Rev. Rul. 58-426

The Internal Revenue Service has been asked whether the manufacturers excise tax on mechanical lighters applies to an importer's sale of lighters which have advertising material imprinted thereon.

A company imports and sells mechanical cigarette lighters which have advertising material imprinted thereon. These lighters are sold to customers in the United States for a stated price which includes a charge for imprinting the advertising material. The lighters are not made of, or ornamented, mounted, or fitted with precious metals or imitations thereof, or ornamented, mounted or fitted with pearls, precious or semi-precious stones or imitations thereof. Consequently, they are not subject to the retailers excise tax imposed by section 4001 of the Internal Revenue Code of 1954.

Section 4201 of the Code imposes a tax upon the price for which mechanical lighters for cigarettes, cigars, and pipes are sold by the manufacturer, producer, or importer.

It is held that the manufacturers excise tax on mechanical lighters, imposed by section 4201 of the Code, applies to the price for which the lighters are sold by the importer thereof. However, if there is a separate agreement with a customer that the lighters be imprinted in a manner designated by him and a separate price is agreed upon for such imprinting, the amount charged therefor is not considered to be a part of the selling price of the lighters, provided that amount is shown on the invoice rendered the customer or on the importer's records as a separate item and, also, that such amount represents a reasonable charge for such imprinting.