Rev. Rul. 56-143

Advice has been requested whether tobacco processed into rolls for use as a binder in the manufacture of cigars may be produced and handled by dealers in tobacco materials.

Section 280.120 of the Regulations relating to Dealers in Tobacco Materials provides that a dealer in tobacco materials may handle such materials in any manner, provided he does not package them for consumption by smoking or for use in the mouth or nose. Section 280.33 includes `tobacco in process' as a part of the definition of tobacco materials.

The tobacco binder is considered to be a form of tobacco material suitable for use in the manufacture of a tobacco product (cigars). Tobacco materials may be handled by a person who qualifies as a dealer in tobacco materials. Accordingly, tobacco processed into rolls for use as a binder in the manufacture of cigars may be produced and handled by dealers in tobacco materials. For accounting purposes, such material should be regarded as stemmed leaf tobacco and should be so reported on the records of the dealer and of the person to whom such tobacco materials are shipped.