On 21 June, the Legislative Council of Hong Kong, China passed the Import and Export (Amendment) Bill 2023 on its third reading, which exempted alternative smoking products (including vaped e-cigarettes, heated cigarettes, liquid cigarettes, herbal cigarettes, etc.) transshipped through Hong Kong by sea, air and land.

On June 30, the Customs and Excise Department (C&ED) published on its official website the "Alternative Smoking Products Transhipment Control Scheme", detailing the intermodal transhipment scheme.

Alternative Smoking products transhipment control Scheme

I. Introduction

Under the Import and Export Ordinance (Cap. 60) of the Laws of Hong Kong, any person who imports alternative smoking products commits an offence and is liable on summary conviction to a maximum fine of $500,000 and imprisonment for two years; Upon conviction on indictment, the maximum penalty is a fine of $2,000,000 and imprisonment for seven years.

Under the Import and Export Ordinance, alternative smoking products are exempted from the import ban if they are transit articles, air transhipment cargo or specified through transit cargo imported by a registered operator.

Under the Import and Export Ordinance, the Customs and Excise Department (C&ED) regulates the registration and control system of the Alternative Smoking Products Transhipment Control Scheme (the Scheme) to deal with the exemption of specified through transhipment of alternative smoking products. The Department will undertake the investigation and prosecution of illegal imports of alternative smoking products.

Practice Guide on Alternative Smoking Products transhipment Control Scheme

Made under section 13H of the Import and Export Ordinance, these guidelines set out:

a. Registration requirements and procedures; and

b. Security and procedural requirements for registered operators engaged in the transshipment of alternative smoking products in specified through transhipment.

Copies of the relevant documents are also available at:

63 Container Terminal Road South, Kwai Chung, New Territories, Hong Kong

9 / F, Kwai Chung Customs Building

Land Boundary Control Division, Customs and Excise Department

Registration and vehicle inspection Team

2. Definition of Alternative smoking products and Specified through transport alternative smoking products

Section 2(1) of the Smoking (Public Health) Ordinance (Cap. 371) explains the definition of alternative smoking products. In short, alternative smoking products are:

(a) An apparatus capable of producing an aerosol from any substance (other than a dangerous drug) without ignition and used as an imitation of traditional smoking, or parts and accessories thereof, other than a hookah;

(b) any substance (other than dangerous drugs) used to produce aerosol in the apparatus described in subparagraph (a) above, such as heating cigarettes, e-liquids; or

(c) Plant material (other than tobacco and dangerous drugs) that is rolled in any material and can be used in real time to mimic traditional smoking, i.e. herbal tobacco.

Under the Import and Export Ordinance, alternative smoking products are exempted from the import ban as "specified through transit cargo". Under section 13A of the Import and Export Ordinance, a specified through transhipment cargo means an article that:

a. imported by vehicle or vessel; and

b. consignment from one place outside Hong Kong to another place outside Hong Kong by means of a through bill of lading; And when consigned for export by aircraft departing from Hong Kong International Airport.

Section 13I of the Import and Export Ordinance empowers the Commissioner of Customs and Excise (" the Commissioner "), after consulting the Airport Authority (" AA "), to specify by notice published in the Gazette an area for the processing of specified through transhipment cargoes. The specified area includes the West Coast Terminal of the Hong Kong International Airport and parts of the cargo handling area located at Superterminal One, Cathay Pacific Cargo Terminal, Asia Air Transport Centre and Express Centre.

Iii. Registration

Who needs to register

Any person who wishes to obtain an exemption from the specified through transhipment of alternative smoking products must apply to the Commissioner for registration as a registered operator in advance.

Apply for

Any person wishing to register for the scheme should submit the completed form together with the authorisation letter (if applicable) and photocopies of the required documents to the Commissioner through the following channels:

a. Online application (land and air transshipment); or

b. By post/in person:

63 Container Terminal Road South, Kwai Chung, New Territories, Hong Kong

9 / F, Kwai Chung Customs Building

Land Boundary Control Division, Customs and Excise Department

Registration and vehicle inspection Team

For details of the registration process, please refer to the Practice Guide.

Processing of registration applications

Upon receipt of the registration application, the Department will issue a confirmation letter with the application number to the applicant. If necessary, the Department may issue a reminder letter requesting the applicant to provide supplementary information or supporting documents. If the applicant fails to reply or provide the required supplementary information or supporting documents within 30 days from the date of issue of the reminder letter, the application will be deemed invalid and rejected. The C&ED will issue a written notice informing the applicant that his application has been rejected and the reasons for the rejection.

Install security devices

Upon receipt of the completed registration form and all information and supporting documents required by the Customs and Excise Department, a "Notice on Installation of security Devices" will be issued to the applicant within 7 working days. The applicant can then arrange for the procurement and installation of the security device on the vehicle/vessel in accordance with the standards set by the Customs and Excise Department:

Suitable for business vehicles

a. Electronic locks and global positioning system equipment provided by customs approved suppliers;

b. Closed circuit television system with video recording function [there should be lighting system inside the container and at least two closed circuit television cameras installed to clearly record all the goods in the container; and two closed circuit television cameras installed outside the container to clearly see the door, electronic lock and licence plate of the container for real-time surveillance by the Customs and Excise Department]; and

c. Container deadbolt seals [Containers for business vehicles shall have a closed design with the sole entrance at the end and a deadbolt seal installed to ensure that the door cannot be opened without breaking the electronic lock and the deadbolt seals.]

Suitable for business vessels

a. Global Positioning System equipment approved by Customs; and

b. CCTV system [Install at least two CCTV cameras in the cabin and all alternative smoking products in the cabin must be within the range of CCTV cameras].

Conduct vehicle/vessel inspections, trial and briefing sessions

Upon completion of the installation of the security device, the applicant is required to notify the Customs and Excise Department in writing to arrange for vehicle/vessel inspection and, if necessary, to test the functionality of the installed security device on a trial basis.

Applicants are also required to attend briefing sessions organised by the Department to familiarize themselves with the security and procedural requirements of the scheme.

Approve/reject the application

After reviewing the application, the Commissioner will inform the applicant of the result in writing as soon as possible:

a. the approval of the application, the effective date of registration, the registration number of the Alternative Smoking Products Transhipment Control Scheme, and the particulars of the registered business vehicle/vessel and driver/crew; or

b. The application was rejected and the reasons for the rejection.

appeal

An applicant may appeal against the Commissioner's decision by notice in writing to the Chief Secretary for Administration within 14 days from the date of notification of the decision or the date on which he becomes aware of the decision, whichever is later.

Registration fee

Although no fee will be charged to the applicant, the cost of installing the required security devices will be borne by the applicant. Applicants should note that security device suppliers approved by the Customs and Excise Department may charge service fees for the use of security devices.

Iv. Matters after registration

Deregistration/change of particulars

If a registered operator wishes to cancel his registration, he should make a written application to the Commissioner. The Commissioner will process the application and issue a confirmation letter specifying the date of termination of registration.

If the particulars of the registered operator are changed *, they should complete the change form and submit all relevant supporting documents to the Customs and Excise Department within 30 days. Late submission of the change of particulars form may result in suspension or cancellation of the registration.

* Changes in registration particulars include business particulars of the registered operator, authorizers, vehicles/vessels to be used and drivers/crew members to be deployed.

Repair, replace and reinstall security devices

It is the responsibility of the registered operator to ensure that the security device is in good condition and functioning properly. The registered operator should report any failure of the security device to the Customs and Excise Department immediately and repair it properly before the next specified transshipment of alternative smoking products. If any security device is to be repaired, replaced or re-installed (as the case may be), the registered operator should notify the Customs and Excise Department and make an appointment for a vehicle/vessel inspection.

Periodic check

The C&ED will conduct regular biannual checks on registered operators to ensure that they meet the standards required by the C&ED and that the required security devices are functioning properly. The registered operator is required to provide the information required by the Customs and Excise Department for verification and/or to arrange for inspection of the business vehicle/vessel at the place designated by the Customs and Excise Department. If non-compliance is found during the check/inspection, Customs may suspend or cancel the registration as appropriate.

Cancellation/suspension of registration

If a registered operator contravenes the Import and Export Ordinance and/or the Practice Guidelines, or if the Commissioner is satisfied that the operator is no longer fit and proper to act as a registered operator, the Commissioner may give a written notice to the registered operator:

a. cancel the registration with effect from the specified date and state the reasons for the cancellation; or

b. Suspend the relevant registration and state the reasons for the suspension -

i. the specified period for revocation of registration; or

ii. Until the Commissioner is satisfied that the terms or conditions imposed have been complied with.

A registered operator whose registration is suspended does not qualify for exemption from the specified through transhipment of alternative smoking products under the Scheme until the suspension period has expired or the terms/conditions specified in the written notice have been complied with.

appeal

An applicant may appeal against the Commissioner's decision by notice in writing to the Chief Secretary for Administration within 14 days from the date of notification of the decision or the date on which he becomes aware of the decision, whichever is later.

5. Specify the security and procedural guidelines for trans-shipment of alternative smoking products

Under the Import and Export Ordinance, the Commissioner is empowered to issue practice guidelines setting out the requirements to be met by a registered operator's business vehicle or business vessel and the manner in which alternative smoking products to be imported must be transported, stored and otherwise disposed of prior to their removal for export by aircraft. The Commissioner may amend or withdraw any practice guide.

In order to be eligible for the exemption for specified through transhipment of alternative smoking products, registered operators are required to comply with the security and procedural guidelines set out in the following paragraphs when transhipping alternative smoking products through Hong Kong.

Advance cargo information

For each alternative smoking product transhipped under the Scheme, the registered operator is required to ensure that the advance cargo information and related documents/information are submitted to the C&ED as follows:

a. For the transshipment of alternative smoking products by land and air:

At least 2 hours before a registered business vehicle enters Hong Kong,

i. Submit relevant cargo information to the Road Cargo Information System under the Import and Export (Electronic Cargo Information) Regulations (Cap. 60L); and

ii. Send relevant shipping and shipment documents and information to atcs_landair@customs.gov.hk by email

b. For air and sea transhipment of alternative smoking products:

i. Submit cargo information to the Air Cargo Clearance System at least 3 hours before the arrival of registered business vessels at the West Bund terminal of the Hong Kong International Airport; and

ii. At least 2 hours prior to the arrival of registered business vessels at the West Bund Pier of the Hong Kong International Airport, send relevant transport and shipment documents and information by email to

atcs_seaair@customs.gov.hk

When reporting to the Road Cargo Information System/Air Cargo Clearance System the quantity of alternative smoking products to be transhipped under the Scheme, the unit quantity of alternative smoking products and the number of packages (cartons) of the alternative smoking products must be provided, and these information must be consistent with the information shown in the relevant transport and shipment documents for verification by Customs.

The driver/master must also bring relevant cargo documents, in particular the through bill of lading, for customs officers to check and verify as necessary during the transfer process.

Transfer process

Prior to the shipment of alternative smoking products under the intermodal transhipment arrangement, the registered operator shall ensure that the security devices installed on the business vehicle/vessel are in good condition and in good working order before the transfer of alternative smoking products can commence.

During the transfer process, the GPS and closed circuit television systems installed on business vehicles/vessels should be kept on for Customs tracking and monitoring. CCTV images should be retained for at least 30 days. Alternative smoking products should be properly transported in the following ways:

i. For business vehicles: Store alternative smoking products in the containers of business vehicles and do not mix with other types of cargo. Containers should be equipped with electronic locks and container deadbolt seals to ensure that the container doors cannot be opened without breaking the electronic locks and container deadbolt seals.

ii. In the case of operational vessels: store alternative smoking products in a manner that complies with the standards of transport security measures accepted by the Civil Aviation Department, such as in containers equipped with metal door seals; For containers without metal doors or for goods already loaded with plates, disassembly resistant packaging nets and seals should be used.

Upon arrival in Hong Kong, business vehicles/vessels carrying alternative smoking products are required to proceed directly to the specified cargo handling Area # at the Hong Kong International Airport. Upon completion of discharge, the alternative smoking products should be immediately transferred to the cargo transfer area for storage and waiting for export.

The cargo handling area at the Hong Kong International Airport specified by the Commissioner by notice published in the Gazette under the Import and Export Ordinance.

Designated route

Business vehicles/vessels carrying alternative smoking products are required to use designated routes after entering Hong Kong. In the event of a necessary departure from the designated route, such as a traffic accident on the designated route, the driver/master is required to contact the C&ED on the 24-hour hotline (852) 3106 4510 (for business vehicles)/(852) 2116 4115 (for business vessels) for instructions/approval.

Customs check

In the course of the removal of alternative smoking products, the Department may conduct surprise checks on alternative smoking products carried by business vehicles/vessels at any time. The Department may also conduct surprise inspections on business vehicles/vessels at any time to ensure that the required security devices are in use and in normal operation. If any non-compliance is found during the check/inspection, Customs may suspend or cancel the registration as appropriate.

C&ed has the right to access the CCTV systems installed on business vehicles/vessels and will check and extract relevant information and data for real-time monitoring and ex post verification purposes as appropriate.