KUALA LUMPUR, August 27 — The government’s withdrawal of its appeal in a nicotine case has triggered potentially significant legal and commercial consequences that may involve not just tax refunds, but also complex regularisation measures.
The Malaysia E-Vaporizer and Alternative Tobacco Association (Mevta) described the High Court ruling, which invalidated the exemption of liquid nicotine from the Poisons List, as dismantling the legal foundation of the nicotine vape industry that businesses had complied with over the past three years.
With Putrajaya now upholding that High Court decision, the trade group said legal uncertainty extends across the entire nicotine vape supply chain, from finished products and existing retail stock to bulk liquid and gel nicotine held by manufacturers.
Mevta president Mohamad Neezam Talib said the situation cannot simply be reduced to “vape is now illegal”, stressing that the Poisons Act 1952 (Act 366) must now be reconciled with the Control of Smoking Products for Public Health Act 2024 (Act 852).
While Group C poisons like nicotine can only be legally dispensed by a pharmacist or medical practitioner under Act 366, he pointed out that Act 852, which regulates and permits the sale of smoking products to adults aged 18 and above, expressly defines “smoking substance” to include nicotine.
“The industry therefore urgently requires the government to explain how these different statutory regimes are now intended to operate together,” Neezam told CodeBlue in a lengthy statement yesterday.
“The MOH (Ministry of Health) should state its position concerning the application of the Poisons Act 1952 following the High Court judgment. At the same time, MOH must explain how that position interacts with Act 852, which remains an Act of Parliament currently in force.”
Mevta urged the government to adopt a single position on the matter, involving the MOH, Ministry of Finance (MOF), and the Royal Malaysian Customs Department, with the Attorney-General’s Chambers providing legal interpretation if necessary.
“There should be one federal government position – not different interpretations from different agencies,” Neezam said.
Mevta’s view is that the High Court ruling did not repeal Act 852, which Parliament enacted after the unlawful 2023 exemption of liquid nicotine from the Poisons List, but Act 852 also cannot automatically be treated as overriding Act 366 without a proper legal basis.
“The withdrawal of the appeal therefore creates an obvious and serious question of statutory interaction: How is a nicotine-containing smoking substance that Parliament expressly regulates under Act 852 to be treated if the nicotine contained in that product is simultaneously subject to the Poisons Act?”
That same question was asked by anti-tobacco groups, including the Malaysian Pharmacists Society, who asked how Act 366 and Act 852 operate together now in light of the High Court verdict upheld by the government.
Six-Month Transition Sought If Nicotine Vape Sales Are Restricted
With the legal status of nicotine-containing vape products still unclear, Mevta said the government should first clarify whether they can continue to be sold under the existing retail framework.
If the government determines that such products can no longer be sold, the association wants a minimum six-month transition period for businesses to clear existing stock.
“Mevta believes a minimum six-month transitional period would be reasonable, although the precise period should be determined after consultation with manufacturers, importers, distributors, and retailers, and should take into account existing inventories and contractual obligations,” Neezam said.
The association said businesses should not face sudden enforcement after acquiring stock under the government’s previous regulatory framework.
However, if Putrajaya demands an immediate recall of nicotine vape products, rather than permit existing stock to be sold, Mevta said the government must explain the mechanism that addresses excise duties already paid and the financial consequences for lawfully operating businesses.
“The government cannot reasonably create a regulated market, collect taxes from that market, require businesses to comply with regulatory obligations, and then abruptly alter the legal treatment of existing inventory without addressing the consequences,” Neezam said.
Vape Businesses Entitled To Refund Of Excise Duties Paid
Mevta also questioned whether the government would need to refund RM354.51 million in excise duties collected from nicotine-containing vape products since 2023 if the High Court ruling ultimately means the duties were collected without a valid legal basis.
“If it is ultimately established that the legal effect of the High Court judgment renders the collection of excise duty on nicotine vape products legally invalid, then Mevta’s position is that businesses that paid such duties should be entitled to an appropriate refund or restitution mechanism, subject to the applicable law,” Neezam said.
Health Minister Dzulkefly Ahmad told the Dewan Negara last month that the government collected RM354.51 million in excise duties on e-cigarette and vape products between May 2023 and June 11, 2026.
The potential tax implications stem from a 2023 affidavit by Treasury secretary-general Johan Mahmood Merican, who said cancelling the health minister’s order exempting liquid nicotine from the Poisons List would affect related subsidiary legislation and “subsequently invalidate” the government’s collection of excise duties.
“What is the present legal basis for retaining the RM354.51 million collected from the industry if the legal foundation identified by MOF itself for that collection has subsequently been nullified?” Neezam said.
“Mevta is not asserting, without a definitive legal determination, that every ringgit collected must automatically be refunded.
“But if MOF determines that the duties were collected without a valid legal basis as a consequence of the judgment, the government cannot reasonably retain those monies without addressing the rights of the businesses that paid them.”
Mevta said it would prefer the matter to be resolved administratively rather than through litigation, but affected businesses could consider legal action if the government determined that tax collection was invalid but did not provide an appropriate refund or restitution mechanism.
“Mevta will also consider obtaining further legal advice on the appropriate course of action once the government’s official position is known,” Neezam said.
Legal Uncertainty Extends To Bulk Nicotine Held By Manufacturers
Mevta said the government also needs to address manufacturers holding bulk liquid or gel nicotine in their raw form.
“This is an important distinction because the Poisons Act 1952 regulates not only the sale and supply of scheduled poisons, but also matters including their importation, possession, manufacture, storage and transportation,” Neezam said.
Mevta wants MOH to establish a temporary regularisation and controlled-transition mechanism for manufacturers’ existing stocks if liquid and gel nicotine are again treated as scheduled poisons.
Manufacturers should be allowed to declare and register existing stocks, including their quantity, concentration, source, date of importation or acquisition, storage location, and intended use.
“Stocks that were lawfully imported or acquired under the government’s previous regulatory and taxation framework should not automatically be treated as illicit merely because the legal position subsequently changed following the High Court judgment,” Neezam said.
Such stocks should instead be allowed to remain in controlled storage while the government determines whether they can be used, returned to suppliers, re-exported, transferred to an appropriately licensed party, or disposed of, Mevta said.
If continued possession requires a licence or permit under the Poisons Act, MOH should provide a temporary authorisation pathway, rather than require immediate disposal or expose businesses to enforcement before the government clarifies the legal position.
Mevta wants a transition of at least six months for the entire supply chain, although it said the more immediate concern for manufacturers was having a formal legal mechanism governing possession and storage of liquid nicotine during the transition.
The association also wants the government to address taxes, duties, and other financial losses if stocks lawfully acquired under the previous framework must now be destroyed.
“The answer cannot simply be to declare overnight that materials previously acquired within the government’s regulatory framework have suddenly become unlawful to possess without providing any transition mechanism,” Neezam said.
“Legal certainty must therefore extend from the raw material stored in a factory all the way to the finished product on a retailer’s shelf.”
Ultimately, Mevta held that the vape industry shouldn’t be punished with sudden or retrospective enforcement against businesses that complied with a regulatory and taxation framework established by the government for more than three years.
It pointed out that ever since taxation on nicotine-containing e-liquids was introduced in 2023 and Act 852 was subsequently enacted to regulate smoking products, businesses have incurred costs relating to excise duty, product registration, packaging and labelling, manufacturing, distribution, and other compliance obligations.
“The government has now withdrawn its appeal against a judgment invalidating an important part of the legal foundation upon which that transition began,” said Neezam.
“The resulting uncertainty cannot simply be transferred to manufacturers, importers, distributors, and retailers. Regulatory uncertainty created by government decisions must ultimately be resolved by the government.”
Mevta called for a written statement from the MOH explaining the present legal status of liquid and gel nicotine and how Act 366 is to operate alongside Act 852; a public clarification from MOF on the legal status of excise duties already collected; as well as guidance from the Royal Malaysian Customs for licensed manufacturers and other affected businesses on whether excise duty continues to be payable and how existing duty-paid stock should be treated.
The government should also clarify the status of products already registered or undergoing registration under Act 852.
Health Minister Dzulkefly Ahmad simply told reporters at an event yesterday that he would soon call for a media briefing to explain the government’s decision to drop its appeal in the nicotine case.
He reportedly said the withdrawal of the appeal didn’t mean that the government would stop regulating vaping, citing the existence of Act 852, even though both anti-tobacco activists and the industry alike are asking whether Putrajaya is banning nicotine vape as a result of upholding the High Court judgment.
