Rev. Rul. 64-25

Advice has been requested whether tobacco processed into rolls, sheets, bobbins, etc., for use in the manufacture of tobacco products may be produced and handled by dealers in tobacco materials. Such material, variously referred to in the trade as `reconstituted tobacco,' `homogenized leaf tobacco,' `tobacco sheet,' etc., is hereinafter referred to as `reconstituted tobacco.'

Based on the examination and analysis of such samples of `reconstituted tobacco' as have been submitted to the Alcohol and Tobacco Tax Division, such material has been considered to be a form of tobacco materials as defined in section 5702 of the Internal Revenue Code of 1954.

Section 280.120 of the Dealers in Tobacco Materials Regulations provides that a dealer in tobacco materials may handle tobacco materials in any manner at any place described in his bond as a part of his establishment, provided such handling does not result in a tobacco product which is subject to tax under chapter 52 of the Code and the regulations prescribed thereunder.

Accordingly, `reconstituted tobacco' for use in the manufacture of tobacco products may be produced and handled by dealers in tobacco materials. Such material should be accounted for as tobacco materials, under the classification of `Other tobacco materials,' by weight (whether in rolls, sheets, bobbins, etc.), in the records required by section 280.127 of the regulations to be kept by dealers in tobacco materials. Such material when received by manufacturers of tobacco products should be similarly accounted for in the records required to be kept by section 270.182 of the Manufacture of Tobacco Products Regulations.

Revenue Ruling 56-143, C.B. 1956-1, 548, is hereby superseded.

¹ Prepared pursuant to Revenue Procedure 62-24, C.B. 1962-2, 489.