Alternative Smoking Product Transhipment Control Scheme (ATCS)

Under the Import and Export Ordinance, Chapter 60 ("IEO"), import of alternative smoking products ("ASPs") is prohibited. Any person who imports an ASP commits an offence and is liable on summary conviction to a fine of $500,000 and to imprisonment for 2 years; or on conviction on indictment to a fine of $2,000,000 and to imprisonment for 7 years.

The IEO provides exemption for ASP import which is an article in transit; an air transhipment cargo; or a specified intermodal transhipment cargo imported by a registered operator.

The Customs and Excise Department ("C&ED") is the authority for regulating the registration and control regime, namely the "Alternative Smoking Product Transhipment Control Scheme" ("ATCS"), for the exemption of the specified intermodal ASP transhipment under the IEO. The C&ED will be responsible for investigation and prosecution of any import offences relating to ATCS.

• Practice Guidelines for Alternative Smoking Product Transhipment Control Scheme

  Practice Guidelines

  This Guide is issued pursuant to Section 13H of the IEO which sets out:

  1. the registration requirements and procedures; and
  2. the security and procedural requirements to be fulfilled by registered operators engaging in the specified intermodal ASP transhipment.

  Hard copies are also available at Registration and Vehicle Inspection Unit, Land Boundary Command, Customs and Excise Department, 9/F, Kwai Chung Customhouse, 63 Container Port Road South, Kwai Chung, New Territories, Hong Kong.

ASPs are defined under Section 2(1) of the Smoking (Public Health) Ordinance, Chapter 371. In gist, it is:

1. a device (other than a waterpipe) that is capable of generating an aerosol, other than by means of direct lighting, from any substances (except dangerous drugs) and being used for imitating conventional smoking; its component or accessory;
2. any substance (other than a dangerous drug) suitable for use with a device described in (a) to generate an aerosol from that substance. Examples include heated tobacco sticks and "e-liquid"; or
3. any plant material (other than tobacco or a dangerous drug) rolled up in any material for immediate use for imitating conventional smoking (i.e. herbal cigarettes).

Under the Pharmacy and Poisons Ordinance, Chapter 138 ("PPO"), nicotine is a Part 1 poison and nicotine-containing products for human use, except tobacco, are pharmaceutical products. Therefore, all nicotine-containing ASPs, except when the nicotine is contained in tobacco, are pharmaceutical products.

The IEO provides exemption for ASP import which is imported as "specified intermodal transhipment cargo". According to Section 13A of the IEO, "specified intermodal transhipment cargo" refers to an article

1. imported in a vehicle or vessel; and
2. consigned on a through bill of lading from a place outside Hong Kong to another place outside Hong Kong; and for export in an aircraft departing from the Hong Kong International Airport ("HKIA").

Section 13I of the IEO empowered the Commissioner of Customs and Excise ("CCE") in consultation with Airport Authority Hong Kong ("AAHK") to specify areas for the purpose of handling specified intermodal transhipment cargo by notice published in the Gazette. The areas include West Quay as well as part of cargo handling areas in Super Terminal 1, Cathay Pacific Cargo Terminal, Asia Airfreight Terminal and Express Centre of the HKIA.

Who is required to be registered

Any person who wishes to seek exemption for specified intermodal ASP transhipment shall make prior application to the CCE for registration as a registered operator.

Application

To register under the ATCS, an applicant should submit the completed form together with authorization letter (if applicable) and photocopies of the requisite documents to the CCE through the following means: -

1. Online application (Land-to-Air transhipment) ; or
2. By post/In person:
   Customs and Excise Department
   Land Boundary Command
   Registration and Vehicle Inspection Unit
   9/F, Kwai Chung Customhouse
   63 Container Port Road South, Kwai Chung
   New Territories, Hong Kong

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

• Registration Form

  	Land-to-Air transhipment	Sea-to-Air transhipment
  Registration Form	Registration form (Land-to-air)	Registration form (Sea-to-air)

Processing of Registration

Upon receipt of a registration application, the C&ED will send an acknowledgement letter bearing an application reference number to the applicant. Where necessary, the C&ED may issue a reminder to require the applicant to provide supplementary information or supporting documents. If the applicant fails to reply or produce the required supplementary information or supporting documents within 30 days from the date of the reminder, the application is deemed to be invalid and the application will be refused. The C&ED will accordingly issue a written notice informing the applicant of the refusal with reasons.

Installation of Security Device

A "Notification for Installation of Security Devices" will be issued to the applicant within 7 working days upon the receipt of the completed registration form and all information and supporting documents required by the C&ED. The applicant may then arrange to acquire and install the security devices to the concerning vehicle/vessel, according to the standards required by the C&ED which include:

For business vehicle

1. Electronic lock ("e-lock") and Global Positioning System ("GPS") device from supplier(s) accredited by the C&ED;
2. Closed-circuit television ("CCTV") system with recording function [at least two CCTV cameras with illumination to be installed inside the container/cargo compartment for clearly recording all consignments therein and another two CCTV cameras to be installed outside the container/cargo compartment in such a way that the container/cargo compartment entrance, the e-lock and vehicle number plate can be seen clearly for real-time monitoring by the C&ED]; and
3. Container bolt seal [the container/cargo compartment of the business vehicle should be in a closed design with a single entrance at one end for affixing a container bolt seal to the container/cargo compartment door such that the door of the container/cargo compartment cannot be opened without tampering the container bolt seal].

For business vessel

1. GPS device accredited by the C&ED; and
2. CCTV system [at least two CCTV cameras to be installed inside the cargo hold and all ASP consignments placed therein must be covered within the angle range of CCTV cameras].

Briefing, Vehicle / Vessel Inspection and Trial

On completion of the installation of the required security devices, the applicant should inform the C&ED in writing for the arrangement of vehicle/vessel inspection and trial as appropriate for testing the functionality of the installed security devices.

The applicant is also required to attend a briefing organized by the C&ED to familiarize with the security and procedural requirements specified under the ATCS.

Approval / Refusal

After determining the application, the CCE will inform the applicant by writing as soon as practicable of the result set out below:

1. approval of the application, the effective date of registration, the ATCS registration number as well as the business vehicle(s)/vessel(s) and driver(s)/crew member(s) registered; or
2. refusal of the application and the reasons for the refusal.

Appeal

The applicant may appeal against the CCE's decision by giving written notice to the Chief Secretary for Administration within 14 days from the date when he/she was informed of the decision, or from the date when the decision became known to him/her, whichever is later.

Registration Fee

While the C&ED will not impose any fees/charges on the applicant, the costs of installing the required security devices shall be borne by the applicant. The applicant should note that accredited suppliers of the security devices may impose a service charge on the use of the devices.

Deregistration / Change of Particulars

If a registered operator wishes to deregister from the ATCS, he/she should submit a written request to the CCE. The CCE will process the request and issue a confirmation letter specifying the date of cessation of registration.

If there is any change in the particulars of a registered operator^*, he/she should complete and submit a "Change of Particulars Form" together with the relevant supporting documents to the C&ED within 30 days. Late submission of change of particulars may be subject to suspension or cancellation of the registration.

^{* Change of particulars of registration includes changes to the operator's business information, authorized person, vehicle(s)/vessel(s) intended to be used and driver(s)/crew member(s) intended to be deployed.}

• Change of Particulars Form

  	Land-to-Air transhipment	Sea-to-Air transhipment
  Change of Particulars Form	Change of Particulars Form (Land-to-air) / Online Form	Change of Particulars Form (Sea-to-air)

Fixing, Replacement and Reinstallation of Security Devices

The registered operators have the responsibility to ensure the security devices are in good order and functioning properly at all times. Malfunctioning of the security devices should be reported to the C&ED immediately and fixed before the next transhipment operation under ATCS. For fixing, replacement and reinstallation, as the case may be, of any of the security devices, the registered operators should inform the C&ED and make appointment with the C&ED for vehicle/vessel inspection.

Periodic Compliance Checks

The C&ED will conduct periodic compliance checks every two years on the registered operators to ascertain that they fulfill the standards as required by the C&ED and the required security devices are functional. The registered operators are required to provide any information for checking and/or arrange the business vehicle/vessel for inspection at a place as specified by the C&ED. If non-compliance is detected during the checking/inspection, the registration may be subject to suspension or cancellation as appropriate.

Cancellation / Suspension of Registration

If there is any breach of the IEO and/or practice guidelines by a registered operator or if the CCE considers that the operator is no longer fit to be a registered operator, the CCE may by written notice given to the registered operator:

1. cancel the registration from a specified date onward with reasons for the cancellation; or
2. suspend the registration with reasons for the suspension-
   1. for a specified period; or
   2. until the CCE is satisfied that the terms or conditions imposed are complied with.

The registered operator whose registration has been suspended is not eligible for the exemption for specified intermodal ASP transhipment under the ATCS until the expiry of the suspension period or compliance of the terms/conditions specified in the written notice.

Appeal

The applicant may appeal against the CCE's decision by giving written notice to the Chief Secretary for Administration within 14 days from the date when he/she was informed of the decision, or from the date when the decision became known to him/her, whichever is later.

The CCE is empowered under the IEO to issue practice guidelines setting out the requirements that a registered operator's business vehicle or business vessel must meet, the manner in which the ASPs intended to be imported must be transported, stored and otherwise handled before being transferred to an aircraft for export. The CCE may amend or revoke any of the practice guidelines.

In order to be eligible for exemption for specified intermodal ASP transhipment, registered operators should comply with the security and procedural guidelines setting out in ensuing paragraphs when transhipping the ASPs via Hong Kong.

Licensing Requirements of Nicotine-Containing ASPs

All nicotine-containing ASPs, except when the nicotine is contained in tobacco, are pharmaceutical products in Hong Kong. Under the IEO, all imports and exports of pharmaceutical products must be covered by import and export licences. The Department of Health ("DH") will issue Import Licence ("Form 3") and Export Licence ("Form 6") (for the purpose of re-export) for the transhipment of nicotine-containing ASPs. For details, please refer to the DH's website:

https://www.drugoffice.gov.hk/eps/do/en/pharmaceutical_trade/guidelines_forms/useful_guidelines_forms.html.

For applying the Import and Export licences for nicotine-containing ASPs^{^}, the registered operators shall ensure submission of the following documents as required by the DH to the C&ED :

1. proof of permission to import/indication of no objection from relevant authority (e.g. drug regulatory authority or Customs authority) of the receiving country;
2. undertaking, signed by the registered operators, of not returning the ASPs to Hong Kong if their entry into the receiving country is rejected;
3. completed and scanned copy of Form 3 and Form 6 with matching product description and quantity, and "For Alternative Smoking Product Transhipment Control Scheme Use Only" shall be stated in both forms;
4. copy of Wholesale dealer licence; and
5. Others: documentary proof of the product being tobacco free.

^{^ The applicant must be a wholesaler licensed under the PPO.}

The C&ED will then pass the application and required documents to the DH for processing and approval. The registered operators shall ensure that they have obtained the Import and Export licences issued by the DH before transhipping nicotine-containing ASPs.

Alternatively, specified intermodal transhipment of nicotine-containing ASPs under ATCS by registered operators who have been registered under the Transhipment Cargo Exemption Scheme ("TCES") or who have been appointed by the TCES registrants (i.e. freight forwarders/airlines/shipping companies) in handling that particular transhipment is exempted from import and export licensing requirements. For details of the TCES, please refer to the Trade and Industry Department ("TID")'s website:

https://www.tid.gov.hk/english/import_export/tces/tces_maincontent.html

For transhipping nicotine-containing ASPs covered by the TCES, registered operators shall ensure submission of the Certificate of Exemption and Certificate of Exemption Number ("TREX No. ") issued by the TID (if the registered operators have been appointed by the TCES registrants in handling that particular transhipment, only TREX No. is required), together with the shipping documents and information to the C&ED.

Advance Cargo Information ("ACI")

For each ASP consignment to be transhipped under the ATCS, the registered operator should ensure submission of ACI and related documents/information to the C&ED in the manners set out below:

1. For land-to-air ASP transhipment:
   1. cargo information to be submitted to the Road Cargo System ("ROCARS") in accordance with the Import and Export (Electronic Cargo Information) Regulation ("Cap. 60L"); and
   2. related shipping documents (including additional documents for nicotine-containing ASPs, if applicable) and information to be sent by email to atcs_landair@customs.gov.hk
   at least 2 hours (4 hours for nicotine-containing ASPs) before the registered business vehicle enters Hong Kong.
2. For sea-to-air ASP transhipment:
   1. cargo information to be submitted to the Air Cargo Clearance System ("ACCS") at least 3 hours before the registered business vessel arrives at the West Quay of the HKIA; and
   2. related shipping documents (including additional documents for nicotine-containing ASPs, if applicable) and information to be sent by email to atcs_seaair@customs.gov.hk at least 2 hours (4 hours for nicotine-containing ASPs) before the registered business vessel arrives at the West Quay of the HKIA.

In making declaration to ROCARS/ACCS on the quantity of the ASP consignment to be transhipped under the ATCS, both the units of ASPs and the number of package (in cartons) should be provided, which must tally with the information shown on the related shipping documents to facilitate C&ED's verification.

The relevant cargo documents particularly the through bill of lading and licensing documents (if applicable) must also be carried by the driver/captain for checking and verification by the C&ED officers as and when required during the transfer process.

Transfer Process

Prior to transporting the ASPs under the intermodal transhipment arrangement, the registered operator should ensure the security devices required to be installed to the business vehicle/vessel are in good order and functioning properly before the start of the ASP transfer process.

During the transfer process, the GPS and CCTV system installed to the business vehicle/vessel should be turned on to enable tracking and surveillance by the C&ED. The CCTV footage should be retained for at least 30 days. The ASPs should be securely transhipped in a manner specified below:

1. For business vehicle: The ASPs without mix-loading with other types of consignments to be stored inside the container/cargo compartment of the business vehicle with the e-lock and the container bolt seal affixed such that the doors of the container/cargo compartment cannot be opened without tampering the e-lock and the bolt seal.
2. For business vessel: The ASPs to be stored in a manner which fulfils the standards of the Secure Transport Means accepted by the Civil Aviation Department, e.g. inside a Unit Load Device ("ULD") container with metal door affixed with seal; for the ULD container without metal door or palletized cargo, the application of tamper-evident wrapping net and seals.

On arriving Hong Kong, the business vehicle/vessel carrying the ASPs should go directly to the specified cargo handling area of the HKIA^#. Upon completion of cargo unloading, the ASPs should be transferred immediately to the cargo transhipment area for storage pending exportation.

^{# Cargo handling areas in the HKIA specified by the CCE by notice published in the Gazette under the IEO.}

Designated Routing

The business vehicle/vessel carrying the ASPs must use designated routing(s) after entering into Hong Kong. In the circumstances where deviation from designated routing have to be made, e.g. traffic accident at the designated route, the driver/captain should contact the C&ED by 24-hour hotline at (852) 3106 4510 (for business vehicle) / (852) 2116 4115 (for business vessel) for seeking advice/approval.

Customs Check

The C&ED may conduct surprise check of the ASPs carried by the business vehicle/vessel at any point during the course of the ASP transfer process. Surprise inspection of the registered business vehicle/vessel may also be conducted to ascertain that the required security devices are in use and remain fully functional. If irregularities are detected during the check/inspection, the registration may be subject to suspension or cancellation as appropriate.

With the access right to the CCTV system installed on the business vehicle/vessel, the C&ED would check, retrieve the relevant information and data for real-time monitoring and post-audit checking as appropriate.

• Practice Guidelines
• Registration Form (Land-to-Air transhipment)
• Registration Form (Sea-to-Air transhipment)
• Change of Particulars Form (Land-to-Air transhipment)
• Change of Particulars Form (Sea-to-Air transhipment)
• Appointment for Vehicle Inspection
• Appointment for Vessel Inspection

Enquiry can be made by the following ways:

• E-mail
  atcs_enquiry@customs.gov.hk
• Phone
  (852) 3106 4508
• Mail
  Customs and Excise Department
  Land Boundary Command
  Registration and Vehicle Inspection Unit
  9/F, Kwai Chung Customhouse
  63 Container Port Road South, Kwai Chung
  New Territories, Hong Kong