HKSAR v. LEE YAU SING

HCMA 326/2021

[2022] HKCFI 1117

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

(Appeal against Conviction)

MAGISTRACY APPEAL NO 326 OF 2021

(ON APPEAL FROM WKCC 3009 OF 2020)

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J U D G M E N T

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1.  The appellant was convicted after trial by Deputy Magistrate Mr Hui Shiu-keung, Peter (“the Magistrate”) of one count of “Possession of Dutiable Goods”, contrary to section 17(6) as read with section 46(3) of the Dutiable Commodities Ordinance, Cap. 109 (“Cap. 109”) (Charge 1) and one count of “Failing to declare to a member of the Customs and Excise Service”, contrary to section 34A(3) as read with section 34A(1) and section 46(3) of Cap. 109 (Charge 2). He was sentenced to a total of 6 months’ imprisonment. The appellant now appeals against his conviction for both offences [1].

Prosecution Case

2.  Charge 1 alleged that on 27 October 2019, at Customs Arrival Hall B, Hong Kong International Airport, the appellant had in his possession 45,981 sticks of cigarettes, namely heatsticks, otherwise than in accordance with the provisions of Cap. 109.  Charge 2 alleged that he failed to declare the said heatsticks to a member of the Customs and Excise Service.

3.  The issue at trial was whether heatstick was captured by the taxable provisions of Cap. 109.

4.  The following facts were agreed by the prosecution and the defence ^[2] :

(1)  The appellant was found in possession of 45,981 sticks of heatsticks as he entered Hong Kong on 27 October 2019 and he did not make any declaration to the Customs and Excise Service.  He was duly arrested.  Under caution, he admitted those were heatsticks inside his personal baggage and suitcase, he bought them in a convenient store in Japan for his own use, he did not know the ingredients of the heatsticks, and he would use a heating device to consume them.

(2)  Samples of the seizure were tested by Dr Tang Hei-man, a government chemist (“Dr Tang”).  He certified that tobacco was found in all the samples he tested and nicotine was detected in mainstream emission of the samples.

(3)  The appellant had a clear record.

5.  The prosecution only called Dr Tang to give live evidence.  His witness statement was admitted pursuant to section 65B of the Criminal Procedure Ordinance (Cap. 221).

6.  The Magistrate summarized Dr Tang’s evidence as follows ^[3]:

“9. Dr Tang gave his account of how he conducted the tests. The sample of Heatsicks he used in his tests has 2 ends, one end shaped like a round bucket contains tobacco substance, the other end has a filter. He used a transparent plastic tube, one end of it was affixed to a smoking machine (吸煙機) with the other end of the plastic tube affixed to the filter of Heatstick sample, then lit the tobacco inside the Heatstick with an ignition gun, with the smoking machine turned on to suck in the white vapour emerging from the filter. The white vapour was collected, tested and found to contain nicotine. Dr Tang added that the sample Heatstick continued to burn even without sucking motion.

…

49.  According to the evidence given by Dr Tang about the tests he conducted on the samples and what he stated in paragraph 2(ii) of his witness statement (P21), it appears smoking a Heatstick is no different from smoking a conventional rolled cigarette.  He had to lit one end of the sample which contained tobacco and the filter end of the sample was attached to a smoking machine which served as an inhaler, substances or white smoke as he described in his evidence emitted from the filter end were collected and analysed.  He certified that tobacco was found in all samples he tested.  Nicotine was detected in mainstream emission of the samples.  These findings are un-challenged by defence.”

Defence Case

7.  The appellant elected not to give evidence and did not call any defence witness.

8.  In his closing submission, defence counsel contended that heatstick cannot be classified as “cigarettes” as defined in section 65 of Cap. 109 as it was not in the contemplation of the legislature when the relevant sections were enacted.  Counsel referred to the Report of the Bills Committee on Smoking (Public Health) (Amendment) Bill 2019 (“MFI-1”) ^[4], pointing out that the Smoking (Public Health) Ordinance (Cap. 371) would be amended to cater specifically to the new products of e-cigarettes, heat-not-burn products (“HNB”) and herbal cigarettes ^[5].

Magistrate’s Findings ^[6]

9.  The Magistrate pointed out that the main issue was whether heatstick fell into the definition of cigarette of the Cap. 109.  Under section 65, “cigarette” is defined to mean “any roll of tobacco capable of being smoked by itself not being a cigar”.  Any product which satisfies the statutory definition of cigarette is subject to taxation and control under Cap. 109.

10.  The Magistrate found that MFI-1 had nothing to do with Cap. 109 as it clearly aimed to amend the Smoking (Public Health) Ordinance for general public health safety.

11.  The Magistrate attached full weight to Dr Tang’s evidence and his findings about the presence of tobacco and nicotine in the emission from the filter.  Although heatstick had different features from conventional cigarettes, the Magistrate considered that it was a kind of cigarette only in different form and appearance.

12.  Having considered the facts, the law and the principles of statutory interpretation, the Magistrate concluded that heatstick was a kind of cigarette and was a dutiable commodity subject to control under Cap. 109.  Both charges were proved beyond reasonable doubt and the appellant was convicted accordingly.

Ground of Appeal

13.  Counsel for the appellant Ms Candy Tang raised essentially one ground of appeal, namely that the Magistrate erred in finding that HNB was equivalent to the definition of “cigarette” under Cap. 109.  Ms Tang submitted that the Magistrate failed to consider the Smoking (Public Health) (Amendment) Bill 2019 (“the 2019 Bill”) in which the government has already made a distinction between cigarette as “conventional smoking product” whereas HNB was defined as “alternative smoking product”.

14.  Ms Tang contended that a law imposing taxation should always be construed strictly ^[7]. She said the Magistrate erred in using an interpretative approach to include HNB as cigarettes as the 2019 Bill shows the legislative intent of defining HNB as another category of smoking product.  She said the distinction can be illustrated by the selling of cigarette which was allowed by the government, and the selling of HNB which was completely banned by the government.

15.  Counsel for the Respondent Mr Martin Chow, Public Prosecutor, contended that as a general rule, extrinsic materials such as Parliamentary materials are not permitted to be referred to by the court.  The exception to this rule is very limited and requires three conditions to be met.  Mr Chow prayed in aid the following passage Lord Browne-Wilkinson in the case of Pepper v Hart [8] :

“I therefore reach the conclusion, subject to any question of Parliamentary privilege, that the exclusionary rule should be relaxed so as to permit reference to Parliamentary materials where (a) legislation is ambiguous or obscure, or leads to an absurdity; (b) the material relied upon consists of one or more statements by a Minister or other promoter of the Bill together if necessary with such other Parliamentary material as is necessary to understand such statements and their effect; (c) the statements relied upon are clear.”

16.  Mr Chow said the 2019 Bill does not avail the appellant as none of the above three conditions has been met in the present case, and the Bill was nothing but a list of proposed amendments to Cap. 371 which did not come into operation until 30 April 2022.

Consideration

17.  The long title of Cap. 109 states that it is the purpose of the Ordinance “to amend the law relating to the taxation and control of various substances including tobacco”. Section 3 provides that the Ordinance applies to, inter alia, tobacco (other than any smokeless tobacco product within the meaning of section 2(1) of the Public Health and Municipal Services Ordinance (Cap. 132)). Section 65 provides that the definition of “cigarette” means “any roll of tobacco capable of being smoked by itself not being a cigar”.  It is clear from the definition of cigarette in Cap. 109 that the legislative intent is to levy duty on cigarette.  If heatstick falls within the definition of cigarette, it is a dutiable commodity subject to the control of Cap. 109.

18.  The Magistrate gave detailed explanation of the reasons for finding the heatstick as a kind of cigarette ^[9] :

“54. My short answer to defence counsel’s submission as spelt out in preceding paragraphs is, although Heatstick has different features from conventional cigarettes, it is no doubt a kind of cigarette only in different form and appearance. It contains tobacco, the tobacco instead of being ignited by fire, has to be heated by a heating device to heat it to a certain temperature, and aerosol which contains nicotine will be emitted and inhale by the inhaler through the filter.

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57. It is not in dispute when Cap.109 came into effect in 1986, Heatstick had not come into existence. It does not mean Heatstick in not subject to taxation under Cap.109 even though there is no such inclusion under the definition of “cigarette”. Section 19 of the Interpretation and General Clauses Ordinance Cap.1 provides that “An Ordinance shall be deemed to be remedial and shall receive such fair, large and liberal construction and interpretation as will best ensure the attainment of the object of the Ordinance according to the true intent, meaning and spirit”.

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60. Prosecuting counsel submits the definition of “cigarette” in Cap.109 states what the word means and thus is intended to be an exhaustive definition thereof. It is clear from Cap.109 that the legislative intent is to levy duty on “cigarette”. Therefore, any product which satisfies the statutory definition of cigarette is subject to taxation under Cap.109. The product description or name of a product does not carry any weight when considering whether it falls within the definition. I totally agree.

61. I have also considered section 2 of Cap.371 where “cigarette” is defined which means “tobacco rolled up in paper or in any other material except tobacco, in such form as to be capable of immediate use for smoking”. I accept defence counsel’s submission that the interpretation of cigarette under section 2 of Cap.371 and the definition of cigarette under section 65 of Cap.109 are in pari material. Based on my analysis, although Heatstick has different features from conventional cigarettes, it is no doubt a kind of cigarette as known to the general public. According to Dr Tang, samples of Heatstick he conducted his tests on contained tobacco at one end, like conventional cigarettes, after he lit that end which contained tobacco, aerosol emitted from the tobacco through its filter collected from the smoking machine contained nicotine. There is no difference from conventional cigarettes and to certain extent fit into the definition of ‘cigarette’ under section 2 of Cap.371 and section 65 of Cap.109. Defence’s argument is Heatsticks do not need to be lit like conventional cigarettes, the tobacco inside only need to be heated to a certain temperature by a heating device and aerosol will be generated from the heated tobacco. It is very clear to me that Heatsticks are only in different form and appearance from conventional cigarettes.”

19.  I agree entirely with the analysis and the conclusion reached by the Magistrate.  As the Magistrate rightly pointed out, even though heatstick had not come into existence when Cap. 109 came into effect, “the law must be able to keep pace with changing circumstances” ^[10] and “the Court must construe the language used in the light of its context and purpose” ^[11].  On the undisputed expert evidence of Dr Tang, there was little difference between the smoking of a heatstick and the smoking of a cigarette.  The heatstick contained tobacco at one end which, when heated by a heating device, emitted aerosol which contained nicotine for the smoker to inhale through the filter at the other end.  The heatstick continued to burn even without sucking motion.  The heatstick was capable of immediate use for smoking by itself.  On the evidence I am satisfied that heatstick falls squarely within the definition of cigarette in Cap. 109.

20.  I disagree with Ms Tang that the Magistrate failed to consider the 2019 Bill (which had not yet come into operation at the time of the trial).  The Magistrate gave due consideration to the relevant Report (submitted by the defence and marked at MFI-1 at trial) before rejecting it [12]:

“51. Having read the contents of the Bill MFI-1, it appears defence counsel mis-quoted the paragraphs or mis-presented the contents of the particular paragraphs he referred to. For instance, it is premature for him to submit the Smoking (Public Health) Ordinance will be amended and the definitions of e-cigarettes, HNB products and herbal cigarettes will be provided. As I understood from the contents of MFI-1, the Bill has yet to be fully debated by the committee in the Legislative Council. More importantly, this Bill clearly is aimed to amend the Smoking (Public Health) Ordinance for general public health safety, nothing to do with taxation which the Dutiable Commodities Ordinance is concerned.”

21.  The enactment of the 2019 Bill on 30 April 2022 gives rise to only one consequential amendment to Cap. 109 at section 3(1)(b) of the Ordinance:

“This Ordinance applies to -

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(b)  tobacco (other than any smokeless tobacco product within the meaning of section 2(1) of the Public Health and Municipal Services Ordinance (Cap.132)”

22.  I agree with Mr Chow that the only logical deduction from the consequential amendment is that Cap. 109 applies to HNB until it was excluded on 30 April 2022, otherwise the amendment would be otiose.  On the other hand, contrary to Ms Tang’s contention, it would be an affront to common sense if the government continues to levy duty on a prohibited commodity (HNB) after the enactment of the 2019 Bill.   

23.  For the above reasons, I consider that the appellant’s ground of appeal has no merit whatsoever.

Conclusion

24.  The appellant’s appeal against conviction should be dismissed.

Post-script

25.  The Magistrate admitted that he was wrong to impose a 6-month imprisonment for Charge 2 as the maximum penalty is a fine at $2,000.  As such the sentence imposed for this charge was wrong in law. Despite the appellant had abandoned his appeal against sentence, in the interest of justice, I order that the 6 months’ imprisonment imposed for Charge 2 be set aside and substituted with a fine of HK$2,000.