CCMMlSSlCnL8 Cl ln1L8nAL 8LvLnuL vs CA C1A and lC81unL 1C8ACCC

CC8C8A1lCn
C8 no 119761 AugusL 29 1996

IAC1S Cl8 dlspuLes Lhe declslon of Lhe CA afflrmlng Lhe resoluLlon of Lhe C1A
8evenue Memorandum Clrcular no 3793 (8MC 3793)

Champlon Pope and More were classlfled as forelgn brands slnce Lhey were
llsLed ln Lhe World 1obacco ulrecLory as belonglng Lo forelgn companles
Powever lorLune 1obacco changed Lhe names of Pope Lo Pope Luxury and
More Lo remlum More Lhereby removlng Lhe sald brands from Lhe forelgn
brand caLegory and reglsLered as a local brand Ad valorem Laxes were lmposed
on Lhese brands
8MC 3793 8eclasslflcaLlon of ClgareLLes Sub[ecL Lo Lxclse 1ax was lssued by Lhe
8l8 whlch alms Lo collecL deflclencles on ad valorem Laxes agalnsL lorLune
1obacco followlng Lhelr reclasslflcaLlon as forelgn branded clgareLLes
PCL MC8L and CPAMlCn belng manufacLured by lorLune 1obacco
CorporaLlon were consldered locally manufacLured clgareLLes bearlng a forelgn
brand sub[ecL Lo Lhe 33 ad valorem Lax on clgareLLes under 8A 7634
lorLune 1obacco flled a peLlLlon for revlew wlLh Lhe C1A 8MC 3793ls found Lo be
defecLlve lnvalld and unenforceable
1he CA susLalned Lhe declslon of Lhe C1A

ISSUL ls 8MC 3793 a mere lnLerpreLaLlve rullng Lherefore noL requlrlng for lLs
effecLlvlLy hearlng and flllng wlLh Lhe u Law CenLer?


kULING
A readlng of 8MC 3793 parLlcularly conslderlng Lhe clrcumsLances under whlch lL
has been lssued convlnces us LhaL Lhe clrcular cannoL be vlewed slmply as a
correcLlve measure (revoklng ln Lhe process Lhe prevlous holdlngs of pasL
Commlssloners) or merely as consLrulng SecLlon 142(c)(1) of Lhe nl8C as
amended buL has ln facL and mosL lmporLanLly been moJe lo otJet to ploce
nope loxoty ltemlom Mote ooJ cbomploo wltblo tbe closslflcotloo of
locolly mooofoctoteJ clqotettes beotloq fotelqo btooJs ooJ to tbeteby bove tbem
coveteJ by kA 7654
Speclflcally Lhe new law would have lLs amendaLory provlslons applled Lo locally
manufacLured clgareLLes whlch aL Lhe Llme of lLs effecLlvlLy were noL so classlfled
as bearlng forelgn brands rlor Lo Lhe lssuance of Lhe quesLloned clrcular Pope
Luxury remlum More and Champlon clgareLLes were ln Lhe caLegory of
locally manufacLured clgareLLes noL bearlng forelgn brand sub[ecL Lo 43 ad
valorem Lax

Pence wlLhouL 8MC 3793 Lhe enacLmenL of 8A 7634 would have had no new
Lax raLe consequence on prlvaLe respondenLs producLs LvldenLly ln order Lo
place Pope Luxury remlum More and Champlon clgareLLes wlLhln Lhe
scope of Lhe amendaLory law and sub[ecL Lhem Lo an lncreased Lax raLe tbe oow
JlspoteJ kMc J79J boJ to be lssoeJ lo so Joloq tbe 8lk oot slmply lottepteteJ
tbe low vetlly lt leqlsloteJ ooJet lts pooslleqlslotlve ootbotlty 1be Joe
obsetvooce of tbe tepoltemeots of ootlce of beotloq ooJ of pobllcotloo sboolJ
oot bove beeo tbeo lqooteJ

lndeed Lhe 8l8 lLself ln lLs 8MC 1086 has observed and provlded

ln order LhaL Lhere shall be a [usL enforcemenL of rules and regulaLlons ln
conformlLy wlLh Lhe baslc elemenL of due process Lhe followlng procedures are
hereby prescrlbed for Lhe drafLlng lssuance and lmplemenLaLlon of Lhe sald
8evenue 1ax lssuances

(1) 1hls Clrcular shall apply only Lo (a) 8evenue 8egulaLlons (b) 8evenue AudlL
Memorandum Crders and (c) 8evenue Memorandum Clrculars and 8evenue
Memorandum Crders bearlng on lnLernal revenue Lax rules and regulaLlons

(2) LxcepL when Lhe law oLherwlse expressly provldes Lhe aforesald lnLernal
revenue Lax lssuances shall noL begln Lo be operaLlve unLll afLer due noLlce
Lhereof may be falrly presumed

uue noLlce of Lhe sald lssuances may be falrly presumed only afLer Lhe followlng
procedures have been Laken

xxx xxx xxx

(3) SLrlcL compllance wlLh Lhe foregolng procedures ls
en[olned
-otbloq oo tecotJ coolJ tell os tbot lt wos eltbet lmposslble ot lmptoctlcoble fot
tbe 8lk to obsetve ooJ comply wltb tbe obove tepoltemeots befote qlvloq effect to
lts poestlooeJ cltcolot
All Laken Lhe CourL ls convlnced LhaL Lhe hasLlly promulgaLed 8MC 3793 has
fallen shorL of a valld and effecLlve admlnlsLraLlve lssuance

1he declslon of Lhe CourL of Appeals susLalnlng LhaL of Lhe CourL of 1ax Appeals
ls Alll8MLu