Rev. Rul. 57-64

Advice has been requested whether pocket cigarette lighters ornamented with rhinestones or with colored stones, which imitate or simulate precious or semi-precious stones, are subject to the manufacturers excise tax or to the retailers excise tax.

Section 4201 of the Internal Revenue Code of 1954 imposes a tax upon the sale by the manufacturer, producer, or importer, of mechanical lighters for cigarettes, cigars, and pipes. Section 4221 of the Code provides that the manufacturers excise tax shall not be imposed on any article subject to the retailers excise tax on jewelry and related items.

Section 4001 of the Code imposes a tax on all articles commonly or commercially known as jewelry, whether real or imitation, when sold at retail. Jewelry as defined in section 320.31 of Regulations 51, made applicable to the 1954 Code by Treasury Decision 6091, C.B. 1954-2, 47, includes articles designed to be carried in the hand, or hung on the arm, or carried or worn on the person, whether in pocket or bag or under the outer garment, such as cigarette cases, eyeglass cases, pencils, powder boxes, garter buckles, canes, purses, or handbags, if made of, or ornamented, mounted or fitted with pearls, precious or semi-precious stones, or imitations thereof.

It is held that pocket cigarette lighters ornamented with rhinestones or with colored stones, which imitate or simulate precious or semiprecious stones, are articles of jewelry within the meaning of the Code, and, therefore, are subject to tax when sold by the retailer. Because such cigarette lighters are subject to the retailers excise tax, they are exempt from the manfuacturers excise tax.