The employee of a clothing company smuggled a batch of clothing with a cost of RMB 1 million out of the company’s warehouse, and sold it to a third party at an extremely low price of RMB 200,000. Later then, the company reported to the police, and claimed that the employee should compensate a loss of RMB 1.5 million (including sales profit). How to determine the amount of occupation by taking advantage of duties? Shall the amount be equal to the cost, or sales price, or illegal gains?
Because the nature of the occupation by taking advantage of duties is similar to theft, the provisions related to theft are always quoted.
In practice, the price certificate is rare, and the appraisal has been applied in many cases. The main basis for the appraisal is the “Standards of Practice for Asset Appraisals—-Asset Appraisal Approaches”, in which it has listed 3 methods, which are the market approach, the income approach and the cost approach. This rule has also set out the precondition for the application of each approach. However, for individual cases, it is still uncertain on the selection of appraisal approach. In addition, in many relevant cases, the items have been consumed or sold, so the appraisal agency could not conduct appraisal on physical objects. As a result, in many cases, the courts had adopted the illegal gains as the basis for conviction, for example, (2018) Xiang 01 XinZhong No.990 and so on.
It is worth noting that there are still several courts held the similar opinion with Fa Shi  No.4. For example, in case (2009) Xi Xin Er Zhong No.92, published in Issue 4 of the “Selected Cases of the People’s Court”(2010), the key judgment point is that the perpetrator changed the preferential measures of the internet café by taking advantage of his own duty with the purpose of illegal possession. The perpetrator had spent very little money in exchange for a large amount of money, which had brought a huge loss to the internet café, and such behavior constituted the crime of occupation. The amount of occupation should be calculated according to the actual loss of the internet café instead of the illegal gains. This point has also been adopted in the civil compensation case later then. There is another example, in the case “Sun Wei v.s Nantiong Baichuan Flour Co., Lt., Disputes on Improper Gains”, published in Issue 7 of the “Gazette of the Supreme
Therefore, the victim shall prepare evidence on the reasonableness of the price, by which the victim could persuade the court to apply the reasonable sales price on the determination of the damage of the amount of occupation by taking advantage of duties.