Hong Kong 2006 - Public Order

The Customs and Excise Department is primarily responsible for the collection of revenue on dutiable goods and the prevention of its evasion and the suppression of narcotics trafficking and narcotic drugs abuse, as well as the prevention and detection of smuggling of contraband, and the protection of intellectual property rights. It has an establishment of 5 202 staff. The department also enforces legislation to protect consumer interests, safeguard and facilitate legitimate trade and industry, uphold Hong Kong's trading integrity and fulfil relevant international obligations. (See also Chapter 5).

The department is responsible for the collection of excise duties derived from dutiable commodities stipulated in the Dutiable Commodities Ordinance. These are liquor, tobacco, hydrocarbon oil and methyl alcohol. During the year, the excise duties collected amounted to $6.96 billion, of which 47.7 per cent was from hydrocarbon oil, 38.8 per cent from tobacco, 13.4 per cent from liquor and 0.1 per cent from methyl alcohol, representing a total increase of 5.1 per cent over 2005.

The department also assesses the taxable values of motor vehicles under the Motor Vehicles (First Registration Tax) Ordinance for the purpose of levying first registration tax. In 2006, the department registered 41 motor traders and assessed the provisional taxable value on 42 594 vehicles, resulting in the collection of $4.34 billion first registration tax by the Transport Department.

Dutiable commodities in Hong Kong are stored in bonded warehouses licensed by the department after import or local manufacture. Removal of dutiable commodities is subject to a permit being issued by the department and the goods can only be released for local consumption upon payment of duty.

In 2006, the department detected 9 537 cases of abuse of the duty-free concessions, involving 2.85 million cigarettes. The number of cases detected and the cigarettes involved represented increases of 249 per cent and 62 per cent respectively when compared with the 2005 figures.

In 2006, some 10 702 offenders were arrested and 78.75 million sticks of illicit cigarettes were seized, a decrease of 32 per cent and 22 per cent respectively over 2005.

On international cooperation, Hong Kong Customs continued its commitment to stamp out transnational cigarette smuggling in concert with overseas customs administrations. In 2006, by monitoring suspicious shipments and through intelligence exchange, 10.65 million cigarettes, 4.75 million of which were illicit, were seized in Germany and Panama.

Due to high oil prices, illicit fuel including marked oil, commonly known as 'red oil', detreated oil and illicit motor spirit continued to be sought by local drivers as fuel for their vehicles in 2006. To tackle the problem, Hong Kong Customs, apart from taking sustained enforcement action to shut down all the illicit filling stations, marked oil detreating plants and places where they are stored, launched a publicity campaign to warn drivers against using illicit fuel. Simultaneously, surprise fuel-tank checks were conducted to deter the use of such fuel. Enforcement actions were stepped up at sea and at land boundaries to prevent the smuggling of illicit fuel.

As a result of the department's vigorous enforcement action, the number of 'black spots' where illicit fuel activities were carried out, was reduced to 21. In 2006, 836 offenders were arrested and 890 000 litres of illicit fuel seized, a fall of 12 per cent and 24 per cent respectively when compared with 2005 figures. The decline in the amount of illicit fuel seized was due largely to the department's ongoing anti-illicit fuel operations and the success of the publicity campaign.

The department continued to take vigorous enforcement action to prevent and suppress the unlawful manufacture, distribution and trafficking of dangerous drugs; to trace, confiscate and recover drug proceeds from illegal drug activities; and to prevent the diversion of chemicals used for the illicit manufacture of dangerous drugs.

The Customs Drug Investigation Bureau tracks down drug trafficking activities, exchanges intelligence and cooperates closely with both local and overseas law enforcement agencies to combat drug trafficking.

In 2006, the department dealt with 80 drug trafficking cases and neutralised three drug storage and distribution centres. It seized 46.9 kilogrammes of heroin, 53 kilogrammes of ketamine, 103 kilogrammes of cannabis, 11.2 kilogrammes of cocaine, 550 grammes of methamphetamine, 24 683 tablets of MDMA, commonly known as 'ecstasy' and 55 032 tablets of other psychotropic drugs. Some 590 people were arrested. Through cooperation with Mainland and overseas law enforcement agencies, 16.5 kilogrammes of various drugs were seized and 14 people arrested.

The Tuen Mun Cross-boundary Ferry Terminal, providing cross-boundary ferry services between Tuen Mun and Zhuhai, commenced operations on November 3, 2006. A new unit with an establishment of 26 officers has been formed to provide customs clearance services at the terminal.

Smuggling between Hong Kong and the Mainland continued. In 2006, a total of 202 smuggling cases were detected, 388 people arrested and over $265 million worth of smuggled goods seized. Evasion of tariff or duty as well as other import and export regulatory controls is the major incentive for smuggling.

Computer parts, electrical and electronic appliances, and precious metals such as silver and nickel were common items smuggled from Hong Kong to the Mainland. Due to the price difference between the duty-exempt marked oil sold in Hong Kong and the light diesel oil sold on the Mainland, the year saw an upsurge in the smuggling of marked oil. The increase in sales tax on vehicles on the Mainland in April 2006 prompted a sharp rise in the smuggling of dismantled vehicles from Hong Kong.

Inbound smuggling activities subsided during the year. Common items smuggled into Hong Kong from the Mainland included cigarettes, pirated optical discs, and meat and poultry.

The department continued to liaise closely with the Police and other local and overseas law enforcement agencies to make concerted efforts to combat smuggling activities. Cooperation with the Mainland authorities was enhanced through the exchange of intelligence and the mounting of parallel operations at the land boundary control points and at sea.