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have paid duty, receive drawback on exports calculated according to the percentage of spirits of wine contained in their preparations.
10. In the case of firms which had already established bottling and packing establishments in China owing to the increased Chinese Import Tariff, arrangements were made, whereby they could add their secret mixtures to spirits of wine in bond, and export the mixture in bulk. Complaint has been made that it was the imposition of the new duties here which forced firms to establish bottling and packing establishments outside the Colony. This complaint is quite unjustified as the new arrangements had already been made sometime before the new duties were introduced here.
II. TOBACCO.
11. Duties collected amounted to $3,364,522.13 net as against $2,620,074.17 net for last year. No true comparison can however be made, because the collection of duties was placed on a sterling basis in February, and the duties themselves were raised in September, after having been lowered on the introduction of the sterling basis of collection. Considering that the prices were greatly advanced owing to the fall in exchange, the collection must be considered most satisfactory; the weights on which duty was paid being only slightly less than in 1930. There was a great deal of smuggling of Chinese-made tobacco, and seizures increased considerably. A large amount of this smuggling was across the Shan Chun River into the New Territories, and many seizures were made there by the Police. The local cigarette factories were fully employed.
III. MOTOR SPIRIT.
12. The collection on motor spirit remained steady at $425,358.95. The duty was increased by ten cents per gallon in September. The installation of the Texas Oil Co. at Tsun Wan was completed during the year.
IV. OPIUM.
13. The prices of prepared opium were slightly increased in February to compensate partially for the fall in exchange, and the price of Kamshan opium was again raised towards the end of the year.
As was anticipated, sales decreased, but less than might have been expected, and the net financial result was $3,019,724.02 as compared with $2,835,286.90 in 1930.
14. Sources of Illicit Opium. (A) Prepared Opium.-Macao remained the chief source from which prepared opium was smuggled into the Colony, supplying 61 per cent. out of the total seized. With one exception this was all of the Red Lion brand. The exceptional case was a seizure of Lam Kei Hop