Circular No. 11/2009/TT-BCT detailing certain provisions of Government Decree No. 107/2008/NĐ-CP dated September 22, 2008 on administrative penalties for speculative behavior, stockpiling goods, excessive price increases, disseminating false information, smuggling, and commercial fraud.

CIRCULAR

DETAILING CERTAIN PROVISIONS OF DECREE NO. 107/2008/ND-CP OF SEPTEMBER 22, 2008 OF THE GOVERNMENT ON ADMINISTRATIVE SANCTIONS FOR SPECULATIVE ACTIVITIES, STOCKPILING GOODS, UNJUSTIFIED PRICE INCREASES, SPREADING FALSE INFORMATION, SMUGGLING AND COMMERCIAL FRAUD

Pursuant to Decree No. 189/2007/ND-CP dated December 27, 2007, issued by the Government, detailing the functions, tasks, powers, and organizational structure of the Ministry of Industry and Trade;
Pursuant to Decree No. 107/2008/ND-CP of September 22, 2008 of the Government on administrative sanctions for speculative activities, stockpiling goods, unjustified price increases, spreading false information, smuggling and commercial fraud;

The Ministry of Industry and Trade hereby details certain provisions of Decree No. 107/2008/ND-CP of September 22, 2008 of the Government on administrative sanctions for speculative activities, stockpiling goods, unjustified price increases, spreading false information, smuggling and commercial fraud (hereinafter referred to as Decree No. 107) as follows:

Section I. SCOPE OF REGULATION AND CONDITIONS FOR APPLICATION

Article 1. Scope of Regulation

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

1. They must be granted a Certificate of Science and Technology Enterprise by the competent state management agency.

1. Administrative sanctions for violations stipulated in Article 4, Article 5, Article 6, and Article 7 shall only be applied when the following two conditions are met:

a) For goods and services listed in the price stabilization list under Decree No. 75/2008/ND-CP of June 9, 2008 of the Government amending and supplementing certain articles of Decree No. 170/2003/ND-CP of December 25, 2003 of the Government detailing certain provisions of the Price Ordinance and Circular No. 104/2008/TT-BTC of November 13, 2008 of the Ministry of Finance guiding the implementation of Decree No. 170/2003/ND-CP of December 25, 2003 and Decree No. 75/2008/ND-CP of June 9, 2008 on amending and supplementing certain articles of Decree No. 170/2003/ND-CP.

b) In cases where the market experiences abnormal fluctuations in supply and demand, prices of goods and services due to natural disasters, fires, epidemics, wars, or other unusual developments, if the Prime Minister or the Minister of Finance decides to implement price stabilization measures nationwide or in specific regions (then administrative sanctions for violations stipulated in the above articles will be applied nationwide or in the announced regions), or if the Chairman of the People's Committee at provincial level decides to implement price stabilization measures within their jurisdiction (then administrative sanctions for violations stipulated in the above articles will only be applied in the areas announced by the Chairman of the People's Committee at provincial level).

Article 3. Revocation of Business Registration Certificate and Various Business Licenses

Regarding the revocation of business registration certificates and various business licenses stipulated in Decree No. 107, it is applied as follows:

- Revocation of the aforementioned papers with a time limit means revoking the use of such papers for a maximum period not exceeding twelve months; determining the duration of the revocation of such papers must be based on the value of the goods involved in the violation, the nature, and the degree of the violation.

- Revocation of the aforementioned papers without a time limit means revoking the use of such papers for more than twelve months and is only applicable to repeated or recidivist violations of administrative offenses; the determination of repeated or recidivist violations is carried out according to the provisions of Clause 2 and Clause 3 of Article 6 of Decree No. 128/2008/ND-CP of December 16, 2008 of the Government detailing certain provisions of the Administrative Violation Handling Ordinance 2002 and the Ordinance Amending and Supplementing Certain Provisions of the Administrative Violation Handling Ordinance 2008.

- The duration of the revocation of business licenses and practice certificates is calculated from the date of temporary detention of the business registration certificate, business license, or practice certificate.

Mục II. VIOLATIONS AND APPLICATION OF FORMS AND LEVELS OF ADMINISTRATIVE SANCTIONS

Article 4. Sanctioning Speculative Behavior in Goods Trading

1. On Violations

In cases where, during the time and in the area where measures to stabilize prices have been announced, a business entity purchases goods outside the designated area with the purpose of bringing them into the area experiencing abnormal fluctuations, as announced by the competent authority, for sale to stabilize the market, such behavior shall not be considered speculative trading and shall not be subject to administrative sanctions for speculative trading.

2. Calculation of the Value of Purchased Goods, Determination of Quantity and Price of Goods Purchased

The value of goods purchased = purchase price x quantity of goods purchased.

Where:

- Determination of Price:

The basis for determining the price shall be carried out in accordance with the provisions of Article 63 of Decree No. 06/2008/ND-CP dated January 16, 2008 of the Government on administrative sanctions for violations in commercial activities, Circular No. 15/2008/TT-BCT dated December 2, 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 on administrative sanctions for violations in commercial activities, and Article 34 of Decree No. 128/2008/NĐ-CP dated December 16, 2008 detailing the implementation of certain articles of the Administrative Violation Handling Ordinance 2002 and the Ordinance Amending and Supplementing Certain Articles of the Administrative Violation Handling Ordinance 2008.

- Determination of Quantity Includes:

+ Goods currently being purchased in bulk;

+ Goods purchased in bulk that are stored in warehouses or stores;

+ Goods purchased in bulk that have already been sold.

3. Confiscation of Profits from Sold Goods, Calculated as Follows:

Amount of profit to be confiscated = (selling price - purchase price) x quantity of goods purchased in bulk that have been sold

Article 5. Sanctioning Hoarding Behavior

1. On Violations

The behaviors stipulated in Clause 1, Clause 2, Clause 3, and Clause 4 of Article 5 of Decree No. 107/2008/ND-CP shall be sanctioned when both conditions specified in Article 2 of this Circular are met, provided that there are goods at the store, warehouse, or sales point, constituting hoarding behavior.

2. The sanctioning of hoarding behavior as stipulated in Point c, Clause 5 of Article 5 of Decree No. 107 is applied as follows:

a) In cases where supermarkets, shopping centers, or other modern distribution facilities (shopping centers, member stores, hypermarkets, discount stores, modern general merchandise stores) engage in hoarding behavior, the subject of administrative violation is the organization or individual owning the supermarket, shopping center, or other modern distribution facility.

b) In cases where organizations or individuals operating within supermarkets, shopping centers, or other modern distribution facilities engage in hoarding behavior, the subject of administrative violation is the organization or individual operating within the supermarket, shopping center, or other modern distribution facility.

3. "Legitimate Reason" is understood as follows: the violations stipulated above occur due to objective and irresistible reasons.

Example:

- Power outage affecting the entire area when selling fuel;

- At the time of inspection, all goods in the warehouse and sales points are sold out, leaving no goods available for sale.

- Reduction of sales points to cut costs or because the sales points do not attract buyers due to unsuitable product types or colors for local consumer preferences.

Determining whether a reason is legitimate or not is the responsibility of the authorized inspector and enforcer, who must bear responsibility for their conclusion and record it in the inspection report.

4. "Previous Period" is understood as the period before the competent authority's announcement of measures to stabilize prices becomes effective.

5. Calculation of the Average Inventory of Goods Over the Previous Three Months as stipulated in Clause 4 of Article 5 of Decree No. 107/2008/ND-CP is as follows:

Average inventory over three months = Total average monthly inventory over the previous three months / 3

In which, the calculation of "Average Monthly Inventory" is based on specific data and applies one of the following methods:

- Full daily inventory data is available:

Average monthly inventory = Total daily inventory in the month / Number of days in the month

- Incomplete daily data is available:

Average monthly inventory = (Beginning-of-month inventory + Mid-month inventory + End-of-month inventory) / 3

- No mid-month inventory data is available:

Average monthly inventory = (Beginning-of-month inventory + End-of-month inventory) / 2

Article 6. Administrative penalties for violations related to price declaration and registration

1. Price Declaration

The list of goods that must be declared, enterprises that must declare prices, forms, contents, and procedures for price declaration, the authority receiving price declaration files, rights and responsibilities of the authority receiving price declarations and enterprises declaring prices shall be governed by Section VII of Circular No. 104/2008/TT-BTC dated November 13, 2008, issued by the Ministry of Finance.

2. Price Registration

The list of goods and services that must be registered, enterprises that must register prices, forms, contents, and procedures for price registration, the authority receiving price registration files, rights and responsibilities of the authority receiving price registrations and enterprises registering prices shall be governed by Section VI of Circular No. 104/2008/TT-BTC dated November 13, 2008, issued by the Ministry of Finance.

Article 7. Administrative penalties for violations related to price display of goods and services

1. Acts of Violation

Not displaying prices of goods, services, foreign currencies, gold; displaying prices incorrectly, unclearly causing confusion for customers; selling goods or charging service fees higher than the displayed price; displaying prices of goods and services in foreign currency or collecting payment in foreign currency without permission are acts of violating price display subject to administrative penalties as stipulated in Article 9 of Decree No. 107.

2. Price Display and Displayed Prices

a) Price display shall be carried out in accordance with Article 29 of the Pricing Law, specifically:

Organizations and individuals engaged in production and business must display prices of goods and services at stores, transaction locations for buying and selling goods and providing services; price display must be clear and not cause confusion for customers.

For goods and services priced by the State, organizations and individuals engaged in production and business must display the correct price decided by competent state authorities and sell according to the displayed price.

For goods and services not included in the list of items priced by the State, they must be displayed at the price determined by organizations and individuals engaged in production and business.

b) For goods and services that must be registered, it is the price of the enterprise that has registered the price with the competent state management authority as prescribed in Clause 5.2, Section VI of Circular No. 104/2008/TT-BTC of the Ministry of Finance.

c) For goods and services that must be declared, it is the price of the enterprise that has declared the price to the competent state management authority.

Article 8. Administrative penalties for the act of smuggling gasoline and oil across borders

1. Violations concerning the export of goods not in accordance with the content of the permit as specified in point b, Clause 2, and violations concerning the export of goods without a permit as specified in point d, Clause 4 of Clause 10, Article 1 of Decree No. 18/2009/NĐ-CP dated February 18, 2009, issued by the Government amending and supplementing certain provisions of Decree No. 97/2007/NĐ-CP dated June 7, 2007, of the Government on handling administrative violations and enforcing administrative decisions in the customs sector, where the exported goods are gasoline and oil, shall be subject to administrative penalty measures as stipulated in Article 10 of Decree No. 107 for punishment.

2. Acts of forging, illegally using quotas, Export Permits, Import Permits for goods, and acts of exporting, importing goods without quotas, Export Permits, Import Permits for goods as stipulated in Clause 2, Clause 3, Article 34 of Decree No. 06/2008/NĐ-CP dated January 16, 2008, of the Government, where the exported goods are gasoline and oil, shall be subject to administrative penalty measures as stipulated in Article 10 of Decree No. 107 for punishment.

3. Guidelines for calculating the value of gasoline and oil to apply the administrative penalty measures stipulated in Article 10 of Decree as follows:

Value of gasoline (oil) = Quantity of gasoline (oil) seized X price

The basis for determining the price shall be carried out in accordance with the provisions of Article 63 of Decree No. 06/2008/ND-CP dated January 16, 2008 of the Government on administrative sanctions for violations in commercial activities, Circular No. 15/2008/TT-BCT dated December 2, 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 on administrative sanctions for violations in commercial activities, and Article 34 of Decree No. 128/2008/NĐ-CP dated December 16, 2008 detailing the implementation of certain articles of the Administrative Violation Handling Ordinance 2002 and the Ordinance Amending and Supplementing Certain Articles of the Administrative Violation Handling Ordinance 2008.

Article 9. Penalty for the act of smuggling rice, timber, minerals across the border

The method to calculate the value of goods such as rice, timber, minerals for applying sanctions under Article 11 of the Decree:

Value of goods = Quantity of seized goods x price

Where:

- Actual quantity of seized goods.

- Price: Determined based on the provisions stipulated in Article 63 of Decree No. 06/2008/ND-CP dated January 16, 2008 of the Government on administrative penalties in commercial activities, Circular No. 15/2008/TT-BCT dated December 2, 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 on administrative penalties in commercial activities, and Article 34 of Decree No. 128/2008/ND-CP dated December 16, 2008 detailing certain provisions of the Administrative Violation Handling Ordinance 2002 and the Ordinance amending and supplementing certain articles of the Administrative Violation Handling Ordinance 2008.

Article 10. Penalty for prohibited goods, smuggled goods, counterfeit goods

The penalty for violations concerning prohibited goods, smuggled goods with a value of VND 100,000,000 or more, counterfeit goods with a value of VND 30,000,000 or more, and violations regarding product labeling shall be carried out according to Circular No. 15/2008/TT-BCT dated December 2, 2008 of the Ministry of Industry and Trade guiding certain articles of Decree No. 06/2008/ND-CP dated January 16, 2008 of the Government on administrative penalties in commercial activities.

Article 11. Penalty for fraudulent measurement, packaging of goods, and quality of goods and services

1. Acts of Violation

Violations as stipulated in Article 13 of Decree No. 107 include:

a) Fraudulent measurement and packaging of goods refers to fraud in performing measurements, methods of weighing, measuring, and counting goods (the quantity of goods is less than that indicated on the package), causing a shortage of goods while the buyer still has to pay the full price, thereby harming customers.

b) Fraudulent quality of goods and services refers to the production, processing, repackaging, filling, selling of goods where the quality does not match the declared quality or label, thereby harming customers.

2. Other violations and sanctions related to measurement and quality of goods and services not specified in Decree No. 107/2008/ND-CP shall be subject to sanctions as prescribed in Decree No. 126/2005/ND-CP dated October 10, 2005 of the Government and Decree No. 95/2007/ND-CP dated June 4, 2007 amending and supplementing certain articles of Decree No. 126/2005/ND-CP dated October 10, 2005 on administrative penalties in the field of measurement and product quality.

3. Method to calculate the value of goods involved in fraudulent quantity:

Value of fraudulent goods = Quantity of fraudulent goods x price

Where:

a) Determining the quantity of fraudulent goods:

- The quantity of fraudulent goods is the actual quantity at the time of inspection and seizure.

If there is sufficient evidence to determine the period and quantity of fraudulent goods during that period, then the quantity of fraudulent goods is calculated from the time the fraudulent act occurred.

Example:

On December 30, 2008, when inspecting gas station A, it was found that the electronic chip caused an error rate of 0.5%, while only a 0.05% error rate was allowed. The inspection authority had sufficient evidence to determine that the gas station installed the faulty chip from September 30, 2008, and the amount of fuel sold during this period was 100,000 liters.

The calculation of the quantity of fraudulent fuel measured at gas station A is as follows:

Quantity of fraudulent fuel = 100,000 liters x (0.5% - 0.05%) = 4,500 liters

- For pre-packaged goods involved in fraudulent measurement, if there is sufficient evidence to determine which batch the fraudulent goods belong to, the quantity of fraudulent goods is the entire batch of pre-packed goods. To ensure representativeness of the entire batch, there must be sufficient evidence to ensure that a random check of 5% of the quantity of seized pre-packed goods involved in fraudulent measurement causing damage to customers is conducted.

Example:

During an inspection of fertilizer production facility of Company X, it was found that each bag was labeled with a net weight of 50 kg, but upon inspection, each bag was found to weigh only 48.5 kg on average. Through inspection, it was determined that the batch being inspected was batch Y and had already been sold on the market totaling 500,000 kg (10,000 bags).

The calculation of the quantity of fraudulent fertilizer measured at Company X is as follows:

Quantity of fraudulent fertilizer by Company X = 10,000 bags x (50 kg - 48.5 kg) = 15,000 kg

b) Determining the price

- The basis for determining the price is carried out according to the provisions stipulated in Article 63 of Decree No. 06/2008/ND-CP dated January 16, 2008 of the Government on administrative penalties in commercial activities, Circular No. 15/2008/TT-BCT dated December 2, 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 on administrative penalties in commercial activities, and Article 34 of Decree No. 128/2008/ND-CP dated December 16, 2008 detailing certain provisions of the Administrative Violation Handling Ordinance 2002 and the Ordinance amending and supplementing certain articles of the Administrative Violation Handling Ordinance 2008.

- In cases where prices have changed multiple times and the quantity of goods involved in each price change cannot be determined, the value of fraudulent goods is calculated using the simple average method.

Example:

On October 10, 2008, it was discovered that Gas Station A sold gasoline with an error rate of 0.1%, while the allowable error rate was 0.05%. The faulty chip causing measurement errors and customer harm was installed on December 1, 2007. During this period, the price of gasoline was adjusted four times: at the time of installation on December 1, 2007, the price was VND 12,000 per liter; adjusted to VND 14,000 per liter on March 30, 2008; adjusted to VND 18,000 per liter on June 1, 2008; adjusted to VND 14,500 per liter on August 30, 2008; and adjusted to VND 11,000 per liter on September 20, 2008. The total volume of gasoline sold from December 1, 2007 to October 10, 2008 was 200,000 liters.

As there were no data on sales volumes at each price adjustment, the simple average method was used to calculate the price:

Simple average price = (VND 12,000 per liter + VND 14,000 per liter + VND 18,000 per liter + VND 14,500 per liter + VND 11,000 per liter) / 5 = VND 13,900 per liter

Quantity of fraudulent gasoline = 200,000 liters x (0.1 - 0.05) = 10,000 liters

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

- In cases where there are data on the quantity sold each time the price increases (decreases), the weighted average price method shall be used to calculate the price.

Weighted average price = ∑ (quantity of fraudulent goods in each price change X price at each change) : (divided by) total quantity of goods

Example: Based on the above example, additional evidence is provided

From December 1, 2007 to March 29, 2008, Gas Station A sold 50,000 liters at 12,000 VND/liter

From March 30, 2008 to June 1, 2008, Gas Station A sold 50,000 liters at 14,000 VND/liter

From June 2, 2007 to August 29, 2008, Gas Station A sold 40,000 liters at 18,000 VND/liter

From August 30, 2008 to September 19, 2008, Gas Station A sold 40,000 liters at 14,500 VND/liter

From September 20, 2007 to October 10, 2008, Gas Station A sold 20,000 liters at 11,000 VND/liter

Weighted average price = ﴾(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﴿ : (divided by) 200,000 = 14,200 VND/liter

4. Method for calculating the value of fraudulent goods regarding quality

- Calculating the value of fraudulent goods regarding quality to determine the fine amount and the authority to impose penalties:

Value of fraudulent goods regarding quality = quantity of seized goods X price

- The value for compensating customers' losses, in cases where customers cannot be identified, the amount shall be confiscated and deposited into the state treasury = Quantity of units of seized goods X (correctly announced quality unit price or labeled unit price of goods - fraudulent quality unit price of goods).

Chapter III. IMPLEMENTATION PROVISIONS

Article 12. Effective Date

1. This Circular shall take effect 45 days from the date of signature.

2. During the implementation of Decree No. 107/2008/NĐ-CP and the guidance provided in this Circular, if any issues arise, they should be reported to the Ministry of Industry and Trade for timely research, guidance, and resolution./.