dealer in liquors, wholesale dealer in beer, retail dealer in beer, limited retail dealer, or manufacturer of stills, and willfully fail to pay the special tax as required by law, shall be fined not more than $5,000, or imprisoned not more than 2 years, or both, for each such offense.

(b) Presumption in case of the sale of 20 wine gallons

or more.

For the purposes of this chapter, the sale, or offer for sale, of distilled spirits, wines, or beer, in quantities of 20 wine gallons or more to the same person at the same time, shall be presumptive evidence that the person making such sale, or offer for sale, is engaged in or carrying on the business of a wholesale dealer in liquors or a wholesale dealer in beer, as the case may be. Such presumption may be overcome by evidence satisfactorily showing that such sale, or offer for sale, was made to a person other than a dealer, as defined in section 5112 (a). (Added Pub. L. 85-859, title II, § 201, Sept. 2, 1958, 72 Stat. 1413.)

AMENDMENTS

1958-Pub. L. 85-859, title II, 202, Sept. 2, 1958, 72 Stat. 1414, substituted "manufacturers of tobacco products and cigarette papers and tubes, export warehouse proprietors, and" for "manufacturers of articles and" in the hearing of subchapters B and E, "manufacurers and importers of tobacco products and cigarette papers and tubes and export warehouse proprietors" for "manufacturers of articles" in the heading of subchapter C, and "Penalties and forfeitures" for "Fines, penalties and forfeitures" in the heading of subchapter G.

Subchapter A.-Definitions; Rate and Payment of Tax; Exemption From Tax; and Refund and Drawback of Tax

Sec.

5701. Rate of tax.

5702. Definitions.

5703. Liability for tax and method of payment.

5704. Exemption from tax.

5705. Refund or allowance of tax. 5706. Drawback of tax.

5707. Floor stocks refund on cigarettes. 5708. Losses caused by disaster.

AMENDMENTS

1958-Pub. L. 85-859, title II, § 202, Sept. 2, 1958, 72 Stat. 1414, added item 5708.

§ 5701. Rate of tax. (a) Tobacco.

On tobacco, manufactured in or imported into the United States, there shall be imposed a tax of 10 cents per pound.

(b) Cigars.

On cigars, manufactured in or imported into the United States, there shall be imposed the following taxes:

(1) Small cigars.

On cigars, weighing not more than 3 pounds per thousand, 75 cents per thousand; (2) Large cigars.

On cigars, weighing more than 3 pounds per thousand;

(A) If removed to retail at not more than 21⁄2 cents each, $2.50 per thousand;

(B) If removed to retail at more than 22 cents each and not more than 4 cents each, $3 per thousand;

(C) If removed to retail at more than 4 cents each and not more than 6 cents each, $4 per thousand;

(D) If removed to retail at more than 6 cents each and not more than 8 cents each, $7 per thousand;

(E) If removed to retail at more than 8 cents each and not more than 15 cents each, $10 per thousand;

(F) If removed to retail at more than 15 cents each and not more than 20 cents each, $15 per thousand;

(G) If removed to retail at more than 20 cents each, $20 per thousand.

In determining the retail price, for tax purposes, regard shall be had to the ordinary retail price of a single cigar in its principal market, exclusive of any State or local taxes imposed on cigars as a commodity. Cigars not exempt from tax under this chapter which are removed but not intended for sale shall be taxed at the same rate as similar cigars removed for sale.

(c) Cigarettes.

On cigarettes, manufactured in or imported into the United States, there shall be imposed the following taxes:

(1) Small cigarettes.

On cigarettes, weighing not more than 3 pounds per thousand, $4 per thousand until July 1, 1965, and $3.50 per thousand on and after July 1, 1965; (2) Large cigarettes.

On cigarettes, weighing more than 3 pounds per thousand, $8.40 per thousand; except that, if more than 61⁄2 inches in length, they shall be taxable at the rate prescribed for cigarettes weighing not more than 3 pounds per thousand, counting each 234 inches, or fraction thereof, of the length of each as one cigarette.

(d) Cigarette papers.

On each book or set of cigarette papers containing more than 25 papers, manufactured in or imported into the United States, there shall be imposed a tax of 1⁄2 cent for each 50 papers or fractional part thereof; except that, if cigarette papers measure more than 61⁄2 inches in length, they shall be taxable at the rate prescribed, counting each 24 inches, or fraction thereof, of the length of each as one cigarette paper.

(e) Cigarette tubes.

On cigarette tubes, manufactured in or imported into the United States, there shall be imposed a tax of 1 cent for each 50 tubes or fractional part thereof, except that if cigarette tubes measure more than 61⁄2 inches in length, they shall be taxable at the rate prescribed, counting each 24 inches, or fraction thereof, of the length of each as one cigarette tube.

(f) Imported tobacco products and cigarette papers and tubes.

The taxes imposed by this section on tobacco products and cigarette papers and tubes imported into the United States shall be in addition to any import duties imposed on such articles. (Aug. 16, 1954, ch. 736, 68A Stat. 705; Mar. 30, 1955, ch. 18, § 3(a) (9), 69 Stat. 14; Mar. 29, 1956, ch. 115, § 3(a) (9), 70 Stat. 66; Mar. 29, 1957, Pub. L. 85-12, § 3(a) (7), 71 Stat. 9; June 30, 1958, Pub. L. 85-475, § 3(a) (7), 72 Stat. 259; Sept. 2, 1958, Pub. L. 85-859, title II, § 202, 72 Stat. 1414; June 30, 1959, Pub. L. 86-75, § 3(a) (7), 73 Stat. 157; June 30, 1960, Pub. L. 86564, title II, § 202 (a) (9), 74 Stat. 290; Sept. 14, 1960, Pub. L. 86-779, § 1, 74 Stat. 998; June 30, 1961 Pub. L. 87-72, § 3(a) (9), 75 Stat. 193; June 28, 1962, Pub. L. 87-508, § 3(a) (8), 76 Stat. 114; June 29, 1963, Pub. L. 88-52, § 3(a) (9), 77 Stat. 72; June 30, 1964, Pub. L. 88-348, § 2(a) (9), 78 Stat. 237.)

AMENDMENTS

1964 Subsec. (c) (1). Pub. L. 88-348 substituted "July 1, 1965" for "July 1, 1964" in two instances.

1963 Subsec. (c) (1). Pub. L. 88-52 submitted "July 1, 1964" for "July 1, 1963" in two instances.

1962-Subsec. (c) (1). Pub. L. 87-508 substituted "July 1, 1963" for "July 1, 1962" in two instances.

1961-Subsec. (c)(1). Pub. L. 87-72 substituted “July 1, 1962" for "July 1, 1961" in two instances.

1960- Subsec. (b). Pub. L. 86-779 substituted "imposed on cigars as a commodity" for "imposed on the retail sales of cigars."

Subsec. (c)(1). Pub. L. 86-564 substituted "July 1, 1961" for "July 1, 1960” in two instances.

1959 Subsec. (c)(1). Pub. L. 86-75 substituted "July 1, 1960" for "July 1, 1959" in two places.

1958 Subsec. (b). Pub. L. 85-859 provided that in determining the retail price, for tax purposes, regard shall be had to the ordinary retail price of a single cigar in its principal market, exclusive of any State or local taxes imposed on the retail sale of cigars, and required cigars not exempt from tax under this chapter which are removed but not intended for sale to be taxed at the same rate as similar cigars removed for sale.

Subsec. (c) (1). Pub. L. 85-475 substituted "July 1, 1959" for "July 1, 1958" in two places.

Subsec. (d). Pub. L. 85-859 substituted "On each book or set of cigarette papers containing more than 25 papers, manufactured in or imported into the United States, there shall be imposed" for "On cigarette papers, manufactured in or imported into the United States, there shall be imposed, on each package, book, or set containing more than 25 papers".

Subsec. (f). Pub. L. 85-859 substituted "imposed by this section on tobacco products and cigarette papers and tubes imported into the United States" for "imposed on articles by this section".

1957 Subsec. (c) (1). Pub. L. 85-12 substituted "July 1, 1958" for "April 1, 1957" in two places.

1956 Subsec. (c) (1) Act Mar. 29, 1956, substituted "April 1, 1957" for "April 1, 1956" in two places.

1955 Subsec. (c) (1). Act Mar. 30, 1955, substituted "April 1, 1956" for "April 1, 1955" in two places.

EFFECTIVE DATE OF 1960 AMENDMENT

Section 2 of Pub. L. 86-779 provided that: "The amendment made by the first section of this Act [to subsec. (b) of this section] shall apply with respect to cigars removed on or after the ninth day of the first month which begins after the date of the enactment of this Act [Sept. 14, 1960]."

EFFECTIVE DATE OF 1958 AMENDMENT

Amendment of section by Pub. L. 85-859 effective on Sept. 3, 1958, see section 210 (a) (1) of Pub. L. 85-859, set out as a note under section 5001 of this title. TAX REFUNDS ON ARTICLES BROUGHT IN FROM FOREIGN TRADE ZONES AFTER JULY 1, 1964

Section 497 of act Oct. 20, 1951, ch. 521, title IV, 65 Stat. 521, as amended Mar. 31, 1954, ch. 126, title VI, § 601(b) (5), 68 Stat. 46; Mar. 30, 1955, ch. 18, § 3(b) (4), 69 Stat. 15; Mar. 29, 1956, ch. 115, § 3(b) (4), 70 Stat. 67; Pub. L. 85-12, Mar. 29, 1957, § 3(b) (4), 71 Stat. 10; Pub. L. 85-475, § 3(b) (4), June 30, 1958, 72 Stat. 260; Pub. L. 86-75, §3(b) (3), June 30, 1959, 73 Stat. 158; Pub. L. 86-564, title II, § 202(b) (3), June 30, 1960, 74 Stat. 291; Pub. L. 87-72, §3(b) (3), June 30, 1961, 75 Stat. 193; Pub. L. 87-508. § 3(b) (3), June 28, 1962, 76 Stat. 114; Pub. L. 88-52, § 3(b) (2), June 29, 1963, 77 Stat. 73; Pub. L. 88-348, § 2 (b) (2), June 30, 1964, 78 Stat. 237, provided that:

"(a) Imported articles. With respect to any article specified in section 2000(c)(2), 2800(a), 3030(a), or 3150(a) of the Internal Revenue Code [section 2000 (c) (2), 2800 (a), 3030 (a), or 3150 (a) of I.R.C. 1939] on which internal revenue tax at the applicable rate prescribed in such section has been determined pursuant to section 3 of the Act of June 18, 1934, as amended (U.S.C., title 19. sec. 81c), prior to July 1, 1965, and which on or after such date is brought from a foreign trade zone into customs territory of the United States and the tax so determined thereon paid, there shall be credited or refunded (without interest) to the taxpayer, subject to such regulations as may be prescribed by the Secretary, an amount equal to the difference between the tax so paid and the amount of tax made applicable to such articles on and after July 1, 1965, if claim for such credit or refund is filed with the Secretary within thirty days after payment of the tax.

"(b) Previously taxpaid articles. With respect to any article specified in section 2000 (c) (2), 2800(a), 3030(a). or 3150 (a) of the Internal Revenue Code [section 2000 (c) (2), 2800(a), 3030(a), or 3150(a) of I.R.C. 1939), upon which internal revenue tax (including floor stocks tax) at the applicable rate prescribed in such section has been paid, and which was taken into a foreign trade zone

from the customs territory of the United States and placed under the supervision of the collector of customs, pursuant to the second proviso of section 3 of the Act of June 18, 1934, as amended (U.S.C., title 19, sec. 81c), prior to July 1, 1965, and which on or after such date is (without loss of identity) returned from a foreign trade zone to customs territory of the United States, there shall be credited or refunded (without interest) to the person so returning such article, subject to such regulations as may be prescribed by the Secretary, an amount equal to the difference between the tax so paid and the amount of tax made applicable to such articles on and after July 1, 1965, if claim for such credit or refund is filed with the Secretary within thirty days after the return of the article to customs territory."

§ 5702. Definitions.

When used in this chapter—

(a) Manufactured tobacco.

"Manufactured tobacco" means tobacco (other than cigars and cigarettes) prepared, processed, manipulated, or packaged, for removal, or merely removed, for consumption by smoking or for use in the mouth or nose, and any tobacco (other than cigars and cigarettes), not exempt from tax under this chapter, sold or delivered to any person contrary to this chapter or regulations prescribed thereunder.

(b) Cigar.

"Cigar" means any roll of tobacco wrapped in tobacco.

(c) Cigarette.

"Cigarette" means any roll of tobacco, wrapped in paper or any substance other than tobacco.

(d) Tobacco products.

"Tobacco products" means manufactured tobacco, cigars, and cigarettes.

(e) Manufacturer of tobacco products.

"Manufacturer of tobacco products" means any person who manufactures cigars or cigarettes, or who prepares, processes, manipulates, or packages, for removal, or merely removes, tobacco (other than cigars and cigarettes) for consumption by smoking or for use in the mouth or nose, or who sells or delivers any tobacco (other than cigars and cigarettes) contrary to this chapter or regulations prescribed thereunder. The term "manufacturer of tobacco products" shall not include

(1) a person who in any manner prepares tobacco, or produces cigars or cigarettes, solely for his own personal consumption or use; or

(2) a proprietor of a customs bonded manufacturing warehouse with respect to the operation of such warehouse; or

(3) a farmer or grower of tobacco with respect to the sale of leaf tobacco of his own growth or raising, if it is in the condition as cured on the farm; or

(4) a bona fide association of farmers or growers of tobacco with respect to sales of leaf tobacco grown by farmer or grower members, if the tobacco so sold is in the condition as cured on the farm, and if the association maintains records of all leaf tobacco, acquired or received and sold or otherwise disposed of, in such manner as the Secretary or his delegate shall by regulations prescribe.

(f) Cigarette paper.

"Cigarette paper" means paper, or any other material except tobacco, prepared for use as a cigarette wrapper.

(g) Cigarette papers.

"Cigarette papers" means taxable books or sets of cigarette papers.

(h) Cigarette tube.

"Cigarette tube" means cigarette paper made into a hollow cylinder for use in making cigarettes. (i) Manufacturer of cigarette papers and tubes. "Manufacturer of cigarette papers and tubes" means any person who makes up cigarette paper into books or sets containing more than 25 papers each, or into tubes, except for his own personal use or consumption.

(j) Export warehouse.

"Export warehouse" means a bonded internal revenue warehouse for the storage of tobacco products and cigarette papers and tubes, upon which the internal revenue tax has not been paid, for subsequent shipment to a foreign country, Puerto Rico, the Virgin Islands, or a possession of the United States, or for consumption beyond the jurisdiction of the internal revenue laws of the United States.

(k) Export warehouse proprietor.

"Export warehouse proprietor" means any person who operates an export warehouse. (1) Tobacco materials.

"Tobacco materials" means tobacco other than manufactured tobacco, cigars, and cigarettes. (m) Dealer in tobacco materials.

"Dealer in tobacco materials" means any person who receives and handles tobacco materials for sale, shipment, or delivery to another dealer in such materials, to a manufacturer of tobacco products, or to a foreign country, Puerto Rico, the Virgin Islands, or a possession of the United States, or who receives tobacco materials, other than stems and waste, for use by him in the production of fertilizer, insecticide, or nicotine. The term "dealer in tobacco materials" shall not include_

(1) an operator of a warehouse who stores tobacco materials solely for a qualified dealer in tobacco materials, for a qualified manufacturer of tobacco products, for a farmer or grower of tobacco, or for a bona fide association of farmers or growers of tobacco; or

(2) a farmer or grower of tobacco with respect to the sale of leaf tobacco of his own growth or raising, or a bona fide association of farmers or growers of tobacco with respect to sales of leaf tobacco grown by farmer or grower members, if the tobacco so sold is in the condition as cured on the farm: Provided, That such association maintains records of all leaf tobacco acquired or received and sold or otherwise disposed of by the association, in such manner as the Secretary or his delegate shall by regulation prescribe; or

(3) a person who buys leaf tobacco on the floor of an auction warehouse, or who buys leaf tobacco from a farmer or grower, and places the tobacco on the floor of such a warehouse, or who purchases

and sells warehouse receipts without taking physical possession of the tobacco covered thereby; or (4) a qualified manufacturer of tobacco products with respect to tobacco materials received by him under his bond as such a manufacturer.

(n) Removal or remove.

"Removal" or "remove" means the removal of tobacco products or cigarette papers or tubes from the factory or from internal revenue bond, as the Secretary or his delegate shall by regulation prescribe, or release from customs custody, and shall also include the smuggling or other unlawful importation of such articles into the United States.

(0) Importer.

"Importer" means any person in the United States to whom nontaxpaid tobacco products or cigarette papers or tubes manufactured in a foreign country, Puerto Rico, the Virgin Islands, or a possession of the United States are shipped or consigned; any person who removes cigars or cigarettes for sale or consumption in the United States from a customs bonded manufacturing warehouse; and any person who smuggles or otherwise unlawfully brings tobacco products or cigarette papers or tubes into the United States. (Aug. 16, 1954, ch. 736, 68A Stat. 706; Sept. 2, 1958, Pub. L. 85-859, title II, § 202, 72 Stat. 1415.)

AMENDMENTS

1958 Subsec. (a). Pub. L. 85-859 inserted the term "for removal, or merely removed".

Subsec. (b). Pub. L. 85-859 redesignated former subsec. (c) as (b) and former subsec. (b) as (e).

Subsec. (c). Pub. L. 85-859 redesignated former subsec. (d) as (c) and former subsec. (c) as (b).

Subsec. (d). Pub. L. 85-859 redesignated former subsec. (f) as (d) and former subsec. (d) as (c).

Subsec. (e). Pub. L. 85-859 consolidated the definitions "manufacturer of tobacco" and "manufacturer of cigars and cigarettes", inserted the phrase "for removal, or merely removes", excluded from the definition a proprietor of a customs bonded manufacturing warehouse with respect to the operation of the warehouse, and required bona fide associations of farmers or growers to maintain records of leaf tobacco.

Subsec. (f). Pub. L. 85-859 redesignated former subsec. (g) as (f) and former subsec. (f) as (d).

Subsec. (g). Pub. L. 85-859 added subsec. (g) and redesignated former subsec. (g) as (f).

Subsec. (1). Pub. L. 85-859 substituted "into books or sets containing more than 25 papers each, or into tubes" for "into packages, books, sets, or tubes".

Subsec. (1). Pub. L. 85-859 substituted provisions defining "export warehouse" for provisions which defined "article" as manufactured tobacco, cigars, cigarettes, and cigarette papers and tubes.

Subsec. (k). Pub. L. 85-859 added subsec. (k) and redesignated former subsec. (k) as (1).

Subsec. (1). Pub. L. 85-859 redesignated former subsec. (k) as (1) and substituted "other than manufactured tobacco, cigars. and cigarettes" for "in process, leaf tobacco, and tobacco scraps, cuttings, clippings, siftings, dust, stems, and waste". Former subsec. (1), redesignated (m).

Subsec. (m). Pub. L. 85-859 redesignated former subsec. (1) as (m) and included within the definition persons who receive tobacco materials, other than stems and waste, for use in the production of fertilizer, insecticide, or nicotine, required associations of farmers or growers of tobacco to maintain records of all leaf tobacco acquired or received and sold or otherwise disposed of, and excluded from the definition persons who buy leaf tobacco without taking physical possession of the tobacco and qualified manufacturers of tobacco products. Former subsec. (m) redesignated (n).

Subsec. (n). Pub. L. 85-859 redesignated former subsec. (m) as (n) and substituted "tobacco products or cigarette papers or tubes" for "articles". Former subsec. (n) redesignated (0).

Subsec. (0). Pub. L. 85-859 redesignated former subsec. (n) as (o) and substituted "tobacco products or cigarette papers or tubes" for "articles" in two instances, and inserted provisions to include within the definition persons who remove cigars or cigarettes for sale or consumption in the United States from a customs bonded manufacturing warehouse.

EFFECTIVE DATE OF 1958 AMENDMENT

Amendment of section by Pub. L. 85-859 effective on Sept. 3, 1958, see section 210 (a) (1) of Pub. L. 85-859, set out as a note under section 5001 of this title.

§ 5703. Liability for tax and method of payment. (a) Liability for tax.

(1) Original liability.

The manufacturer or importer of tobacco products and cigarette papers and tubes shall be liable for the taxes imposed thereon by section 5701. (2) Transfer of liability.

When tobacco products and cigarette papers and tubes are transferred, without payment of tax, pursuant to section 5704, the liability for tax shall be transferred in accordance with the provisions of this paragraph. When tobacco products and cigarette papers and tubes are transferred between the bonded premises of manufacturers and export warehouse proprietors, the transferee shall become liable for the tax upon receipt by him of such articles, and the transferor shall thereupon be relieved of his liability for such tax. When tobacco products and cigarette papers and tubes are released in bond from customs custody for transfer to the bonded premises of a manufacturer of tobacco products or cigarette papers and tubes, the transferee shall become liable for the tax on such articles upon release from customs custody, and the importer shall thereupon be relieved of his liability for such tax.

(b) Method of payment of tax.

The taxes imposed by section 5701 shall be determined at the time of removal of the tobacco products and cigarette papers and tubes. Such taxes shall be paid on the basis of a return, except that the taxes shall continue to be paid by stamp until the Secretary or his delegate provides, by regulations, for the payment of the taxes on the basis of a return. The Secretary or his delegate shall, by regulations, prescribe the period or event for which such return shall be made, the information to be furnished on such return, the time for making such return, and the time for payment of such taxes. Any postponement under this subsection of the payment of taxes determined at the time of removal shall be conditioned upon the filing of such additional bonds, and upon compliance with such requirements, as the Secretary or his delegate may, by regulations, prescribe for the protection of the revenue. The Secretary or his delegate may, by regulations, require payment of tax on the basis of a return prior to removal of the tobacco products and cigarette papers and tubes where a person defaults in the postponed payment of tax on the basis of a return under this subsection or regulations prescribed thereunder. All administrative and penal

provisions of this title, insofar as applicable, shall apply to any tax imposed by section 5701. (c) Stamps to evidence the tax.

If the Secretary or his delegate shall by regulation provide for the payment of tax by return and require the use of stamps to evidence the tax imposed by this chapter or to indicate compliance therewith, the Secretary or his delegate shall cause to be prepared suitable stamps to be issued to manufacturers and importers of tobacco products, to be used and accounted for, in accordance with such regulations as the Secretary or his delegate shall prescribe. (d) Use of government depositaries.

The Secretary or his delegate may authorize Federal Reserve banks, and incorporated banks or trust companies which are depositaries or financial agents of the United States, to receive any tax imposed by this chapter, in such manner, at such times, and under such conditions as he may prescribe; and he shall prescribe the manner, time, and condition under which the receipt of such tax by such banks and trust companies is to be treated as payment for tax purposes.

(e) Assessment.

Whenever any tax required to be paid by this chapter is not paid in full at the time required for such payment, it shall be the duty of the Secretary or his delegate, subject to the limitations prescribed in section 6501, on proof satisfactory to him, to determine the amount of tax which has been omitted to be paid, and to make an assessment therefor against the person liable for the tax. The tax so assessed shall be in addition to the penalties imposed by law for failure to pay such tax when required. Except in cases where delay may jeopardize collection of the tax, or where the amount is nominal or the result of an evident mathematical error, no such assessment shall be made until and after the person liable for the tax has been afforded reasonable notice and opportunity to show cause, in writing, against such assessment. (Aug. 16, 1954, ch. 736, 68A Stat. 707; Sept. 2, 1958, Pub. L. 85-859, title II, § 202, 72 Stat. 1417.)

AMENDMENTS

1958 Subsec. (a) (1). Pub. L. 85-859 designated part of first sentence of subsec. (a) as par. (1) thereof and redesignated the remainder of subsec. (a) as (b).

Subsec. (a) (2). Pub. L. 85-859 added subsec (a)(2). Subsec. (b). Pub. L. 85-859 designated former subsec. (a), with exception of part of the first sentence, as subsec. (b) and substituted "tobacco products and cigarette papers and tubes" for "articles", and inserted provisions relating to postponements, and to payment of the tax on the basis of a return prior to removal of the tobacco products and cigarette papers and tubes where a person defaults in the postponed payment of the tax.

Subsec. (c). Pub. L. 85-859 designated former subsec. (b) as (c) and substituted "If the Secretary or his delegate shall by regulation provide for the payment of tax by return and require the use of" for "If the Secretary or his delegate shall, by regulation, require the use", and "tobacco products" for "articles". Former subsec. (c) redesignated (d).

Subsec. (d). Pub. L. 85-859 redesignated former subsec. (c) as (b) and former subsec (d) as (e).

Subsec. (e). Pub. L. 85-859 designated former subsec. (d) as (e) and permitted assessments in cases where delay may jeopardize collection of the tax, or where the

amount is nominal or the result of an evident mathematical error.

EFFECTIVE DATE OF 1958 AMENDMENT Amendment of section by Pub. L. 85-859 effective on Sept. 3, 1958, see section 210 (a) (1) of Pub. L. 85-859, set out as a note under section 5001 of this title.

§ 5704. Exemption from tax.

(a) Tobacco products furnished for employee use or experimental purposes.

Tobacco products may be furnished by a manufacturer of such products, without payment of tax, for use or consumption by employees or for experimental purposes, in such quantities, and in such manner as the Secretary or his delegate shall by regulation prescribe.

(b) Tobacco products and cigarette papers and tubes transferred or removed in bond from domestic factories and export warehouses.

A manufacturer or export warehouse proprietor may transfer tobacco products and cigarette papers and tubes, without payment of tax, to the bonded premises of another manufacturer or export warehouse proprietor, or remove such articles, without payment of tax, for shipment to a foreign country, Puerto Rico, the Virgin Islands, or a possession of the United States, or for consumption beyond the jurisdiction of the internal revenue laws of the United States; and manufacturers may similarly remove such articles for use of the United States; in accordance with such regulations and under such bonds as the Secretary or his delegate shall prescribe. (c) Tobacco materials shipped or delivered in bond. A dealer in tobacco materials or a manufacturer of tobacco products may ship or deliver tobacco materials, without payment of tax, to another such dealer or manufacturer, or to a foreign country, Puerto Rico, the Virgin Islands, or a possession of the United States; or, in the case of tobacco stems and waste only, to any person for use by him as fertilizer or insecticide or in the production of fertilizer, insecticide, or nicotine; in accordance with such regulations and under such bonds as the Secretary or his delegate shall prescribe.

(d) Tobacco products, cigarette papers and tubes, and tobacco materials released in bond from customs custody.

Tobacco products, cigarette papers and tubes, and tobacco materials, imported or brought into the United States, may be released from customs custody, without payment of tax, for delivery to a manufacturer of tobacco products or cigarette papers and tubes and such tobacco materials may be similarly released for delivery to a dealer in tobacco materials, in accordance with such regulations and under such bond as the Secretary or his delegate shall prescribe.

(e) Tobacco products and cigarette papers and tubes exported and returned.

Tobacco products and cigarette papers and tubes classifiable under item 804.00 of title I of the Tariff Act of 1930 (relating to duty on certain articles previously exported and returned) may be released from customs custody, without payment of that part of the duty attributable to the internal revenue tax for delivery to a manufacturer of tobacco products or cigarette papers and tubes, in accordance with