(a)

(1) Except as otherwise provided in this part, any tobacco products that are required to have Tennessee revenue stamps affixed to the products, and that are found any place in this state without the proper stamps affixed to the tobacco products, or without applicable Tennessee tobacco tax having been paid, as required by this part, unless such products shall be in the possession of a person or firm currently licensed, qualified and authorized to possess such tobacco products, or unless they shall be in course of transit from and consigned to a person or firm currently licensed, qualified and authorized to possess such tobacco products, or in the possession of a common carrier complying with this part, are declared to be contraband goods, and may be seized by the commissioner, the commissioner's agents or employees, or by any peace officer of this state authorized by the commissioner to do so.

(2) Duly licensed wholesale dealers and jobbers not appointed affixing agents who in their normal course of business receive from out of state untaxed tobacco products may, upon written authorization from the commissioner, have such untaxed tobacco products in their possession for a period not to exceed twenty-four (24) hours, exclusive of Saturdays, Sundays and legal holidays, before being required to have proper stamps affixed to those tobacco products, or applicable Tennessee tobacco tax paid on those tobacco products by an authorized tobacco tax affixing agent.

(3) Under no condition may such tobacco products be sold, used or otherwise disposed of before having tax stamps affixed on those tobacco products or applicable tobacco tax paid on those tobacco products by an authorized tobacco tax affixing agent.

(4) All such tobacco products requiring tax to be paid on the tobacco products and found in the possession of any person shall be presumed to have been held by the person for more than twenty-four (24) hours, unless proof can be shown to the contrary.

(5) This section shall not apply to persons possessing no more than twenty (20) packages of twenty (20) cigarettes each, or cigars in an amount not exceeding fifty (50) cigars, or other tobacco products with retail value of not more than two dollars ($2.00) that have been brought into the state by the person; and in all instances of possession in excess of the limited quantities enumerated, the foregoing provision for exception of any cigarettes, cigars or other tobacco products shall not be applicable and any and all such products, including those quantities excepted on which the applicable Tennessee tobacco tax has not been paid, shall be deemed to be contraband and may be seized as provided in this section.

(b)

(1) Every person who transports within this state cigarettes not bearing Tennessee revenue stamps or any other tobacco products upon which the Tennessee tax imposed by this part has not been paid shall be presumed to be transporting such products in violation of this part, and such products and any vehicles used to transport them shall be deemed contraband. Such products shall be confiscated and disposed of as provided for in this part. Such vehicles may likewise, in the discretion of the commissioner, be confiscated and disposed of as provided for in this part.

(2) This presumption may be rebutted by the person transporting the tobacco products; provided, that the person has in the person's actual possession invoices or delivery tickets for such products that shall show the true name and exact address of the consignor or seller, the true name and exact address of the consignee or purchaser, and the quantity and brands of such products so transported.

(3) If the tobacco products are consigned to or purchased by any person in Tennessee, such purchaser or consignee must be a person who is authorized by this part to possess such tobacco products in this state; and if the invoice or delivery ticket specifies that the tobacco products are to be delivered to any person in any other state or jurisdiction, such person must be authorized by the laws of such other state or jurisdiction to receive or possess tobacco products on which the taxes imposed by such other state or jurisdiction have not been paid.

(4) The presumption provided for in this subsection (b) may not be overcome if the invoice or delivery ticket is false, or if the purchaser, as indicated by the name and/or address shown on the invoice or delivery ticket, is not authorized by the laws of the receiving state to possess such tobacco products.

(5) The commissioner or the commissioner's duly authorized agent is authorized to take custody and retain any such products and any vehicle being used to transport them until the correctness of any invoices or delivery tickets provided for in this subsection (b) can be determined by the commissioner, either before or at a hearing, as provided for in this part.

(c) In addition to any other penalties provided for in this part, any person unlawfully transporting or unlawfully in possession of cigarettes or other tobacco products shall, in the discretion of the commissioner, be liable for a penalty of not more than twenty-five dollars ($25.00) for each individual carton of cigarettes and not more than fifty dollars ($50.00) for each individual box or carton of other tobacco products so transported or possessed by the person, the penalty to be collected as other tax and penalties.

(d)

(1) After qualifying with and receiving authorization from the commissioner, wholesale dealers and jobbers and manufacturing distributors licensed under this part may have in their possession tobacco products on which the Tennessee tax has not been paid to fulfill ordinary export requirements and to provide for their sale to armed forces installations, and veterans administration hospitals, where such products are sold only to patients registered and admitted to veterans administration hospitals.

(2) To provide for its ordinary export requirements, and after qualifying and receiving authorization from the commissioner, a Tennessee licensed wholesaler dealer and jobber or tobacco distributor servicing stores, vending machines or other retail businesses located in another state may possess, in storage warehouses in this state or in vehicles in the process of transporting, foreign stamped or other such tobacco products in an amount authorized by the commissioner, if acquired from a Tennessee appointed and bonded affixing agent and that bear, if required by the commissioner, the tax stamps of the state in which the product is to be sold.

(3) The commissioner is empowered, if the commissioner deems it necessary, to limit such authorizations by designating only a state or specified states from which these licensees may possess such foreign stamped or other unstamped products, and in what maximum quantity.

(4) Also, upon qualifying and receiving permission from the commissioner, any tobacco dealer licensed and domiciled in another state may obtain from a Tennessee appointed affixing agent foreign stamped or other unstamped tobacco products and transport them to the dealer's business location in the foreign state, but such dealer must have in the dealer's possession an invoice showing the true name and exact address of the consignor or seller, the true name and exact address of the consignee or purchaser, the quantity and brands of the cigars or cigarettes transported, and any other information that the commissioner may require.

(5) A person licensed to engage in the business of a tobacco manufacturer's warehouse, as defined by this part, is authorized to have in the person's possession foreign stamped or other unstamped tobacco products for the purpose of supplying properly licensed Tennessee wholesale dealers and jobbers or for export purposes.

(e)

(1) Every person, as defined by this part, specifically including, but not limited to, persons licensed to engage in the business of a tobacco manufacturer's warehouse as defined by this part, authorized by this part to possess foreign stamped or other unstamped tobacco products, may be required to account for the distribution of such foreign or other unstamped products, and shall be unconditionally liable for the tax imposed by this part for each and every foreign or other unstamped tobacco product removed from inventory and not sold as above defined or exported from the state of Tennessee.

(2) Every person authorized by this part to possess foreign stamped or other unstamped tobacco products may, however, be permitted to reduce the person's inventory by the amount of any unstamped tobacco product loss due to theft occurring in connection with a breaking and entering upon the person's premises without being subjected to tax on such amount, if acceptable proof is supplied to the department, as soon as possible after the loss occurs reflecting that the theft was promptly reported to the proper law enforcement agency.

(3) The amount of inventory reduction acknowledged by the department as being supported by proof of loss satisfactory to the commissioner shall be evidenced by a certificate furnished to such person following receipt of required proof, and such certificate shall be retained by the person as authorization for the inventory reduction.