Substitute Senate Bill No. 1206

Public Act No. 99-109

An Act Concerning the Sale of Cigarettes Produced and Labeled for Export Only.

Be it enacted by the Senate and House of Representatives in General Assembly convened:

Section 1. Section 12-302 of the general statutes is repealed and the following is substituted in lieu thereof:

[Each] (a) Except as otherwise provided in subsection (b) of this section, each distributor shall affix, or cause to be affixed, at the location for which [his] such distributor's license is issued, in such manner as the commissioner may specify in regulations issued pursuant to this chapter, to each individual package of cigarettes sold or distributed by [him] the distributor, stamps of the proper denomination, as required by section 12-296. Such stamps may be affixed by a distributor at any time before the cigarettes are transferred out of [his] the distributor's possession.

(b) No distributor shall affix, or cause to be affixed, to a package of cigarettes sold or distributed by such distributor, stamps, if the package (1) is not labeled in conformity with the requirements of the federal Cigarette Labeling and Advertising Act, 79 Stat. 282, 15 USC 1331 et seq., or any other federal requirement for the placement of labels, warnings and other information, applicable to packages of cigarettes that are intended to be sold within the United States; (2) bears any label or notice prescribed by the United States Department of Treasury to identify cigarettes intended for export and exempt from tax by the United States pursuant to 26 USC 5704(b), including "For export only", "U.S. Tax-exempt", "For use outside U.S." or similar wording indicating that the manufacturer did not intend that the product be sold within the United States, including any notice or label described in 27 CFR 290.185; (3) has been imported into the United States after January 1, 2000, in violation of 26 USC 5754 or regulations adopted thereunder; (4) in any way violates federal trademark or copyright law or if all federal taxes due have not been paid on the cigarettes; or (5) has been modified or altered by a person other than the manufacturer or person specifically authorized by the manufacturer, including modification or alteration by the placement of a sticker or label to cover information, including the wording, labels or warnings described in subdivision (1) or (2) of this subsection, on the package.

Sec. 2. Section 12-303 of the general statutes is repealed and the following is substituted in lieu thereof:

[Each] (a) Except as otherwise provided in subsection (b) of this section, each dealer shall, within twenty-four hours after coming into possession of any cigarettes not bearing proper stamps evidencing payment of the tax imposed by this chapter, and before selling such cigarettes, affix or cause to be affixed, at the location for which [his] such dealer's license is issued, in such manner as the commissioner may specify in regulations issued pursuant to this chapter, to each individual package of cigarettes, stamps of the proper denomination, as required by section 12-296.

(b) No dealer shall affix, or cause to be affixed, to a package of cigarettes sold or distributed by such dealer, stamps, if the package (1) is not labeled in conformity with the requirements of the federal Cigarette Labeling and Advertising Act, 79 Stat. 282, 15 USC 1331 et seq., or any other federal requirement for the placement of labels, warnings and other information, applicable to packages of cigarettes that are intended to be sold within the United States; (2) bears any label or notice prescribed by the United States Department of Treasury to identify cigarettes intended for export and exempt from tax by the United States pursuant to 26 USC 5704(b), including "For export only", "U.S. Tax-exempt", "For use outside U.S." or similar wording indicating that the manufacturer did not intend that the product be sold within the United States, including any notice or label described in 27 CFR 290.185; (3) has been imported into the United States after January 1, 2000, in violation of 26 USC 5754 or regulations adopted thereunder; (4) in any way violates federal trademark or copyright law or if all federal taxes due have not been paid on the cigarettes; or (5) has been modified or altered by a person other than the manufacturer or person specifically authorized by the manufacturer, including modification or alteration by the placement of a sticker or label to cover information, including the wording, labels or warnings described in subdivision (1) or (2) of this subsection, on the package.

Sec. 3. Section 12-304 of the general statutes is repealed and the following is substituted in lieu thereof:

(a) No distributor shall sell, and no other person shall sell, offer for sale, display for sale or possess with intent to sell, any cigarettes (1) which do not bear stamps evidencing the payment of the tax imposed by this chapter, or (2) the stamping of which is prohibited by subsection (b) of section 12-302, as amended by this act, or subsection (b) of section 12-303, as amended by this act, provided a licensed dealer may keep on hand, at the location for which [his] such dealer's license is issued, unstamped cigarettes, other than cigarettes, the stamping of which is prohibited by subsection (b) of section 12-303, as amended by this act, for a period not exceeding twenty-four hours. Any unstamped cigarettes in the possession of a dealer shall be presumed to have been held by [him] such dealer for more than twenty-four hours unless proof is shown to the contrary. Any person who knowingly violates any provision of this subsection shall be fined not more than one thousand dollars or imprisoned not more than one year or both.

(b) (1) Any person, whether or not previously convicted of a violation of any provision of this section, who possesses, transports for sale, sells or offers for sale twenty thousand or more cigarettes, (A) subject to the tax imposed by this chapter in any unstamped or unlawfully packaged stamped packages, or (B) the stamping of which is prohibited by subsection (b) of section 12-302, as amended by this act, or subsection (b) of section 12-303, as amended by this act, and (2) any person, whether or not previously convicted of violation of any provision of this section, who wilfully attempts to evade the taxes imposed by this chapter or the payment thereof on twenty thousand or more cigarettes, shall be fined not more than five thousand dollars or imprisoned not less than one year nor more than five years or both.

Sec. 4. Section 12-305 of the general statutes is repealed and the following is substituted in lieu thereof:

All (1) unstamped cigarettes upon which taxes are imposed by this chapter, or which are in the course of transport within this state and are not properly supported by invoice or delivery tickets as required by section 12-306a, and (2) cigarettes, the stamping of which is prohibited by subsection (b) of section 12-302, as amended by this act, or subsection (b) of section 12-303, as amended by this act, which are in the possession, custody or control of any person for the purpose of being consumed, sold or transported in this state, for the purpose of evading or violating the provisions of this chapter, or with intent to avoid payment of the tax imposed hereunder, and any automobile, truck, conveyance or other vehicle used in the transportation of such cigarettes, and all paraphernalia, equipment or other tangible personal property, incident to the use of such purposes, found in the place, building, vehicle or vehicles where such cigarettes are found, are declared to be contraband goods; and any house, building or other premises and any vehicle or other conveyance suspected of containing such contraband goods may be searched under due process of law; and any such contraband goods may be seized by the commissioner, [his] agents or employees of the commissioner, or by any peace officer of this state when directed by the commissioner to do so, without a warrant, provided nothing [herein] in this section shall be construed to require the commissioner to confiscate unstamped cigarettes or property when [he] the commissioner has reason to believe that the owner thereof is not wilfully or intentionally evading the tax imposed by this chapter. Any property seized under the provisions of this chapter may, at [his] the commissioner's discretion and except as otherwise provided by this section, be offered by the commissioner for sale at public auction to the highest bidder after advertisement, as provided in section 12-307, or [he] the commissioner may dispose of such property in a manner in which [he] the commissioner deems to be in the best interest of the state. The commissioner shall deliver to the State Treasurer the proceeds of any sale made under the provisions of this section. Before delivering any cigarettes so sold to the purchaser, the commissioner shall require such purchaser to affix to the packages the amount of stamps required by this chapter. The seizure and sale of any cigarettes or other property under the provisions of this section shall not relieve any person from a fine or other penalty for violation of this chapter. Any sale of cigarettes by the commissioner, the stamping of which is prohibited by subsection (b) of section 12-302, as amended by this act, or subsection (b) of section 12-303, as amended by this act, may only be made to the manufacturer and solely for purpose of export.

Sec. 5. Section 12-306a of the general statutes is repealed and the following is substituted in lieu thereof:

Every person who transports cigarettes not bearing Connecticut cigarette stamps upon the public highways, roads or streets of this state shall have in [his] such person's actual possession invoices or delivery tickets for such cigarettes, which shall show the true name and address of the consignor or seller, the true name and address of the consignee or purchaser, and the quantity and brands of the cigarettes so transported. If the cigarettes are consigned to or purchased by any person in Connecticut, such purchaser or consignee shall be authorized by this chapter to possess unstamped cigarettes in this state [; if] and the stamping of such cigarettes shall not be prohibited by subsection (b) of section 12-302, as amended by this act, or subsection (b) of section 12-303, as amended by this act. If the invoices or delivery tickets specify that the cigarettes are to be delivered to any person in any other state or jurisdiction such person shall be authorized by the laws of such other state or jurisdiction to receive or possess cigarettes on which the taxes imposed by such other state or jurisdiction have not been paid and the stamping of such cigarettes shall not be prohibited by the laws of such other state or jurisdiction. In the absence of such invoices or delivery tickets, or, if the name or address of the consignee or purchaser is falsified or if the purchaser or consignee is not authorized to possess unstamped cigarettes, the cigarettes so transported shall be deemed contraband and shall be subject to confiscation. Any transporter who violates any provision of this section shall be fined not more than one thousand dollars or imprisoned not more than one year or both, and in addition shall be liable for the tax, interest and penalty as provided in this chapter.

Sec. 6. Section 12-314 of the general statutes is repealed and the following is substituted in lieu thereof:

(a) The sale of single cigarettes or cigarettes other than in an unopened package originating with the manufacturer which bears the health warning required by law is prohibited.

(b) The sale of cigarettes, the stamping of which is prohibited by subsection (b) of section 12-302, as amended by this act, or subsection (b) of section 12-303, as amended by this act, is prohibited.

Sec. 7. Section 12-315 of the general statutes is repealed and the following is substituted in lieu thereof:

[No] Except as otherwise provided in subsection (b) of section 12-314, as amended by this act, no provision of this chapter shall prohibit the sale of unstamped cigarettes by one licensed distributor to another licensed distributor.

Sec. 8. This act shall take effect July 1, 1999.

Approved June 3, 1999

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