detailing the implementation of some Articles of the Ordinance on Handling of Administrative Violations in 2002 and Ordinance amending and supplementing a number of Articles of the Ordinance on Handling of Administrative Violations in 2008.

Article 9. Sanction of acts of smuggling paddy, rice, forest products, and minerals across the border

Method to calculate the value of goods is paddy, rice, forest products and minerals to apply the sanctions provided for in Article 11 of Decree:

The value of goods = amount of goods seized X price

In which:

- The actual amount of goods seized.

- Price: Bases to determine price comply with provisions in Article 63 of Decree No.06/2006/ND-CP dated January 16, 2008 of the Government sanctioning administrative violations in trade activity, Circular No.15/2008/TT-BCT dated December 02, 2008 of the Ministry of Industry and Trade guiding the implementation of Decree No.06/2006/ND-CP dated January 16, 2008 of the Government sanctioning administrative violations in trade activity and Article 34 of Decree No.128/2008/ND-CP dated December 16, 2008 detailing the implementation of some Articles of the Ordinance on Handling of Administrative Violations in 2002 and the Ordinance amending, supplementing some Articles of the Ordinance on Handling of Administrative Violations in 2008.

Article 10. Sanction against prohibited goods, smuggled goods, and fake goods

The sanction for violations of goods banned from trading, smuggled goods valued at VND 100,000,000 or more, counterfeit goods valued at 30 million dong or more and trademark violations complies with Circular No.15/2008/TT-BCT dated December 02, 2008 of Ministry of Industry and Trade guiding some Articles of Decree No.06/2008/ND-CP dated January 16, 2008 of the Government on handling of administrative violations in trade activity.

Article 11. Sanction against fraud acts on measurement, packaging goods, and the quality of goods and services

1. Acts of violation

Acts of violations provided in Article 13 of Decree 107 include:

a) Acts of fraud on measurement, packaging goods are the fraud in carrying out the measurement, the method of measurement in weighing, measuring, counting goods (quantity of goods is short of compared with the amount stated on the package) to lack goods but the buyers still pay the full price of goods, causing damage to the customers.

b) Acts of fraud on the quality of goods and services are the acts of producing, processing, charging, loading, packaging, trading goods but the quality of goods are not in accordance with publication of quality or recording on labels causing damage to the customers.

2. The violations, other sanctions in measurement, the quality of goods and services that Decree No.107/2008/ND-CP does not define, shall apply sanctions stipulated in Decree No.126/2005/ND-CP dated October 10, 2005 of the Government and Decree No.95/2007/ND-CP dated June 04, 2007 amending and supplementing some Articles of Decree No.126/2005/ND- CP dated October 10, 2005 prescribing the sanction of administrative violations in the field of measurement and quality of products, goods.

3. Method of calculating the value of fraudulent goods on quality:

The value of fraudulent commodities = Amount of fraudulent commodities x price

In which:

a) Determination of the amount of fraudulent goods:

- The amount of fraudulent goods is the actual amount of goods at the time of inspection, seizure;

If there is sufficient evidence to determine the time of fraud and amount of fraudulent commodities within such time, then take amount of fraudulent goods calculated from the time with fraudulent act.

For example:

When checking the gas station A on 30/12/2008, it is installed microchip to cause error 0.5% while regulations allow only 0.05% of error; The inspection agency has enough grounds to determine that the gas station is installed microchip from 30/9/2008, the amount of goods sold during the period from 30/09/2008 to 30/12/2008 is 100,000 liters.

Method to calculate gas amount of fraudulent measurement of the gas station X as follows:

Gas amount of fraud = 100,000 liters X (0.5% - 0.05%) = 4500 liters

- For goods of fraudulent measurement, if they are packed-availably goods that there are enough grounds to determine that such number of fraudulent goods to be of a certain lot of goods, number of fraudulent goods is the whole such lot of goods. To ensure representation for the whole lot of goods, it must have enough grounds to ensure the probability inspection of 5% of availably packed number of goods which are being seized due to fraud measurement, causing damage to customers.

For example:

When checking fertilizer production facilities of the Company X, it is found that it has been recorded a net weight of 50 kg/bag on each packaging but in fact determined, each bag is lacked compared with the weight stated on the packaging, its average weight is only 48.5 kg/bag; the inspection is determined that the number of goods is inspected of lot of goods Y and has sold 500,000 kg (10,000 bags) to the market.

Method to calculate number of fraudulent fertilizer on measurement of Company X as follows:

Number of fraudulent fertilizer of company X = 10,000 bags X (50 kg - 48.5 kg) = 15,000 kg

b) Determination of price

- Bases to determine price comply with provisions in Article 63 of Decree No.06/2006/ND-CP dated January 16, 2008 of the Government sanctioning administrative violations in trade activity, Circular No.15/2008/TT-BCT dated December 02, 2008 of Ministry of Industry and Trade guiding the implementation of Decree No.06/2006/ND-CP dated January 16, 2008 of the Government sanctioning administrative violations in trade activity and Article 34 of Decree No.128/2008/ND-CP of December 16, 2008 detailing the implementation of some Articles of the Ordinance on Handling of Administrative Violations in 2002 and Ordinance amending and supplementing some Articles of the Ordinance on Handling of Administrative Violations in 2008.

- If the price changes several times but can not determine the amount of fraud of each time of price change, the value of fraudulent goods is calculated by the method of simple average.

For example:

October 10, 2008, the inspection found that the gas station A sells petrol at a rate of 0.1% error, error allowed is 0.05%, the time that the gas station A was installed microchips causing incorrect measurement, leading harm to customer was December 01, 2007; within the above time, gasoline prices have been adjusted four times: at the time of installing the chip (1/12/2007) gasoline was being sold at the price of 12.000d/liter, 30/3/2008 the price was adjusted up to 14.000d/liter; 01/6/2008 the price was adjusted up to 18,000 VND/liter; 30/8/2008 the price was adjusted down 14,500 VND/liter; 20/9/2008 the price was adjusted down 11,000 VND/liter (d/l). The total amount of gasoline sold from 01/12/2007 to 10/10/2008 is 200,000 liters.

Due to not having data on the selling amount in every time of price change, so the simple average price should be applied:

Simple average price = (12,000 d/l + 14,000 d/l + 18,000 d/l + 14,500 d/l +11,000 d/l): (divide) 5 = 13,900 d/l

Amount of fraudulent gas = 200,000 liters X (0.1 - 0.05) = 10,000 liters

The value of fraudulent goods = 10,000 liters X 13,900 dong = 139,000,000 dong

- Where there is data on amount of sale of each time of price increase (decrease), the method of the weighted average shall be calculated.

Weighted average price = Σ (amount of fraudulent goods in each time of price change X price of each time of change): (divide) the total amount of goods

Example: From the above example, further documentation to prove

From 01/12/2007 to 29/03/2008 the gas station A sold 50,000 liters at 12,000 VND/liter

From 30/03/2008 to 01/06/2008 the gas station A sold 50,000 liters at 14,000 VND/liter

From 02/06/2007 to 29/8/2008 the gas station A sold 40,000 liters at 18,000 VND/liter From 30/08/2008 to 19/09/2008 the gas station A sold 40,000 liters at 14,500 VND/liter

From 20/09/2007 to 10/10/2008 the gas station A sold 20,000 liters at 11,000 VND/liter

Price of weighted average = ((50,000 x 12,000) + (50,000 x 14,000) + (40,000 x 18,000) + (40,000 x 14,500) + (20,000 X 11,000)): (divide) 200,000 = 14,200 VND/liter

4. Method of calculating value of fraudulent goods on quality

- The calculation of value of fraudulent goods on quality to determine the rate of fine and competence to sanction:

The value of fraudulent goods on quality = amount of seized goods X price

- The value required to compensate damage to customers, where unable to determine customers, the amount of money shall be confiscated to remit into state budget = amount of units of goods seized X (unit price of goods unit for proper publication of quality or stated on labels - unit price of fraudulent goods unit on quality).

Item III. IMPLEMENTATION PROVISIONS

Article 12. Effect

1. This Circular takes effect 45 days from its signing date.

2. During the implementation of Decree No.107/2008/ND-CP and the guidance in this Circular, if any problems arise, the ministries and branches at central and local reflect to the Ministry of Industry and Trade for timely research, guidance and answers.