HOGANSBURG — A load of untaxed cigarettes produced on the St. Regis Mohawk Reservation and seized by state police should be returned to its owner, state Supreme Court Judge David R. Demarest ruled this week.

On Jan. 23, William Cagle was driving a tractor-trailer in the town of Waddington that was carrying approximately 5 million Signal brand cigarettes from Ohserase Manufacturing LLC, Hogansburg. His destination was HCI Distribution Corp. on Winnebago tribal lands near Omaha, Neb.

Mr. Cagle was stopped at a U.S. Border Patrol checkpoint and state police seized 26,000 cartons of cigarettes valued by agents at up to $2 million, according to court documents.

HCI Distribution sought order for the cigarettes’ release and argued in court that the seized product was not subject to state tax because it was heading to an out-of-state reservation.

Assistant Attorney General Aaron M. Baldwin, Albany, worried any untaxed cigarettes coming from the St. Regis Mohawk Reservation are going to Nebraska but making their way back into New York for sale and therefore should be subject to tax.

Judge Demarest determined the state lacked the legal authority for the seizure. There were no taxes due on the seized cigarettes because Mr. Cagle had paperwork indicating the cigarettes were heading for Nebraska, and not for sale in New York, he said.

He ordered the state immediately to return the seized load to HCI.

“The fact that there is some possibility they might be reintroduced into New York cannot provide a basis for seizure,” he said. “Respondents rely only on pure speculation that the products seized here would be reintroduced in this state.”

The state wanted Mohawk cigarette manufacturers to prepay a tax, then have it refunded if there was proof cigarettes were heading to another reservation. Judge Demarest said it was up to the state Department of Taxation and Finance or the Legislature to create that regulation.

“There is no such requirement either in the New York Tax Law or in any regulations,” he ruled. “Where the law is clear that no tax is due, for the court to extrapolate the type of regulatory scheme proposed by (the state) would be improper.”

St. Lawrence County District Attorney Nicole M. Duvé and Mohawk Chief Ronald W. LaFrance could not be reached for comment Wednesday.

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