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Illegal European Cigarettes Seized!
A shipment of over 150,000 cigarette cartons was seized Tuesday by federal investigators at Kennedy Airport.

One hundred fifty thousand cartons of illegally purchased cigarettes bound for the United States were confiscated Tuesday at Kennedy Airport in the first major bust there of non-taxed cigarettes bought over the Internet. Federal, state and local authorities combed through the inventory Tuesday. The bust was the result of investigations by several agencies, including the Bureau of Alcohol, Tobacco and Firearms, postal inspectors, customs agents, state and federal tax agents and investigators from the Queens District Attorney's and U.S. Attorney's offices.

Philip Morris Blocks Yesmoke From Importing Cigarettes to USA
In the latest step in the tobacco industry's attempt to stop Internet sites from selling cigarettes to U.S. customers, Philip Morris USA last week took over the online address of one of the largest Internet-cigarette vendors in the world, Yesmoke SA of Switzerland.

The takeover follows a ruling by the U.S. District Court for the Southern District of New York in Manhattan that gave Philip Morris, a unit of Altria Group Inc., the rights to the domain name Yesmoke.com -- the Internet address of Yesmoke's shop, which has drawn millions of customers. The tobacco company had contended that Yesmoke infringed its trademarks and followed unfair market practices.

It isn't clear how effective the seizure of the domain name will be, as Yesmoke vowed to continue operating through a domain name registered in Switzerland. Visitors to the Yesmoke.com address already are automatically redirected to a Swiss address, Yesmoke.ch, where the company continues to operate. "We are in the process of taking full possession of Web site, in accordance with the judge's order," says Brendan McCormick, a spokesman for Philip Morris USA . . .

The domain name at the center of the U.S. suit was registered in the U.S. with Network Solutions Inc., of Virginia, allowing the court to seize it. Yesmoke SA has 30 days to appeal that seizure.

The Web site gives customers hazy information about the legalities: "Buying cigarettes by international mail is legal, as long as it is carried out in accordance with international postal regulations and standards," it says, omitting an important caveat for U.S. buyers: importing U.S. cigarette brands into the U.S. is illegal.

"No American-brand cigarettes are allowed in whatsoever," says Barry Braverman, field national import specialist for the U.S. Customs Service at JFK International Airport. But customs officials, occupied with intercepting drugs and terrorism-related objects, don't consider illegal cigarette shipments a top priority, he says.

If buying foreign brands, U.S. buyers are supposed to pay tariffs of $1.05 per kilogram, plus 2.3%, as well as U.S., state and city taxes. Taxes alone add up to $3.39 per pack in New York City, for example. But few customers of Yesmoke.com report their purchases after the fact and pay the tax. In practice, U.S. buyers often find they can import a few cartons of Marlboros or other brands without a hitch -- and without paying a dime in duty or taxes.

Philip Morris has gone after other Internet cigarette vendors with mixed results. It says it has initiated 20 lawsuits in seven federal courts against 67 owners and operators of online smoke shops. It has won judgments against the operators of four Web sites registered in Panama City, Panama, including Discount-Marlboro-Cigarettes.com and Allsmoke.com.

Earlier this year, a U.S. district court in Los Angeles ruled against the four sites and awarded the tobacco giant some $9 million in damages and fees and gave it the rights to their Internet domain names. Discount-Marlboro-Cigarettes closed down; Allsmoke relocated to a Russian Web server and now is selling Marlboros at Allsmoke.ru.

excerpt from Wall Street Journal

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