ENG-2004 — Page 418

356 | Public Order

liquor and tobacco bonded warehouses from April 1, 2003, and extended to the distilleries bonded warehouses in January 2004, achieving full implementation by this later date. The department has conducted post-implementation reviews on the open bond system and concluded that sufficient measures are in place to manage the risks. of revenue fraud. The open bond system has been running smoothly.

Revenue Protection

To strengthen its work in revenue protection, the department has installed workstations linked to the Immigration Department's computer system at control points since February 2003. The system has proved to be an effective tool in verifying whether incoming passengers travelling on Hong Kong Identity Cards were eligible for duty-free concessions. As provided for by amendments under a Dutiable Commodities (Exempted Quantities) Notice in July 2002 (Dutiable Commodities Ordinance, 109G), an incoming passenger aged 18 or above who travels on a Hong Kong Identity Card and has spent 24 hours or longer outside Hong Kong is eligible for the concession. The computer system enabled officers of the department to detect a total of 7 850 cases of abuse of the duty-free concessions, involving a total of 1.7 million cigarettes, in 2004. The number of cases and the cigarettes seized were 74 per cent and 58 per cent higher than those in 2003 respectively.

In 2004, 56 132 incoming passengers declared possession of excessive duty-free goods and 2 767 passengers were arrested for undeclared excessive duty-free goods, representing increases of 5.5 per cent and 78.9 per cent over 2003.

To further strengthen enforcement against transnational smuggling of cigarettes, the department hosted the First Meeting of the World Customs Organisation Contact Points for Anti-Cigarette-Smuggling Operations in the Asia Pacific Region in June. The meeting aimed at mapping out a long-term joint strategy to crack down on transnational cigarette smuggling activities, which operated mainly in a 'merry-go- round' mode (i.e. by means of roundabout paths). The meeting drew up an action plan entitled 'Project Crocodile', which was put into operation on August 1, 2004. Under the action plan, participating customs administrations joined hands and stepped up the monitoring and tracking of suspicious cigarette shipments within the region. Member administrations have, through an established communication channel, enhanced intelligence exchange and conducted joint investigations. The plan has proved to be very effective. The transnational smuggling cases intercepted under the action plan included a major case in August 2004 in which Hong Kong Customs notified the Philippines Customs of the movement of a suspicious shipment of 28 containers of cigarettes.

The department continued its vigorous enforcement action against illicit cigarettes. During the year, 5 406 offenders were arrested and 167.6 million sticks. were seized, an increase of 19 per cent and 10 per cent respectively over 2003.

Illicit fuel including marked oil (commonly known as 'red oil'), detreated oil and illicit motor spirit continued to be used illegally as fuel for vehicles. To tackle the problem, in addition to enforcement action taken at sea and land boundaries, sustained operations were mounted to eliminate filling stations, marked oil detreating