PepsiCo Investment (China) Ltd, together with two of its employees, stood trial Wednesday at Guangzhou Intermediate People's Court on charges of smuggling ordinary goods, the New Express Daily reported.
PepsiCo China was accused of knowingly making customs declarations for a kola-nut extract under an incorrect HS-code to evade taxes amounting to 1.11 million yuan ($162,600), the report said.
Huang Xuyi, 37, a procurement staffer at PepsiCo China, found in April 2005 while checking a batch of the kola-nut extract imported from the US that the code carried on the invoice started with "1302", rather than "3302", which had been used by the company, it said.
After referring to China's Customs Tariff, Huang confirmed that the code used by PepsiCo China was wrong. But he also discovered that the tax rate under the "1302" code was 20 percent, 5 percentage points higher than that under the "3302" code.
Huang then reported the matter to Lin Dong, who was then the procurement manager. He suggested Lin ask the US suppliers to delete the code on the invoice to avoid customs examination, according to the report. Later, Lin managed to persuade the suppliers to delete the correct code and add the "3302" code on the invoice, it said.
Records showed that PepsiCo China imported more than 100,000 tons of the kola-nut abstract from April 2005 to September 2007, evading taxes of up to 1.11 million yuan.
In a written statement dated March 24 and published by sohu.com Thursday, PepsiCo China says, "We operate to the highest standard of corporate ethics and strictly abide by the relevant laws and regulations in China. We have and will continue to cooperate with the relevant authorities to seek closure to recent tariff issues related to the importation of raw materials."
