Hong Kong (HKSAR) – Hong Kong Customs detected earlier this week a case involving suspected evasion of tobacco duty by a company holding an Import and Export Licence for Cigarettes. The company was suspected to have mixed duty-not-paid cigarettes with duty-paid ones for sale, intending to evade tobacco duty of about $4.1 million.
In the operation, Customs seized about 2.2 million sticks of suspected illicit cigarettes, with a market value of about $4.7 million and a duty potential of about $4.1 million, from a company in Mong Kok and a store in Kwai Chung. Five men and two women aged between 25 and 54, including a company director, three company staff, two drivers and a conveyor, were arrested.
Customs has been monitoring the cigarette sales in the market.
It was found recently that there were discrepancies in the company’s stocks of duty-paid cigarettes and its business records. After several months’ follow-up investigations, it was suspected that someone had mixed the smuggled duty-not-paid cigarettes with duty-paid ones for sale in an attempt to evade tobacco duty.
Customs took enforcement action on August 25 to search the company’s office in Mong Kok and seized 600 000 sticks of suspected illicit cigarettes from 60 carton boxes. Customs further seized 1.6 million sticks of suspected illicit cigarettes from 131 carton boxes in a store at an industrial building in Kwai Chung.
The licensee of the company and six other persons involved in the case were arrested.
A Customs spokesman said today (August 28) that Customs has put in place an effective system on the control of import and export of cigarettes and tobacco products. A person who imports and exports cigarettes must possess a valid Import and Export Licence. A company holding an Import and Export Licence must also obtain the relevant permits from Customs prior to removal of cigarettes.
A licensee must comply with the relevant licensing and permit conditions. Customs will continue to closely monitor the market situation and strengthen intelligence gathering. Target enforcement action will be taken against any suspected illicit cigarette activities.
Under the Import and Export Ordinance, smuggling is a serious offence.
The maximum penalty is a fine of $2 million and imprisonment for seven years.
Under the Dutiable Commodities Ordinance, anyone involved in buying, selling or dealing with illicit cigarettes commits an offence. The maximum penalty is a fine of $1 million and imprisonment for two years. For cases of intentional evasion of duty, a magistrate may additionally impose a fine not exceeding 10 times the amount of duty payable on the dutiable goods.
Under the Crimes Ordinance, a person convicted of the offence at common law of conspiracy to defraud shall be liable to imprisonment for 14 years.
http://www.customs.gov.hk/en/publication_press/press/index_id_1212.html