Rev. Ruling 69-599
The question has been raised as to whether tobacco products can be treated as not having been exported and can be returned to the export warehouse under the following circumstances:
1. Tobacco products are purchased by a passenger prior to boarding an aircraft for delivery to him when beyond the jurisdiction of the internal revenue laws of the United States or at the port of destination.
2. The tobacco products are not delivered to the passenger and are not unladen at the port of destination but remain on the aircraft and are returned to the United States.
The regulations, 26 CFR 290.210, provide that an export warehouse proprietor may return to his export warehouse tobacco products previously removed therefrom for export by not yet exported. Tobacco products which have been removed under 26 CFR Part 290 for delivery to a vessel or aircraft entitled to receive them as ships' supplies are considered to have been "exported" when the vessel or aircraft, with the tobacco products aboard, has proceeded beyond the jurisdiction of the internal revenue laws of the United States (i.e., beyond the three-mile limit or international boundary, as the case may be). Likewise, tobacco products removed without payment of tax for delivery to an exporting carrier for exportation are considered to have been exported when the exporting carrier, with the tobacco products aboard, has proceeded beyond the three-mile limit or international boundary. Tobacco products removed under the circumstances set forth in the first paragraph do not belong in either of these categories since they are removed neither for ships' supplies nor for exportation in the normally accepted sense (i.e., for uniting with the mass of things belonging to some foreign country).
Therefore, tobacco products removed from an export warehouse and laden on an aircraft for delivery to a specific passenger who purchased them prior to boarding are not considered exported if they are not delivered to the passenger and are not unladen at the port of destination in a foreign country, Puerto Rico, the Virgin Islands, or a possession of the United States, but remain on the aircraft and are returned to the United States without fulfilling the intent for which they were removed. Under these conditions the tobacco products are considered as not having been exported and may be returned to the export warehouse as provided in 26 CFR 290.210.
26 U.S.C. 5704; 27 CFR 290.210