CANTON — A state Supreme Court judge listened to arguments Friday afternoon on whether New York can tax American Indian cigarettes leaving the St. Regis Mohawk Reservation and traveling to reservations in other states.

On Jan. 23, William Cagle was driving a tractor- trailer in the town of Waddington that was carrying about 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.

Since then, HCI Distribution filed an order against the district attorney’s office and state police asking for the release of the cigarettes.

Before Judge David R. Demarest, Assistant Attorney General Aaron Baldwin, Albany, said that cigarettes leaving one tribe and going to another tribe are subject to state tax.

Mr. Baldwin said charges against Mr. Cagle and HCI Distribution are a possibility pending an investigation by the district attorney’s office.

St. Lawrence County Attorney Michael C. Crowe, representing the district attorney’s office, asked Judge Demarest not to allow the cigarettes to leave the state.

“This is not the place to disturb the prosecutorial process,” Mr. Crowe said.

He said if HCI Distribution is worried about the cigarettes going stale, it can apply at that point to get its property.

“It’s too early,” he said.

Judge Demarest asked for a timeline, but Mr. Crowe could not estimate when the case would be finished.

“No crime has been committed,” said Joseph V. Messineo, attorney for HCI Distribution.

Mr. Messineo said not being able to deliver the cigarettes to customers has lost HCI permanent business.

He told Judge Demarest that it was legal for the cigarettes to leave the St. Regis Mohawk Reservation and travel directly to another reservation.

What bothered Mr. Baldwin is whether the cigarettes that are leaving the north country and heading to Nebraska are being brought back into New York, based on some statements made by Mr. Cagle.

“We think (the cigarettes) will come back,” he said.

Mr. Messineo said that the final destination of the cigarettes isn’t the issue in this case.

Judge Demarest gave Mr. Messineo 10 days to respond to documents filed by Mr. Baldwin Thursday that allege tax laws were violated.

After the hearing, Mr. Messineo said he was pleased and optimistic about the case as it continues.

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