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How to Understand the Validity Period of the General Bond?
07/07/2011


Question: Article 3 of the GACC Announcement on general bond stipulates "The L/G of the general bond is valid from the date on which the guarantor issues the L/G to June 30 of the following year", while Article 4 of the same announcement specifies "From the date on which the Customs approve the IPR holder to use the general bond to December 31 of the same year, the IPR holder is not required to provide bond to the customs when requesting the customs to detain the suspect infringing goods". In the two articles two expiry dates are stated, i.e. "June 30 of the following year" and "December 31 of the same year". What do those two expiry dates mean? What is the relationship between them? 

Answer: The first expiry date refers to the date of expiration of the L/G of the general bond, i.e., the period during which the guarantor shall perform the obligations under bond; the second expiry date refers to the period during which the bond matters occur, i.e., the period during which the IP right hold is not required to provide bond separately to the port customs.

The relationship between the two expiry dates: As soon as the GACC approves the application for general bond filed by an IPR holder, the IPR holder is not required to provide separate bond for requesting port customs to detain the suspected infringing goods during the period from the date of approval to December 31 of the year; however, the bank's performance of the obligations under bond as the guarantor is not terminated on December 31 of the year. Because the customs’ investigation and handling of suspected infringing goods detained may be unsettled at the said time, and even on December 31, the customs may detain goods suspected of infringement, it is impossible to calculate costs on warehousing, custody, etc. and collect the corresponding charges from the IPR holder, and it is necessary to extend the period for the guarantor's performance of obligations under bond to the time when the customs settle the case. According to relevant laws and regulations, it takes 6 months for the customs to settle a case from the date when the suspected infringing goods are detained, and therefore, Article 3 of Announcement of GACC No. 31 stipulates that the expiry date of the L/G of the general bond is June 30 of the following year.



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STATEMENT

General Administration of Customs of the People's Republic of China

Address: No.6. Jianguomennei Avenue, Dongcheng District, Beijing, China        Postcode: 100730