TOBACO MONOPOLY

   Article 1 This Law is enacted with a view to exercising tobacco monopoly administration, organizing the production and management of tobacco
monopoly commodities in a planned way, improving the quality of tobacco products, safeguarding consumers’ interests and ensuring
the national revenue.

   Article 2 As used in this Law, “tobacco monopoly commodities” refer to cigarettes, cigars, cut tobacco, redried leaf tobacco, leaf tobacco,
cigarette paper, filter rods, cigarette tow and cigarette manufacturing equipment.

Cigarettes, cigars, cut tobacco and redried leaf tobacco are generally referred to as tobacco products.

   Article 3 The State shall, according to law, exercise monopoly administration over the production, sale, import and export of tobacco monopoly
commodities, and production sale, import and export of tobacco monopoly commodities, and practice a tobacco monopoly license system.

   Article 4 The department of tobacco monopoly administration under the State Council shall be responsible for the nation-wide tobacco monopoly.
The departments of tobacco monopoly administration in the provinces, autonomous regions and municipalities directly under the Central
Government shall be responsible for the tobacco monopoly within the areas under their respective jurisdiction, and shall be under
the dual leadership of the department of tobacco monopoly administration under the State Council and the people’s governments of
the relevant provinces, autonomous regions and municipalities directly under the Central Government, with the leadership of the department
of tobacco monopoly administration under the State Council as the main leading authority.

   Article 5 The State shall strengthen the scientific research and technical development of tobacco monopoly commodities, so as to improve the
quality of tobacco products and reduce the content of tar and other hazardous ingredients in such products.

The State and society shall intensify the publicity of and education in the fact that smoking is hazardous to health, forbid or restrict
smoking on public traffic vehicles and in public places, dissuade teen-agers and youngsters from smoking, and forbid primary school
pupils and middle school students from smoking.

   Article 6 The State shall exercise administration of tobacco monopoly in national autonomous areas, and shall, according to the relevant provisions
of this Law and the Law on Regional National Autonomy, take the interests of national autonomous areas into account and give preferential
treatment to the plantation of leaf tobacco and the production of tobacco products in such areas.

   Article 7 For the purpose of this Law, the term “leaf tobacco” means flue-cured tobacco and selected air- and sun-cured tobacco needed for
the production of tobacco products. The catalogue of selected air-and sun-cured tobacco items shall be determined by the department
of tobacco monopoly administration under the State Council.

Other air- and sun-cured tobacco items which are not included in the above mentioned catalogue may be sold at rural or urban trade
markets.

   Article 8 In growing tobacco, good varieties of tobacco shall be cultivated and popularized in line with the local conditions. Good varieties
of tobacco shall, after examination and approval by the national or provincial tobacco evaluation committees, be supplied by local
tobacco companies.

   Article 9 Leaf tobacco purchasing plans shall be assigned by the planning departments of the local people’s governments at or above the county
level on the basis of the plans assigned by the planning department under the State Council. No other organizations or individuals
shall make any modifications thereto.

Tobacco companies or their authorized agencies shall conclude leaf tobacco purchasing contracts with tobacco growers. Any leaf tobacco
purchasing contract shall specify the agreed area for leaf tobacco plantation.

The purchasing prices of leaf tobacco shall be set, on a grading basis, by the pricing authorities under the State Council in conjunction
with the department of tobacco monopoly administration under the State Council.

   Article 10 A unified purchase of leaf tobacco shall be effected by tobacco companies or their authorized agencies in accordance with the standards
and prices set by the State. No other organizations or individuals may effect any leaf tobacco purchase.

Tobacco companies or their authorized agencies shall, after setting price on a grading basis and according to the State-prescribed
standards, purchase all the leaf tobacco grown by leaf tobacco growers within the plantation areas specified in the leaf tobacco
purchasing contracts. The grades and prices thereof shall not be forced down, and disputes arising from leaf tobacco purchasing shall
be dealt with properly.

   Article 11 The plans for allocating leaf tobacco and redried leaf tobacco among the provinces, autonomous regions and municipalities directly
under the Central Government shall be assigned by the planning department under the State Council; the plans for allocating leaf
tobacco and redried leaf tobacco within areas under the jurisdiction of each province, autonomous region or municipality directly
under the Central Government shall be assigned by the planning department of the relevant province, autonomous region or municipality
directly under the Central Government. No other organizations or individuals may make any modifications thereto.

A contract must be concluded for any allocation of leaf tobacco or redried leaf tobacco.

   Article 12 The establishment of an enterprise producing tobacco products shall be subject to the approval of the department of tobacco monopoly
administration under the State Council and the acquisition of a license for the tobacco monopoly production enterprise, and then
to the registration upon its examination and approval by the administrative department for industry and commerce; the split-up, merger
or dissolution of an enterprise producing tobacco products shall be subject to the approval of the department of tobacco monopoly
administration under the State Council and go through formalities for the change and cancellation of the registration with the administrative
department for industry and commerce. The administrative department for industry and commerces shall not approve and register an
enterprise that has not obtained a license for the tobacco monopoly production enterprise.

   Article 13 Capital construction or technological innovation to be conducted by an enterprise producing tobacco products for expanding production
capacity shall be subject to the approval by the department of tobacco monopoly administration under the State Council.

   Article 14 The total annual production plans for cigarettes and cigars of the provinces, autonomous regions and municipalities directly under
the Central Government shall be assigned by the planning department under the State Council. The total annual production plans for
cigarettes and cigars of an enterprise producing tobacco products shall be assigned by the department of tobacco monopoly administration
at the provincial level on the basis of the plans assigned by the planning department under the State Council and in light of the
marketing conditions. Local people’s governments shall not assign additional production quotas to an enterprise producing tobacco
products. If an enterprise producing tobacco products, in light of the marketing conditions, finds it necessary to manufacture cigarettes
and cigars exceeding the total annual production plans, it must obtain the approval of the department of tobacco monopoly administration
under the State Council.

The national tobacco company shall, on the basis of the total annual production plans set by the planning department under the State
Council, assign cigarette output targets with grading and classification specifications to the tobacco companies at the provincial
level, which shall, on the basis of the cigarette output targets with grading and classification specifications set by the national
tobacco company and in light of the marketing conditions, assign cigarette output targets with grading and classification specifications
to the enterprise producing tobacco products. An enterprise producing tobacco products may, in light of the marketing conditions,
make appropriate adjustments to the cigarette output targets with grading and classification specifications, within the scope of
the total annual production plans of the enterprise.

   Article 15 Any enterprise which is to engage in the wholesale trade of tobacco products shall be subject to the approval of the department of
tobacco monopoly administration under the State Council or the department of tobacco monopoly administration at the provincial level,
and the acquisition of a license for the tobacco monopoly wholesale enterprise, and then to the approval and registration by the
administrative department for industry and commerce.

   Article 16 Any enterprise or individual that is to engage in the retail trade of tobacco products shall be subject to the examination and approval
of, before the issuance of a license for tobacco monopoly retail trade by, the administrative department for industry and commerce
under the people’s government at the county level on the commission of the department of tobacco monopoly administration at the next
higher level. In areas where departments of tobacco monopoly administration at the county level have been set up, such departments
may, after their examination and approval, also issue tobacco monopoly retail licenses.

   Article 17 The department of tobacco monopoly administration under the State Council shall, together with the pricing authorities under the
State Council, select on a grading basis cigarettes of certain brands as indicators. The prices of such indicators shall be set by
the pricing authorities under the State Council together with the department of tobacco monopoly administration under the State Council.
The prices of non-indicator cigarettes, of cigars and cut tobacco shall be fixed by the department of tobacco monopoly administration
under the State Council or by the departments of tobacco monopoly administration of the provinces, autonomous regions and municipalities
directly under the Central Government, as authorized by the department of tobacco monopoly administration under the State Council,
and shall be submitted for the record to the pricing authorities under the State Council or to the pricing authorities under the
people’s governments of the relevant provinces, autonomous regions and municipalities directly under the Central Government.

   Article 18 The State shall lay down the tar content grading standards for cigarettes and cigars. The packages of cigarettes and cigars shall
indicate the grade of tar content and that smoking is hazardous to your health.

   Article 19 Advertising for tobacco products shall be banned on broadcasting stations, television stations, or in newspapers or periodicals.

   Article 20 Applications must be made for the registration of trade marks of cigarettes, cigars and packed cut tobacco, which shall not be manufactured
and marketed before the trade mark is registered upon approval.

The production and sale of tobacco products with counterfeit trade marks shall be forbidden.

   Article 21 Trade mark labels for tobacco products must be printed by enterprises designated by the administrative department for industry and
commerce at the provincial level. Non-designated enterprises may not print trade mark labels for tobacco products.

   Article 22 Whoever consigns the transportation of tobacco monopoly commodities to others or undertakes the transportation thereof by himself
must hold a transportation permit signed and issued by the department of tobacco monopoly administration or its authorized agency;
consignees may not undertake the transportation for any consignor who does not hold a transportation permit.

   Article 23 Whoever sends by post or brings from another place leaf tobacco or tobacco products shall not exceed the quantity limits prescribed
by the competent department under the State Council.

   Article 24 Any individual who enters the territory of China shall not carry tobacco products more than the quantity limits prescribed by the
competent department under the State Council.

   Article 25 Any enterprise which is to engage in the production of cigarette paper, filter rods, cigarette tow or cigarette manufacturing equipment
must apply to the department of tobacco monopoly administration under the State Council for approval and obtain a license for the
tobacco monopoly production enterprise.

As used in this Law, the term “cigarette manufacturing equipment” means a complete set of equipment for cigarette manufacturing.

   Article 26 Any enterprise engaged in the production of cigarette paper, filter rods, cigarette tow or cigarette manufacturing equipment shall
organize production in accordance with the plans assigned by the department of tobacco monopoly administration under the State Council
and the order contracts concluded with the enterprises producing tobacco products.

   Article 27 Any enterprise engaged in the production of cigarette paper, filter rods, cigarette tow or cigarette manufacturing equipment may
shall its products only to tobacco companies or enterprises producing tobacco products with the license for tobacco monopoly production
enterprises.

   Article 28 The department of tobacco monopoly administration under the State Council shall, in accordance with the relevant regulations of the
State Council, exercise control over tobacco industry’s import and export trade and its foreign economic and technological co-operation.

   Article 29 Any enterprise engaged in the import and export of tobacco monopoly commodities, the consignment for sale of foreign tobacco products
or the purchase and sale of duty-free foreign tobacco products within a customs surveillance zone shall be subject to the approval
of the department of tobacco monopoly administration under the State Council or the department of tobacco monopoly administration
at the provincial level and must obtain a special license for the tobacco monopoly operation enterprise.

Any enterprise with a special license for the tobacco monopoly operation enterprise must, in accordance with the relevant regulations
of the department of tobacco monopoly administration under the State Council, submit to the department the plans and statements about
its purchases, sales and stock.

   Article 30 Whoever, in violation of this Law, purchases leaf tobacco without authorization shall be fined by the department of tobacco monopoly
administration, and the leaf tobacco illegally purchased shall be repurchased by the said department at the price set by the State;
if the illegal purchase involves large quantities, the leaf tobacco purchased and the illegal income derived therefrom shall be confiscated.

   Article 31 Whoever transports or consigns to others the transportation of tobacco monopoly commodities without a transportation permit, or in
excess of the quantity specified in the transportation permit, shall be fined by the department of tobacco monopoly administration,
and the tobacco monopoly commodities thus involved may be purchased by the said department at the price set by the State; if the
circumstances are serious, the tobacco monopoly commodities illegally transported and the illegal income derived therefrom shall
be confiscated.

A consignee who, knowing that the goods to be transported are tobacco monopoly commodities, undertakes the transportation thereof
for units or individuals that do not hold transportation permits, shall be confiscated of the illegal income derived therefrom by
the department of tobacco monopoly administration, with the concurrent punishment of a fine.

Whoever brings from another place leaf tobacco or tobacco products far in excess of the quantity limits prescribed by the State shall
be dealt with in accordance with the provisions of the first paragraph of this Article.

   Article 32 Where an enterprise that does not hold a license for the tobacco monopoly production enterprise produces tobacco products, the department
of tobacco monopoly administration shall order it to close down, confiscate the illegal income derived therefrom and concurrently
impose a fine.

Where an enterprise that does not hold a license for the tobacco monopoly production enterprise produces cigarette paper, filter rods,
cigarette tow or cigarette manufacturing equipment, the department of tobacco monopoly administration shall order it to stop the
production of the said products, confiscate the illegal income derived therefrom and may concurrently impose a fine.

   Article 33 Where an enterprise that does not hold a license for the tobacco monopoly wholesale enterprise engages in the wholesale trade of
tobacco products, the department of tobacco monopoly administration shall order it to close down or to stop the wholesale trade of
tobacco products, confiscate the illegal income derived therefrom and concurrently impose a fine.

   Article 34 Where an enterprise that does not hold a special license for the tobacco monopoly operation enterprise engages in the import and
export of tobacco monopoly commodities, the consignment for sale of foreign tobacco products, or the purchase and sale of duty-free
foreign tobacco products, the department of tobacco monopoly administration shall order it to stop the aforesaid operations, confiscate
the illegal income derived therefrom and concurrently impose a fine.

   Article 35 Where an enterprise or individual that does not hold a tobacco monopoly retail license engages in the retail sale of tobacco products,
the administrative department for industry and commerce shall order it or him/her to stop retail business, confiscate the illegal
income derived therefrom and concurrently impose a fine.

   Article 36 Where an enterprise or individual produces or sells cigarettes, cigars or packed cut tobacco without registered trade marks, the
administrative department for industry and commerce shall order it or him/her to stop the production and sales thereof and shall
concurrently impose a fine. Where an enterprise or individual produces or sells tobacco products with counterfeit trade marks, the
administrative department for industry and commerce shall order it or him/her to stop the infringing act and to compensate the losses
of the infringed, and may concurrently impose a fine; if the infringement constitutes a crime, the offender’s criminal responsibility
shall be investigated according to law.

   Article 37 Where an enterprise or individual, in violation of the provisions of Article 21 of this Law, illegally prints trade mark labels for
tobacco products, the administrative department for industry and commerce shall destroy the printed trade mark labels, confiscate
the illegal income derived therefrom and concurrently impose a fine.

   Article 38 Where an enterprise or individual profiteers in tobacco monopoly commodities and the profiteering constitutes a crime of illicit
speculation, such profiteer’s criminal responsibility shall be investigated according to law; if the circumstances are not so serious
as to constitute a crime, the administrative department for industry and commerce shall confiscate the profiteered tobacco monopoly
commodities as well as the illegal income derived therefrom and may concurrently impose a fine.

Personnel of a department of tobacco monopoly administration or of a tobacco company, who, by taking advantage of their office, commit
the crime specified in the preceding paragraph, shall be subjected to heavier punishments according to law.

   Article 39 Any enterprise or individual that forges or alters the licenses prescribed in this Law such as those for tobacco monopoly production
enterprises, tobacco monopoly business, as well as transportation permits, shall be investigated for criminal responsibility according
to law.

Any enterprise or individual that purchases or sells the licenses prescribed in this Law such as those for tobacco monopoly production
enterprises, tobacco monopoly business, as well as transportation permits, shall be investigated for criminal responsibility by applying
mutatis mutandis the provisions of Article 117 of the Criminal Law.

Personnel of a department of tobacco monopoly administration or of a tobacco company who, by taking advantage of their office, commit
the crimes specified in the preceding two paragraphs shall be subjected to heavier punishments according to law.

   Article 40 Where the smuggling of tobacco monopoly commodities constitutes the crime of smuggling, the smuggler’s criminal responsibility shall
be investigated in accordance with the Supplementary Provisions Concerning the Punishment of the Crimes of Smuggling; if the smuggling
does not involve tobacco monopoly commodities in large quantities, thus not constituting the crime of smuggling, the smuggled commodities
and articles as well as the illegal income derived therefrom shall be confiscated by the Customs, and as a fine may concurrently
be imposed.

Personnel of a department of tobacco monopoly administration or of a tobacco company who, by taking advantage of their office, commit
the crime specified in the preceding paragraph shall be subjected to heavier punishments according to law.

   Article 41 The department of tobacco monopoly administration shall have the right to carry out inspection on the implementation of this Law.
Whoever by means of violence or threat obstructs such inspectors from carrying out their duties according to law shall be investigated
for criminal responsibility according to law; whoever refuses or obstructs such inspectors from carrying out their duties according
to law, but without resorting to violence or threat, shall be punished by the public security organs in accordance with the Regulations
on the Administrative Penalties for Public Security.

   Article 42 Personnel from a people’s court or a relevant department dealing with law breaking cases who share out the confiscated tobacco products
shall be investigated for criminal responsibility in accordance with the provisions of Article 1 and Article 2 of the Supplementary
Provisions Concerning the Punishment of the Crimes of Embezzlement and Bribery.

Personnel from a people’s court or a relevant department dealing with law breaking cases who purchase the confiscated tobacco products
shall be ordered to return the products and may be subjected to administrative sanctions.

   Article 43 Personnel from the department of tobacco monopoly administration or from a tobacco company who abuse their power, seek personal interests
and commit malpractice or neglect their duties shall be subjected to administrative sanctions; if the circumstances are so serious
as to constitute a crime, the offender shall be investigated for criminal responsibility according to law.

   Article 44 A party, if not satisfied with the decision on administrative sanctions made by the department of tobacco monopoly administration
or the administrative department for industry and commerce, may, within 15 days after receiving the notice about the decision on
punishment, apply for reconsideration to the authorities at the next higher level over the authorities that made the decision on
punishment; the party may also, within 15 days after receiving the notice about the decision on punishment, directly bring a suit
in a people’s court.

The reconsideration department shall, within 60 days after receiving the application for reconsideration, make a reconsideration decision.
The party, if not satisfied with the reconsideration decision, may, within 15 days after receiving the reconsideration decision,
bring a suit in a people’s court; if the reconsideration department fails to make a reconsideration decision within the time limit,
the party may, within 15 days after the expiration of the time limit for reconsideration, bring a suit in a people’s court.

If a party has not applied for reconsideration, nor brought a suit in a people’s court within the time limit, nor complied with the
decision on punishment, the department that has made the decision may apply to a people’s court for compulsory execution.

   Article 45 The State Council shall formulate implementing regulations on the basis of this Law.

   Article 46 This Law shall enter into force on January 1, 1992. The Regulations on Tobacco Monopoly promulgated by the State Council on September
23, 1983 shall be annulled simultaneously.