The Seoul Administrative Court dismissed the argument of an electronic cigarette liquid importer that its product should not be classified as tobacco because it was extracted from the stem, not the leaves, of the tobacco plant. (Image courtesy of Yonhap)
SEOUL, Feb. 26 (Korea Bizwire) – In a recent ruling, the Seoul Administrative Court dismissed the argument of an electronic cigarette liquid importer, Company A, that its product should not be classified as tobacco because it was extracted from the stem, not the leaves, of the tobacco plant.
The importer had been importing e-cigarette liquid made with nicotine from a Chinese manufacturer from January 2017 to July 2020.
Company A declared upon import that the nicotine in its product was extracted from the stems of the tobacco plant, which, according to current tobacco business laws, would not classify the product as tobacco and exempt it from tobacco taxes, including the tobacco consumption tax, individual consumption tax, and national health promotion fee.
However, following an audit by the Board of Audit and Inspection, the Seoul Customs Service conducted an investigation into Company A in 2020 and found that the liquid contained nicotine extracted from the veins of tobacco leaves, leading to the conclusion that the company had evaded tobacco taxes.
As a result, in December 2021, a health promotion fee of approximately 25.2 billion won was imposed on Company A, prompting the company to file a lawsuit challenging the charge.
Despite Company A’s repeated claims in court that its product used stems rather than leaves, the court found that the authorities had reasonably proven the inclusion of tobacco leaves in the product’s ingredients.
The court also noted that correspondence from Chinese authorities suggested that the Chinese manufacturer might have used parts of tobacco leaf waste, including veins, rather than solely stems.
It added that extracting nicotine solely from stems would require a significant amount, and there was insufficient objective evidence to suggest that the Chinese company had purchased such quantities of stems.
Company A had argued that the customs investigation was redundant and procedurally illegal since a tax audit by the National Tax Service had found no issues. However, the court ruled that the investigation was lawful according to the regulations.
M. H. Lee (mhlee@koreabizwire.com)
