On October 13, 2023, the U.S.-based R.J. Reynolds Tobacco Company and R.J. Reynolds Vapor Company (hereinafter referred to as “Reynolds”) filed a complaint with the U.S. International Trade Commission (hereinafter referred to as “Reynolds”) against 26 Chinese and American e-cigarette companies. The United States International Trade Commission (ITC) filed a “337 investigation” application, of which 13 were Chinese e-cigarette companies.
The previous article in this series, “Brief Analysis of Renault’s “337 Investigation” Part One: Accusing E-cigarette Companies of False Advertising and Publicity”, explained the causes of action for false advertising and publicity in this “337 Investigation”. This article will explain the accusations of Renault’s “Section 337 Investigation” The defendant’s cause of action for violation of the PACT Act is discussed.
1.Reynolds accusation of violating the PACT Act
Reynolds alleged that the defendants violated the U.S. Prevent All Cigarettes Trafficking Act (PACT Act) by (1) registering with the U.S. Department of Justice and the state tobacco tax administrator at the transportation terminal; and (2) at each Submit the transportation list to the state government at the transportation terminal before March 10th.
- PACT Act
The PACT Act is a federal law governing the taxation of tobacco products. PACT Act 15 U.S.C. §376(a) requires that any entity that sells, transfers, or transports tobacco for profit in interstate commerce must (1) register with the U.S. Department of Justice and the state tobacco tax administrator at the transportation terminal; (2) ) Submit shipping manifests to the state tobacco tax administrator at the shipping terminal before the 10th of each month.
- A brief analysis of the accusation that R.J. Reynolds Tobacco Company violated the PACT Act
The tobacco excise tax stipulated in the PACT Act that should be paid to the state of transportation terminal only applies to interstate sales and transportation within the United States. Renault’s allegation that Defendants violated the registration and reporting requirements of 15 U.S.C. §376(a) of the PACT Act shall apply only to U.S. dealers. This law does not specify that foreign companies need to register and report. If foreign companies have already borne tariffs and have not sold or transported in the United States, they should not bear additional tax obligations. Chinese companies can make a defense based on this, that is, any failure to comply with the registration and reporting requirements in the PACT Act is the behavior of the U.S. distributors themselves and has nothing to do with the Chinese importers. However, if U.S. dealers are considered to be controlled by or affiliated with Chinese e-cigarette companies, the possibility of application cannot be ruled out.
Regarding the accusation in Renault’s “337 investigation” application that the defendant violated customs laws and constituted import smuggling, please pay attention to the follow-up article.
