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Introduction
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The difference of
retail prices of motor spirit and light diesel
oil between Hong Kong and the Mainland is the
main inducement for culprits smuggling illicit
fuels into Hong Kong. Apart from the loss of revenue,
the problem has also led to the concerns of fire
hazards. This paper provides background information
on illicit fuel abuse and the achievements made
by the Customs and Excise Department in combating
against the illicit fuel activities in Hong Kong.
It is our hope that this presentation will provide
the general public with a better understanding
of the current situation. We shall update the
relevant statistics from time to time and we would
welcome your comments. |
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Highlights
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We are determined to eradicate the illicit fuel problem |
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In 2007,
we have seized 950,153 litres of illicit
fuels and arrested 841 persons in 1,235
cases. |
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In the
first eight months of 2008, a total
of 387,760 litres of illicilt fuels
were seized with 422 persons arrested
in 736 effected cases. |
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made good progress with sustained enforcement
efforts and effective administrative
measures. We will continue with our
vigorous enforcement efforts to combat
the illicit fuel activities and will
continue to educate the public of the
consequences of using and dealing in
illicit fuel through mass media. |
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Background
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The use of illicit
fuels by vehicles is a serious problem that leads
not only to revenue loss, but also causes fire hazards.
The Customs and Excise Department is taking a zero
tolerance approach to eradicating the supply and
use of illicit fuels in our community.
The price difference has been the main selling point
of illicit fuels. Currently, the pump price of light
diesel oil (Euro V diesel) sold in legitimate retail
gas stations in Hong Kong is about HK$ 3 per litre
more than light diesel oil sold in the Mainland.
For motor spirit, the pump price in legitimate retail
gas stations in Hong Kong is about $8 per litre
more than those in the Mainland.
There are four types of illicit fuels being abused
by vehicle drivers in Hong Kong. They are dutiable
motor spirit & light diesel oil, marked light
diesel oil, and detreated light diesel oil. |
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Dutiable
light diesel oil & motor spirit
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Dutiable light diesel
oil and motor spirit are diesel oil and motor spirit
of which the full duties prescribed by law (HK$2.89
per litre for ordinary diesel oil or HK$1.11 per
litre for ultra low sulphur diesel oil; whereas
Euro V diesel has been zero-rated since 14.7.2008.
For motor spirit, HK$6.82 per litre for motor spirit
(leaded) & HK$6.06 per litre for motor spirit
(unleaded)) have not been paid.
Fuel in the fuel tank of any cross-boundary vehicle,
other than a goods vehicle, arriving from the Mainland
of China, for use in that vehicle is exempted from
duty.
Fuel in the fuel tank of a goods vehicle arriving
from the Mainland shall be exempted from duty in
accordance with the rates stipulated below -
| Cylinder Capacity of Goods Vehicle |
Fuel Exemption |
| below 3,000 c.c. |
100L |
| 3,000-10,000 c.c. |
200L |
| over 10,000 c.c. |
300L |
The main sources of illicit fuels are dutiable light
diesel oil and motor spirit smuggled into Hong Kong
from the Mainland. Some unscrupulous cross-boundary
drivers would also take advantage of the legitimate
duty exemption accorded to their vehicles and transfer
illegally the duty exempt light diesel oil and motor
spirit they brought in from the Mainland for use
by other vehicles. The light diesel oil and motor
spirit brought into Hong Kong by these vehicles
is legitimate as long as the oil remains in their
fuel tanks for their own use. It is illegal when
the oil is transferred to other vehicles. |
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Marked oil
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Marked oil, commonly
called "red oil", is light diesel oil
to which a prescribed marker (a specified chemical)
and colouring substance have been added. It is red
in colour and is designated for industrial (only
with specified low sulphur content) and marine use.
It is duty-exempt and is not allowed for use as
fuel in motor vehicles and pleasure vessels. It
has a wide range of legitimate uses, ranging from
fuel for fishing vessels, boilers and machinery
used in construction sites, hotels and hospitals
to cranes and portable electricity generators. The
existence of the colouring substance and the prescribed
marker provides ready identification aids and facilitates
Customs officers in detecting the illegal use of
marked oil as fuel for road vehicles. |
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Detreated oil
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Detreated oil is marked
oil with its red colour or marker illegally detreated
through a filtering process to avoid the detection
by law enforcement officers. The current situation
of the abuse of marked oil and detreated oil has
developed a diminishing trend due to our continuous
and vigorous enforcement actions. |
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Administrative
Control Measures
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We have also taken
stringent administrative measures to reinforcing
enforcement operations and tightening control over
the export of hydrocarbon oil. Starting from November
1999, we are issuing permits for light diesel oil
shipments to be exported to the Mainland only on
productions of Import Authorizations issued by the
Mainland Customs. We are imposing also additional
conditions on exports permits for suspicious export
shipments, including the requirements for security
deposit and subsequent production of landing certificates
issued by proper authorities in the port of destination.
We are also maintaining very close liaison with
neighbouring enforcement agencies, in particular
those of the Mainland and Macau, in enhancing the
exchange of intelligence. |
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Legislative amendments
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In order to suppress
the abuse of illicit fuels, legislative amendments
on the Dutiable Commodities Ordinance (Cap. 109)
and its subsidiary legistlations had been made over
the past years for strengthening our fight against
illicit fuel activities. These include:-
- increasing fine from HK$200,000 to HK$1,000,000
for offences relating to the marked oil;
- imposing driving licence disqualification
provision for repeated offenders;
- expanding the presumption provision for fuel
transferred to or from a vehicle's fuel tank
at any location other than those licensed under
the Dangerous Goods Ordinance is presumed dutiable;
and
- adding a presumption clause that light diesel
oil,if found in the fuel tank of a motor vehicle
with a sulphur content in excess of statutory
limit under the Air Pollution Control (Motor
Vehicle Fuel) Regulations, is presumed dutiable.
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Enforcement Action
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The Customs and Excise
Department is the enforcement agency of the Dutiable
Commodities Ordinance, Chapter 109. We are determined
to eradicate the illicit fuel problem to protect
Government revenue and safeguard the welfare of
our society.
We have devised a multi-pronged approach to tackle
the problem. The Diesel Oil Enforcement Division
conducts in-depth investigation and surveillance
on syndicates involved in the smuggling and supply
of illicit fuel. Officers of other major formations
undertake the principal day-to-day operational work.
Their duties include the raiding of illegal refuelling
stations, checking road vehicles for illicit fuel
and mounting surveillance at coastal areas, waterfronts
and black spots to detect smuggling activities.
Furthermore, officers of different units in the
Customs and Excise Department would be mobilized
from time to time to conduct large-scale operations
to suppress the supply and use of illicit fuel.
The Special Task Force, which was established in
June 1999 with a current complement of 147 officers,
is the flexibly deployed elite unit that serves
to reinforce the enforcement operations against
various illicit activities including illicit fuel.
We are also working closely together with the Fire
Services Department and the Hong Kong Police Force
in dealing with the problems arising from the use,
sale and storage of illicit fuels. |
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Enforcement results
and penalty
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In 2007, 1, 235 cases
were effected with 950, 153 litres of illicit fuels
seized and 841 persons arrested denoting a decrease
of 3.1% in the number of cases as compared with
2006. For the first eight months of 2008, 736 cases
were effected with 387, 760 litres of illicit fuels
seized and 422 persons arrested.
In 2007, the penalties for illicit fuel offences
imposed by the courts included fines ranging from
HK$200 to HK$20,000 and imprisonment terms ranging
from 2 days to 15 months. 20 persons were disqualified
from holding driving licence by the court for period
ranging from 4 to 12 months.
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Conclusion
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The legislative amendments
have enhanced the enforcement capacity to a great
extent. The disqualification penalty to repeated
offenders has a significant deterrent effect to
those die-hard drivers forbidding them to continue
to use illicit fuel. The trend of smuggling illicit
fuels from the Mainland to Hong Kong has declined
as a result of persistent & vigorous enforcement
actions against illicit fuel activities.
The concerted inter-departmental efforts have greatly
contained the problem of illegal fuelling stations
in the territory. Illcit fuels are highly flammable
which poses fire hazard to residents nearby especially
in residential area. It is a matter of serious concern
and we will spare no effort in clamping down the
illicit trade. In 2007, the Department smashed 939
illegal fuelling stations. The number of black spots
for illicit fuel activities dropped drastically
from around 110 in 2000 to about 15 in August 2008.
The illicit fuel business has posed a serious threat
to the safety of the public. We do not allow any
room for the illicit trade to continue to exist.
We are making every effort in eliminating the supply
and use of any illicit fuel in our community. We
are stepping up publicity on the adverse consequences
and danger of using illicit fuels and have encouraged
members of the public through the media to report
to us the locations of those illegal fuelling stations.
Our 24-hour hotline number is 2545 6182. |
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Office of the Dutiable
Commodities Administration
Customs & Excise Department
Nov 2008 |
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