Are E-Cigarettes Tobacco? Is Selling Them an Illegal Business Crime?

In 2017, the State Tobacco Monopoly Administration formulated and issued the "Notice on Carrying out the Identification and Inspection of New Cigarette Products", including four types of new cigarette products: iQOS, GLo, Ploom, and Revo into the cigarette identification and inspection catalog. Also in 2017, the National Tobacco Quality Supervision and Inspection Center conducted an identification test on the components of iQOS cigarette bomb samples submitted by relevant units, and detected nicotine, N-nitrosamines unique to four types of tobacco, and common tobacco and tobacco products. The consistent range of dextrorotine optical isomers in tobacco products, and the secondary alkaloid species consistent with those in general tobacco and tobacco products. It was determined that the cigarette bomb samples contained tobacco characteristic components, and the fillers were made of tobacco leaves. Therefore, iQOS cigarettes belong to tobacco products and are subject to supervision by the Tobacco Monopoly Law.
 
According to the Regulations for the Implementation of the Tobacco Monopoly Law, imported tobacco monopoly products can only be operated by enterprises that have obtained a special tobacco monopoly enterprise license. Our country has not imported IQOS tobacco products, so any trading of IQOS tobacco products is illegal. Purchasing excessive quantities of cigarettes from overseas and selling them domestically may be suspected of smuggling and illegal business operations.

Possible crimes suspected of operating e-cigarettes and prosecution standards

(1) Crime of illegal business operations

Article 225 of the Criminal Law [Crime of Illegal Business Operations]

Anyone who violates national regulations and commits one of the following illegal business activities and disrupts market order, if the circumstances are serious, shall be sentenced to fixed-term imprisonment of not more than five years or criminal detention, and shall also or shall only be sentenced to a fine of not less than one but not more than five times the illegal income; if the circumstances are particularly serious, he shall be sentenced to not less than five years of fixed-term imprisonment, and shall also be fined not less than one but not more than five times the illegal income or confiscated property:

(1) Operating monopolized, monopolized goods or other goods whose trading is restricted as prescribed by laws and administrative regulations without permission;

(2) Buying and selling import and export licenses, import and export certificates of origin, and other business licenses or approval documents stipulated in laws and administrative regulations;

(3) Illegally operating securities, futures, and insurance business without the approval of relevant national authorities, or illegally engaging in fund payment and settlement business;

(4) Other illegal business activities that seriously disrupt market order.

"Provisions of the Supreme People's Procuratorate and the Ministry of Public Security on the Standards for Filing and Prosecution of Criminal Cases under the Jurisdiction of Public Security Organs (2)"

Article 79 [Illegal business cases (Article 225 of the Criminal Law)] Anyone who violates state regulations, conducts illegal business activities, disrupts market order, and is suspected of any of the following circumstances shall be filed for prosecution:

(2) Violating the national laws and regulations on tobacco monopoly administration, and without the permission of the tobacco monopoly administrative department, and without license certificates such as tobacco monopoly production enterprise license, tobacco monopoly wholesale enterprise license, special tobacco monopoly business enterprise license, tobacco monopoly retail license, etc., illegally dealing in tobacco monopoly products, under one of the following circumstances:

1. The amount of illegal business operations is more than 50,000 yuan, or the amount of illegal income is more than 20,000 yuan;

2. Illegal trading of more than 200,000 cigarettes;

3. Having received more than two administrative penalties within three years for illegally trading in tobacco monopoly products, and illegally trading in tobacco monopoly products with the amount exceeding 30,000 yuan.

(2) Crime of smuggling

"Interpretation of the Supreme People's Court and the Supreme People's Procuratorate on Several Issues Concerning the Application of Laws in Handling Criminal Cases of Smuggling"

Article 16 [Crime of Ordinary Smuggling] Anyone who smuggles ordinary goods and articles and evades the tax payable of more than 100,000 yuan but less than 500,000 yuan shall be deemed as the tax payable under Article 153, paragraph 1, of the Criminal Law is relatively large; If the tax payable of more than 500,000 yuan and less than 2.5 million yuan, the tax payable shall be deemed to be huge; if the tax payable of more than 2.5 million yuan, the tax payable shall be deemed to be particularly huge.

Relevant cases on suspected illegal operation of e-cigarettes
 
(1) Criminal ruling of the second instance in the case of Yang Xiaofei's illegal business operation

Trial court: Collegiate Panel of the First Intermediate People's Court of Shanghai City: Ren Suxian, Qin Xianfeng, Yu Shusheng Case No.:(2019) Hu 01 Execution No. 321 Case type: Criminal ruling Trial date: 2019-5- 21#p #paginated title #e#

The court found that since November 2017, the defendant Yang Xiaofei purchased and sold new non-combustible cigarettes (also known as type cigarettes) without a tobacco monopoly license. On December 19 of the same year, Yang Xiaofei paid RMB 30,500 (the same currency below) through Fang Alipay to purchase 100 cigarettes and bombs from Jiang (handled separately). On January 9, 2018, Yang Xiaofei purchased 1,050 cigarettes from Gou (handled separately) through Gao and Gang respectively, paying 288,750 yuan. Among them, 140 cigarettes (worth 38,500 yuan) had been signed by Yang Xiaofei, and the remaining 910 cigarettes (worth 250,250 yuan) had been shipped from Japan. On January 18, 2018, Yang Xiaofei was arrested by police in a private room in the street square in Xuanwu District, Nanjing City, Jiangsu Province and seized 186 cigarette bombs. After inspection, the cigarettes seized above were authentic cigarettes.

The court held that: Yang Xiaofei's confession, mobile phone screenshots, etc. confirmed that Yang Xiaofei knew that the X-type cigarette bombs had not obtained a sales license in China, and that he himself had not obtained a nationwide tobacco monopoly license, but sold X-type cigarette bombs in order to make more money; The way Yang Xiaofei and Gou traded cigarettes was to pay first and then deliver them. Yang Xiaofei bought 1,050 cigarettes from Gou at a price of more than 280,000 yuan. After Gou arranged the delivery, he sent the relevant express delivery number to Yang Xiaofei. Later, Yang Xiaofei received 140 cigarettes. The testimony of witness Gou supports the above facts, which is sufficient to confirm that Yang Xiaofei purchased more than 280,000 yuan of type cigarettes from Gou for the purpose of sales without obtaining a tobacco monopoly license. The court believes that illegal business includes multiple links such as production, purchase, transportation, storage, and sales. As long as the perpetrator implements any of these links, it will constitute the crime of illegal business. Yang Xiaofei was sentenced to five years and nine months in prison for the crime of illegal business operations and fined 20,000 yuan; the defendant's illegal income and cigarettes and bombs were confiscated.

(2) Illegal business cases of Feng Moumou, Fang Moumou and others

Trial court: Collegiate Panel of the People's Court of Jianye District, Nanjing City: Wang Zhanjun  Wang Shunli Dong Han Case No.:(2018) Su 0105 Xing Chu No. 416 Case Type: Criminal Judgment Trial Date: 2018-11-23

Basic case: From December 2017 to March 2018, defendants Feng Moumou and Fang Mou hired defendants He Moumou, Feng Moumou, and He Moumou (handled separately) to sell a total of 164 IQOS cigarettes to Jianye District and other places in the city through WeChat without obtaining a tobacco monopoly license, and received RMB 51950.

The court held that: the defendants Feng Moumou, Fang Moumou, He Moumou, and Feng Moumou violated national regulations and sold tobacco monopoly products without permission. The circumstances were particularly serious, and their actions all constituted the crime of illegal business operations and were joint crimes. Defendant Feng Moumou committed the crime of illegal business operations and was sentenced to five years in prison and fined RMB 10,000.

(3) Illegal business operation case of Chen Chao and Yang Qinchao

Trial court: Collegiate bench of the People's Court of Yuecheng District, Shaoxing City: Wei Xingjun  Zhang Qiufei Zhang Ding 'an Case No.:(2019) Zhe 0602 Xing Chu No. 87 Case Type: Criminal Judgment Trial Date: 2019-7-18

Main case:

1.2017 Since November 2008, the defendant Chen Chao has purchased IQOS type heated non-combustible tobacco products (commonly known as cigarette bombs) from the defendants Yang Qinchao, Zhu Pengcheng, Feng Shubo and others without obtaining a tobacco monopoly retail license., and then sold them to the defendant Yang Yang and others through WeChat at a higher price to earn a difference, with a total operating amount of more than RMB 930,000.

2.2017 Since November 2008, the defendant Yang Qinchao purchased Marlboro brand cigarettes from others without obtaining a tobacco monopoly retail license, and then sold them to the defendant Chen Chao and others through WeChat at a higher price to earn the difference. The total operating amount was RMB 530,000 yuan.

3.2017 Since November 2008, the defendant Zhu Pengcheng purchased Marlboro brand cigarettes from others without obtaining a tobacco monopoly retail license, and then sold them to the defendant Chen Chao and others through WeChat at a higher price to earn the difference. The total operating amount was RMB 350,000. On March 23, 2018, the public security organs seized 12 Marlboro brand cigarettes in Longwan District, Wenzhou City, Zhejiang Province, where he lived, with a value of at least RMB 3,000.

Controversial issues:

Defendant Chen Chao's defender mainly put forward the following opinions:

1. Defendant Chen Chao had subjective inability to understand the violation of the law and objective inability to commit the crime, so it did not constitute a crime. The reasons were:

(1) The IQOS cigarettes involved in the case were not expressly stipulated to be included in the category of tobacco monopoly products;

(2) The document Notice on Carrying out Identification and Inspection of New Cigarette Products does not have universal applicability;#p#pagination title #e#

(3) The defendant Chen Chao later learned through the news that his behavior might be illegal;

(4) It cannot be determined that the cigarettes sold or purchased by the defendant Chen Chao belong to the authentic IQOS or tobacco monopoly products;

(5) There are objections to the identification inspection personnel, identification inspection samples, identification inspection comparison samples, and identification methods who issued the identification inspection report.

The identification and inspection report proves that after identification by the Zhejiang Province Tobacco Quality Supervision and Inspection Station, the 1265.7 IQOS cigarette cartridges seized and submitted for inspection are authentic overseas cigarettes. There is no word monopoly by China Tobacco Corporation. They are all tobacco products.

The court made a comprehensive judgment on the controversial issues related to this case as follows:

1. Whether the tobacco involved belongs to the category of cigarettes

The working principle of the so-called IQOS cigarette bomb involved in the case is to produce smoke by baking and heating special tobacco tobacco by heating a heating rod. The difference between it and ordinary cigarettes is that it only heats rather than burns tobacco. It is not traditional ignition heating, but uses electronic smoking equipment. Baking and heating, so for all defendants who directly contact the so-called electronic cigarette bomb, they can understand it intuitively. They should know that the product is a cigarette product and a new type of heating and non-burning tobacco product.

2. Whether the tobacco involved is a tobacco monopoly product

In October 2017, the State Tobacco Monopoly Administration formulated and issued the "Notice on Carrying out the Identification and Inspection of New Cigarette Products" to include IQOS cigarettes in my country's cigarette identification list. It is a specific work measure taken by the national tobacco management functional department to strengthen supervision of tobacco monopoly products such as cigarettes involved in the case. It is not to expand the scope of tobacco monopoly products but to add a new definition to the cigarettes involved in the case.

After being included in the list, IQOS cigarettes belong to my country's monopoly goods and must hold a tobacco monopoly license before they can be operated. After identification, the e-cigarette cartridges involved in the case contain tobacco leaf components, and their functions are not essentially different from traditional cigarettes. The Tobacco Monopoly Law determines the tobacco monopoly system in the form of law and implements special management methods for tobacco. A tobacco monopoly license must be obtained for trading tobacco products.

The defendants in this case violated the laws and regulations on tobacco monopoly management and continued to operate IQOS cigarettes after November 2017 without the permission of the tobacco monopoly administrative department and without a tobacco monopoly license. As an ordinary person living in the information society, he continues to sell e-cigarette bombs even after being notified of the ban on the sale of e-cigarette bombs. This is illegal trading of tobacco monopoly products and should be punished. Moreover, the establishment of intentional crime does not require the perpetrator to realistically realize that his behavior is prohibited by criminal law.

Moreover, it can be reflected from the defendant's confession, WeChat chat records and other evidence that the defendant knew that selling cigarettes and bombs was illegal. However, the defendants involved in the case, under the temptation of profit, all had a chance and took risks for the sake of profit.

Therefore, the court will not accept the defendant's defense opinions.

summary

To sum up, the four types of products involved in non-burning cigarette equipment, including Philip Morris International iQos, Japan Tobacco Ploom, British American Tobacco Glo, and American Reynolds Tobacco Revo, are all tobacco products. The operation of this type of e-cigarettes is suspected of illegal business operations.