The Cuban cigar company got special permission to ignore the ban so its guests, mostly retailers and well-heeled cigar lovers, can light up their Partagas, Montecristos and Cohibas during the Feb. 21-25 event.

On Monday Cuba banned smoking in air-conditioned public buildings, theaters, schools, sports centers, buses and taxis as part of a health initiative by President Fidel Castro's government.

"In the current restrictive environment for our product around the world, it was predictable that Cuba would enforce this kind of law," Garcia said.

Sales of premium cigars have been recovering despite curbs on public smoking in most countries but have yet to reach the heights of the 1990s, before the dot.com bubble burst.

Habanos S.A., a joint venture between the Cuban state and Spanish-French tobacco group Altadis, has seen its business grow to $300 million last year from $250 million in 2003, Garcia said.

Habanos exports some 120 million cigars a year, about 30 percent of the world market.

Despite a US ban on Cuban products, some 4 million prized Cuban cigars are smuggled into the United States and sold there each year, Garcia said.

Americans will be among the 950 aficionados from 52 countries who signed up for this year's festival, which traditionally includes a gala dinner often attended by Castro and an auction of humidors signed by the Cuban leader and filled with cigars.

Castro, 78, who is recovering from a broken knee, gave up smoking in 1986, but still gives pricey boxes of Habanos as gifts to friends, admirers and favored visitors.

Castro last week said tobacco was "poison" and backed the world trend to curb smoking. But he said Cuba would continue to make cigars because they generate needed income.