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Ruling 65-227

Rev. Ruling 65-227

Repackaging of Tax-determined Large Cigars

Advice has been requested concerning the repackaging of tax-determined large cigars received in the factory and the related sorting and reconditioning operations that may be performed.

A manufacturer of tobacco products proposed to receive, recondition, and repackage tax-determined cigars. Each cigar would be examined for holes, broken wrappers, split heads, etc. Those cigars found to be defective would be set aside and later destroyed. Cigars found to be in salable condition would be reconditioned and repackaged.

The regulations, as amended by Treasury Decision 6840, effective September 1, 1965, at 26 CFR 270.217, provide for such repackaging of tax-determined large cigars only pursuant to an application approved by the Assistant Regional Commissioner, Alcohol and Tobacco Tax. Such repackaging must be for good cause and may not include any manufacturing processes.

Accordingly, it is held that where an application to repackage tax-determined cigars has been approved, such products may be sorted, fumigated rehumidified, recellophaned, rebanded, and repackaged, as necessary, so long as there is no change in tax classification. Such operations as patching, repairing split heads, or replacing
wrappers are considered manufacturing processes and may not be performed unless the cigars are returned to bond.

26 U.S.C. 5723; 27 CFR 270.217

Last updated: May 2, 2024