[Interpretation of the Special Equipment Safety Law] Article 81

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Article 81: If a special equipment manufacturing unit violates the provisions of this Law and commits one of the following acts, it shall be ordered to make corrections within a specified time limit； If the violation is not corrected within the prescribed time, production shall be ordered to cease, and a fine of not less than 50,000 yuan but not more than 500,000 yuan shall be imposed ； In serious cases, the production license shall be revoked: (1) When the enterprise no longer meets the production conditions, when the production license has expired, or when production is carried out beyond the scope permitted by the license ； (II) Failing to immediately cease production and recall the special equipment upon knowing of its identical defect. In violation of the provisions of this law, if a special equipment manufacturer produces, sells, or delivers special equipment that has been explicitly ordered to be phased out, it shall be ordered to cease such production and sales; the illegally produced, sold, or delivered special equipment shall be confiscated, and a fine of not less than 30,000 yuan but not more than 300,000 yuan shall be imposed ； If there are illegal gains, such gains shall be confiscated. If a special equipment manufacturing unit alters, resells, leases, or lends out its manufacturing license, it shall be ordered to cease production and fined not less than 50,000 yuan but not more than 500,000 yuan ； In serious cases, the production license shall be revoked. Interpretation of the provision: This article stipulates the legal responsibilities that shall be borne by special equipment manufacturing units that have obtained production permits for any illegal activities they commit. The legal responsibilities of special equipment manufacturing units as stipulated in this article cover three aspects: first, the legal responsibilities arising from the lack of appropriate manufacturing conditions, an expired manufacturing license, or production beyond the scope permitted by the license, as well as the legal responsibilities for failing to fulfill recall obligations as required ； Second is the legal liability for producing, selling, and delivering **special equipment that has been explicitly banned** ； Third are the legal responsibilities for altering, reselling, leasing, or lending production licenses. I. Legal responsibilities for no longer having the necessary production conditions, having an expired production license, producing beyond the scope permitted by the license, or failing to fulfill recall obligations as required. In accordance with Article 18 of this law, a licensing system is implemented for special equipment in line with the principle of classified supervision and management; such equipment must meet the relevant requirements before it can engage in production activities. Paragraph 1 of Article 26 of this Law stipulates that **a recall system for defective special equipment shall be established. If special equipment suffers from identical defects that pose a safety risk due to production issues, the manufacturer of such equipment shall immediately cease production and take proactive steps to recall it. Pursuant to these two provisions, special equipment manufacturing entities holding a production license shall bear the legal liabilities stipulated in Paragraph 1 of this Article if they no longer meet the prescribed production conditions, if their production license has expired or if they engage in production beyond the scope permitted by the license; they also bear such liabilities if they fail to fulfill their recall obligations as required. (1) Entities liable under law The entities liable for the legal responsibilities stipulated in the first paragraph of this article are special equipment manufacturing units, including those responsible for design, manufacturing, installation, modification, and repair. These production units are those that have obtained the relevant licenses, or those that have previously obtained such licenses. (II) Illegal acts subject to legal liability: Compared with the Regulations on the Safety Supervision of Special Equipment, the provisions regarding legal liability in the first paragraph of this article represent additional penalties that have been introduced. 1. Regarding the situation where production conditions are no longer available, the production license has expired, or production is carried out beyond the scope permitted by the license. The premise of this illegal act is that the special equipment manufacturing unit has already obtained a manufacturing license, but fails to continuously ensure that its manufacturing license and production conditions remain in compliance with legal requirements. The main manifestations take three forms: one is the loss of production conditions. It refers to the situation where, although its production license remains valid on paper, the actual production conditions no longer comply with the provisions of Article 18 of this law as well as relevant safety technical standards; for example, there may be a loss of skilled personnel, the equipment and facilities necessary for production are no longer available, or there are serious issues with the quality assurance system, preventing the proper conduct of production activities. If such production units are allowed to continue manufacturing, it is impossible to ensure the safety of the special equipment they produce. Second, the production license has expired. This situation constitutes a lack of formal requirements for licensing. There are many reasons why a production license expires; sometimes it is because the company loses its manufacturing capacity, faces bankruptcy, and is no longer in a position to apply for a license again ； It is also possible that the enterprise is still operating normally, but its production license has expired due to delays in completing the procedural steps required for renewal. Third is production beyond the permitted scope. In this case, it is legal in terms of the license format, and the essential production conditions specified in the license are also met; however, special equipment is being produced beyond the scope permitted by the license. It is worth noting that the production beyond the permitted scope referred to here generally means that the special equipment produced outside this scope falls within the same category as the processes for which permission has been granted (design, manufacturing, installation, modification, repair), and the type or category of special equipment in question is identical; for example, obtaining a manufacturing license for Class B boilers yet manufacturing Class A boilers. Such cases are punished in accordance with this article. If special equipment produced beyond the permitted scope differs from the types of equipment specified in the license granting production rights, or if the type or category of special equipment is different – for example, if permission is granted to produce a certain type of elevator but boilers are manufactured, or if approval is given to manufacture pressure vessels but designs for such vessels are created – it shall be considered as unauthorized production of special equipment, and penalties shall be imposed in accordance with Article 74 of this law (more severe penalties). 2. Regarding the failure to fulfill recall obligations as required. It mainly includes two aspects: first, knowing that the special equipment had identical defects yet failing to stop production immediately ； Second, failing to recall immediately despite being aware of the identity defect in the special product. It should be said that the obligations to cease production and to recall products must be fulfilled simultaneously; therefore, should either of these obligations be violated – that is, if production is not ceased immediately or the products are not recalled promptly – legal liability as stipulated in the first paragraph of this article shall apply. (III) Forms of legal liability and issues related to the imposition of penalties: In the event of a violation as stipulated in the first paragraph of this article, the department responsible for the supervision and management of special equipment safety shall order the party involved to make corrections within a specified time frame ； If the violation is not corrected within the prescribed time, production shall be ordered to cease, and a fine of not less than 50,000 yuan but not more than 500,000 yuan shall be imposed ； In serious cases, the production license shall be revoked. If the acts listed in this article constitute the crime of a major liability accident or other crimes, corresponding criminal penalties shall be imposed. When imposing penalties, attention should be paid to the following three aspects: 1. The departments responsible for the safety supervision and management of special equipment, when issuing orders to make corrections within a specified time frame or to cease production, must pay attention to the implementation of those penalty decisions. They should also ensure that follow-up supervision measures are in place to prevent violations from continuing, which could lead to potential accidents. 2. Producing when the production conditions no longer exist, when the production license has expired, or when production exceeds the scope permitted by the license – in essence, these also constitute unlicensed production. However, the legal responsibilities are designed to be distinct from those prescribed in Article 74 for engaging in special equipment production activities without permission, because the perpetrators of such acts objectively have obtained a production license and possess, or partially possess, or have previously possessed the necessary production qualifications and conditions; as a result, the harm caused by their production activities is relatively minor, which is why lighter legal responsibilities are stipulated compared to those in Article 74. For example, requiring correction within a specified time frame is set as a prerequisite for subsequent penalties, and the amount of the fine is also low. Therefore, when determining illegal activities, especially those involving production beyond the scope of permission, it is necessary to carefully investigate the details regarding how the entity responsible for the illegal activity obtained its production permit. 3. Regarding the determination of “knowledge” of identical defects in special equipment. The subjective condition for failing to immediately stop production and recall special equipment with identity defects is \"knowledge\", that is, \"to know\" or \"to should know\". The proof of “knowledge” mainly relies on the declarant’s own admission ； “Should have known” is essentially an inference made by law enforcement authorities based on the evidence at hand. This inference is primarily grounded in the party’s work experience, their inspection of incoming raw materials, their understanding of the production process, as well as corroborative testimony from relevant witnesses. II. Legal responsibilities regarding the production, sale, and delivery of special equipment that has been explicitly designated for elimination. Article 19 of this law stipulates that it is prohibited to produce special equipment that does not meet safety performance requirements and energy efficiency standards, as well as special equipment that has been explicitly designated for elimination. **Special equipment that is explicitly designated for elimination refers to those whose safety performance and energy efficiency parameters do not meet the requirements of relevant regulations and standards, and which are included in the **Catalogue of Special Equipment to be Eliminated. In accordance with the requirements of the Energy Conservation Law, a phase-out system is implemented for outdated special equipment products that consume excessive energy. Strict reviews will be conducted in the design, manufacturing, and inspection of special equipment to ensure the implementation of the system for phasing out such equipment. Those who produce, sell, or deliver such equipment in violation of the regulations shall bear the legal responsibilities stipulated in this article. (1) Entities subject to legal liability The entities subject to the legal liability stipulated in the second paragraph of this article are special equipment manufacturing units, including those responsible for design, manufacturing, installation, modification, and repair. These production units are those that have obtained the relevant licenses. (II) Illegal acts subject to legal liability: The illegal acts involving special equipment that give rise to the legal liability stipulated in this article include three situations. The first is when special equipment manufacturers produce special equipment that has been explicitly ordered to be phased out; for example, a boiler manufacturer that holds the authorization to produce a certain model may illegally manufacture older models of boilers that have already been ordered to be discontinued. Second, special equipment manufacturing units sell special equipment that has been explicitly ordered to be phased out in violation of the law; this mainly refers to the illegal sale of special equipment within the scope covered by their licenses. Third, special equipment manufacturing units deliver special equipment that has been explicitly ordered to be phased out in violation of the law; this includes delivery after the equipment has been manufactured, as well as delivery after it has been installed or repaired. (III) Forms of legal liability and matters to be noted when imposing penalties: If a special equipment manufacturer produces, sells, or delivers special equipment that has been explicitly ordered to be phased out, the department responsible for the supervision and management of special equipment safety shall order it to cease such production and sales, confiscate the illegally produced, sold, or delivered special equipment, and impose a fine of not less than 30,000 yuan but not more than 300,000 yuan ； If there are illegal gains, such gains shall be confiscated. If the acts listed in this article constitute the crime of producing or selling counterfeit and substandard products or other crimes, criminal penalties shall be imposed in accordance with the law. When imposing penalties, attention should be paid to the following three aspects: 1. The principle of jurisdiction is that it is based on the location where the illegal act takes place; that is, the department responsible for the supervision and management of special equipment safety is the one that has jurisdiction over any illegal activities related to the production, sale, or delivery of such equipment. This facilitates timely detection and handling of illegal acts. 2. The departments responsible for the safety supervision and management of special equipment shall strictly refer to the **Catalogue of Products to be Phased Out for Special Equipment when carrying out law enforcement; they shall not interpret this catalogue in a way that expands its scope on their own. When it is impossible to determine whether a particular product or equipment falls under the categories described in the catalogue, they should seek an explanation from the authority that compiled the catalogue. 3. Regarding the distinction between the act of special equipment manufacturing units illegally selling special equipment that has been explicitly ordered to be phased out, and the act of special equipment business units illegally selling such equipment as stipulated in Article 82 of this law, the main difference lies in the entities involved. The former are special equipment manufacturing units; although they do engage in sales activities, they usually sell **special equipment that has been officially designated for retirement, produced by their own units, which falls under the category of \"producing and selling one’s own products\"” ； The latter are special equipment business units, that is, they only sell products without producing them themselves; the products they sell are usually manufactured by other special equipment producers. Of course, since both are forms of sales activity, the law imposes similar evaluations and penalties on them: both are required to cease such sales (operations), the special equipment used for illegal sales (operations) must be confiscated; any illegal profits obtained must also be seized, in addition to a fine ranging from 30,000 to 300,000 yuan. III. Legal responsibilities regarding alteration, resale, leasing, or lending of production licenses. Paragraph 3 of this article deals with the legal responsibilities for illegal acts in the use and management of production licenses by special equipment manufacturing units. Article 18 of this Law stipulates the basic procedures for obtaining a special equipment production license. Special equipment manufacturing units that alter, resell, lease, or lend out their production licenses do so for various motives and in different ways; however, as a result, some units that have not obtained production licenses through legitimate channels may end up holding such licenses illegally and engage in unlawful production. Therefore, such illegal acts must be punished. (1) Entities liable under the law The entities liable for the legal responsibilities stipulated in this article are special equipment manufacturing units, including those responsible for design, manufacturing, installation, modification, and repair; these are units that have obtained the relevant licenses. (II) Illegal acts subject to legal liability: The illegal acts that incur the legal liability stipulated in this article refer to those committed by special equipment manufacturing units that hold relevant licenses, such as altering, reselling, leasing, or lending out their production licenses. These include four types of actions: the first being alteration. Tampering refers to the intentional removal of the original text, graphics, or other markings on a license, followed by the addition of new content. For example, the validity period of a production license may be altered in order to extend its formal validity period beyond its actual expiration date, with the aim of deceiving the authorities responsible for supervising and managing the safety of special equipment during routine inspections. The second is reselling. Reselling refers to the act of selling licenses for profit to entities that do not meet the requirements or qualifications, or to those that meet the requirements but have not obtained licenses. Third is leasing. Leasing refers to the act of exchanging the right to use a license for rent from others, with the aim of making a profit. Fourth is lending. Lending refers to the act of granting administrative licenses to others for free use. Leasing and lending are often forms of illegal affiliation, that is, by providing a production license to other entities, which then carry out illegal production activities. The main difference between the two is that leasing involves charging a certain rent. Forging a production license constitutes unlicensed production and forgery of official documents. Production without a license is punished in accordance with Article 74 of this Law, while the falsification of official documents is punished under the Criminal Law. (III) Forms of legal liability and matters to be noted in the imposition of penalties: In the event of a violation as stipulated in Paragraph 3 of this article, the department responsible for the supervision and management of special equipment safety shall order the suspension of production and impose a fine of not less than 50,000 yuan but not more than 500,000 yuan ； In serious cases, the production license shall be revoked. When production licenses are sold, rented out, or lent, the special equipment manufacturing units generally still retain their legal right to produce, and their own production activities continue as usual in a lawful manner. However, such acts of selling, renting out, or lending licenses usually lead to other illegal production activities, severely undermining the licensing system for the production of special equipment. To combat such practices and urge them to revoke their production licenses promptly, the law requires not only fines but also an order to cease production. When imposing the administrative penalties stipulated in Paragraph 3 of this article, attention should be paid to the following two aspects: 1. When determining the nature of multiple illegal acts, it is necessary to accurately distinguish the nature of such acts and clarify their classification. For continuous behaviors, judgments and classifications should be made on a case-by-case basis. For example, if a special equipment manufacturing unit, after its production license has expired, alters it and then rents it out for use by other entities, this should be considered as two separate acts: altering the production license and renting it out, which can be identified and punished separately. 2. To determine that the circumstances are serious, consideration should be given to the following five aspects: First, obstructing law enforcement officers from performing their duties in accordance with the law by means of coercion or threats ； Second, committing the same or similar illegal acts again within a certain period after being subject to administrative penalties for such acts ； Third, those who play a major role in the joint illegal act ； Fourth, the illegal act severely harms **interests and the public interest, or causes significant social impacts, or results in serious physical harm to others or substantial property losses ； Fifth, providing false testimony or destroying or concealing relevant account books, agreements, documents, records, business correspondence, and other materials in order to evade supervision and inspection. Having one of these constitutes a serious circumstance.