Court upholds cigarette tax exemption

ALBANY, N.Y., Sept. 21 (UPI) -- A federal appeals court has upheld a judge's order exempting Seneca Nation mail-order businesses from paying tobacco taxes to states where they ship cigarettes.

The Second Circuit Court of Appeals, ruling Tuesday on the federal Prevent All Cigarette Trafficking Act, upheld the July 2010 order by U.S. District Judge Richard Arcara granting a preliminary injunction, The Buffalo News reported.

But the appeals court upheld a provision of the act that forbids the American Indian reservation to send cigarettes through the U.S. Mail.

"This is a positive decision," Seneca President Robert Odawi Porter said in a statement. "While restrictions on mailing remain in place, the method currently used by Seneca Nation merchants to send product -- private shippers other than the major delivery companies -- is back open."

The law, signed last year by President Barack Obama, is designed to prevent governments' losses of billions of dollars in taxes and to prevent underage smokers from getting cigarettes through the mail.

In his ruling, Arcara said the collection of taxes may violate the Seneca businesses right to due process.

Michael Seilback, vice president of public policy for the American Lung Association in New York, called the appeals court decision a victory.

"The fact that the law will prevent the shipping of these products through the mail is certainly a win for public health," Seilback said.