[Federal Register Volume 61, Number 102 (Friday, May 24, 1996)]
[Rules and Regulations]
[Pages 26096-26102]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-12965]
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DEPARTMENT OF THE TREASURY
Bureau of Alcohol, Tobacco and Firearms
27 CFR Parts 1, 2, and 3
[T.D. ATF-373]
RIN 1512-AB43
Basic Permit Requirements Under the Federal Alcohol
Administration Act, Nonindustrial Use of Spirits and Wine, Bulk Sales
and Bottling of Distilled Spirits (95R-023P)
AGENCY: Bureau of Alcohol, Tobacco and Firearms (ATF), Department of
the Treasury.
ACTION: Final Rule, Treasury decision.
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SUMMARY: As part of a regulatory reform initiative, the Bureau of
Alcohol, Tobacco and Firearms (ATF) is revising and recodifying the
regulations covering the basic permit requirements, the nonindustrial
use of spirits and wine, and the bulk sales and bottling of distilled
spirits under the Federal Alcohol Administration Act. Changes include
consolidating 27 CFR parts 1, 2, and 3 into a single part 1 for ease of
use and minor technical corrections.
[[Page 26097]]
EFFECTIVE DATE: May 24, 1996.
FOR FURTHER INFORMATION CONTACT: David Brokaw, Wine, Beer and Spirits
Regulations Branch, Bureau of Alcohol, Tobacco and Firearms, 650
Massachusetts Avenue, NW., Washington, DC 20226 (202) 927-8230.
SUPPLEMENTARY INFORMATION:
Background
The regulations in 27 CFR parts 1, 2, and 3 implement various
provisions of the Federal Alcohol Administration Act (FAA Act), 27
U.S.C. 201 et seq. The regulations in part 1 govern the issuance,
amendment, denial, revocation, suspension, automatic termination, and
annulment of basic permits. These regulations implement sections 103
and 104 of the FAA Act, 27 U.S.C. 203 and 204, which requires basic
permits of persons engaged in business as importers, producers, or
wholesalers of distilled spirits, wine, or malt beverages. The FAA Act
defines the terms ``distilled spirits'' and ``wine'' to include only
products for ``nonindustrial'' use. The regulations in part 2 specify
the uses of distilled spirits and wine that are deemed
``nonindustrial,'' as that term is used in section 117 of the FAA Act,
27 U.S.C. 211(a) (5) and (a) (6). Finally, section 106 of the FAA Act,
27 U.S.C. 206, provides that bulk distilled spirits may only be sold to
certain classes of persons, including distillers, winemakers for the
fortification of wine, operators of class 8 Customs bonded warehouses,
and agencies of the United States or any State. The regulations in part
3 implement these provisions.
On February 21, 1995, President Clinton announced a regulatory
reform initiative. As part of this initiative, each Federal agency was
instructed to conduct a page by page review of all agency regulations
to identify those which are obsolete or burdensome and those whose
goals could be better achieved through the private sector, self-
regulation or State and local governments. In cases where the agency's
review disclosed regulations which should be revised or eliminated, the
agency would, as soon as possible, propose administrative changes to
the regulations. In addition, on April 13, 1995, the Bureau published
Notice No. 809 (60 FR 18783), which requested comments from the public
regarding which ATF regulations could be improved or eliminated.
ATF did not receive any specific comments from the public regarding
27 CFR parts 1, 2, and 3. However, in keeping with the President's
regulatory reform initiative, the Bureau has decided to consolidate
parts 1, 2, and 3 into a single part 1 for ease of use. This
consolidation will eliminate some of the duplicative material, such as
definitions of terms under the FAA Act which may be found in more than
one part.
ATF is also making certain minor technical corrections in the new
part 1. References to sections of the FAA Act have been corrected to
reflect the changes in section numbering arising out of the enactment
of the Alcoholic Beverage Labeling Act of 1988, Pub.L. 100-690.
Definitions of the terms ``distilled spirits'' and ``wine'' which refer
to sections of the FAA Act have been clarified by adding citations to
Title 27 of the United States Code. Conforming changes to the
regulations which define the ``nonindustrial'' uses of distilled
spirits and wines have been made to reflect technical amendments to the
sections of the Internal Revenue Code of 1986 which set forth the
conditions under which distilled spirits and wines may be withdrawn
free of tax. See 26 U.S.C. 5214 (a) (2) and 5362 (c) (9). Finally,
references in section 1.30 to the form for executing a power of
attorney have been updated to refer to Form 5000.8 (1534), to reflect
the new number for that form. ATF is making several other minor
technical changes in the regulations.
Paperwork Reduction Act
The provisions of the Paperwork Reduction Act of 1980, Pub. L. 96-
511, 44 U.S.C. Chapter 35, and its implementing regulations, 5 CFR Part
1320, do not apply to this rule because no new requirement to collect
information is imposed.
Regulatory Flexibility Act
Because no notice of proposed rulemaking is required for this rule,
the provisions of the Regulatory Flexibility Act (5 U.S.C. 601 et seq.)
do not apply.
Executive Order 12866
It has been determined that this rule is not a significant
regulatory action because it will not, (1) Have an annual effect on the
economy of $100 million or more or adversely affect in a material way
the economy, a sector of the economy, productivity, competition, jobs,
the environment, public health or safety, or State, local or tribal
governments or communities; (2) Create a serious inconsistency or
otherwise interfere with an action taken or planned by another agency;
(3) Materially alter the budgetary impact of entitlements, grants, user
fees, or loan programs or the rights and obligations of recipients
thereof; or (4) Raise novel legal or policy issues arising out of legal
mandates, the President's priorities, or the principles set forth in
Executive Order 12866.
Administrative Procedures Act
Because this final rule merely makes technical amendments and
conforming changes to improve the clarity of the regulations, it is
unnecessary to issue this final rule with notice and public procedure
under 5 U. S. C. 553(b). Similarly, it is unnecessary to subject this
final rule to the effective date limitation of 5 U.S.C. 553(d).
Drafting Information
The principal author of this document is David W. Brokaw, Wine,
Beer, and Spirits Regulations Branch, Bureau of Alcohol, Tobacco, and
Firearms.
List of Subjects in 27 CFR Part 1
Administrative practices and procedures, Alcohol and alcoholic
beverages, Authority delegations, Imports, Liquors, Warehouses, and
Wine.
Authority and Issuance
PARTS 2 AND 3--[REMOVED]
Paragraph 1. Title 27 Code of Federal Regulations parts 2 and 3 are
removed and part 1 is revised as follows:
PART 1--BASIC PERMIT REQUIREMENTS UNDER THE FEDERAL ALCOHOL
ADMINISTRATION ACT, NONINDUSTRIAL USE OF DISTILLED SPIRITS AND
WINE, BULK SALES AND BOTTLING OF DISTILLED SPIRITS
Subpart A--Scope
Sec.
1.1 General.
1.2 Territorial extent.
1.3 Forms prescribed.
Subpart B--Definitions
1.4 Meaning of terms.
Subpart C--Basic Permits
When Required
1.20 Importers.
1.21 Domestic producers, rectifiers, blenders, and warehousemen.
1.22 Wholesalers.
1.23 State agencies.
Persons Entitled to Basic Permits
1.24 Qualifications of applicants.
Applications for Permits
1.25 General.
1.26 Incomplete or incorrectly executed applications.
1.27 Change in ownership, management, or control of the applicant.
1.29 Individual plant or premises.
1.30 Power of attorney; Form 5000.8 (1534).
1.31 Denial of permit applications.
[[Page 26098]]
Authorization
1.35 Authority to issue, amend, deny, suspend, revoke, or annul
basic permits.
Amendment and Duration of Basic Permits
1.40 Change of name.
1.41 Change of address.
1.42 Change in ownership, management, or control of business.
1.43 Duration of permits.
1.44 Automatic termination of permits. Revocation, Suspension, or
Annulment of Basic Permits
1.50 Revocation or suspension.
1.51 Annulment.
1.52 Disposition of stocks of alcoholic beverages upon revocation,
annulment, or automatic termination of basic permit.
Miscellaneous
1.55 Recalling permits for correction.
1.56 Oaths and affirmations.
1.57 Procedure.
1.58 Filing of permits.
1.59 Public information as to applications acted upon.
Subpart D--Nonindustrial Use of Distilled Spirits and Wine
Uses Regarded as Industrial
1.60 Use of distilled spirits.
1.61 Use of wine.
1.62 Use of distilled spirits or wine for experimental purposes and
in manufacture of nonbeverage products.
Uses Classed as Nonindustrial
1.70 General.
1.71 Distilled spirits in containers of a capacity of one gallon or
less.
Subpart E--Bulk Sales and Bottling of Distilled Spirits
Bulk Sales and Bottling
1.80 Sales of distilled spirits in bulk.
1.81 Importation of distilled spirits in bulk.
1.82 Acquiring or receiving distilled spirits in bulk for
redistillation, processing, rectification, warehousing, or
warehousing and bottling.
1.83 Acquiring or receiving distilled spirits in bulk for addition
to wine.
1.84 Acquisition of distilled spirits in bulk by Government
agencies.
Warehouse Receipts
1.90 Distilled spirits in bulk.
1.91 Bottled distilled spirits.
Sales of Distilled Spirits for Industrial Use
1.95 General.
Authority: 27 U.S.C. 203, 204, 206, 211 unless otherwise noted.
Subpart A--Scope
Sec. 1.1 General.
(a) The regulations in this part relate to requirements governing
the issuance, amendment, denial, revocation, suspension, automatic
termination, and annulment of basic permits and the duration of
permits, except that the provisions of part 200, Rules of Practice in
Permit Proceedings, of this chapter are hereby made applicable to
administrative proceedings with respect to the application for, and to
the suspension, revocation, or annulment of, basic permits under the
Federal Alcohol Administration Act.
(b) The regulations in this part also specify what uses of
distilled spirits and wine are ``nonindustrial,'' as that term is used
in section 117 of the Federal Alcohol Administration Act (27 U.S.C.
211). Finally, this part, in accordance with section 106 of the Federal
Alcohol Administration Act (27 U.S.C. 206), contains the substantive
requirements relative to bulk sales and bottling of distilled spirits
under the Federal Alcohol Administration Act, including the terms of
warehouse receipts for distilled spirits in bulk. No procedural
requirements are prescribed.
Sec. 1.2 Territorial extent.
The provisions of this part are applicable to the several States of
the United States, the District of Columbia and Puerto Rico.
Sec. 1.3 Forms prescribed.
(a) The Director is authorized to prescribe all forms required by
this part. All of the information called for in each form shall be
furnished as indicated by the headings on the form and the instructions
on or pertaining to the form. In addition, information called for in
each form shall be furnished as required by this part.
(b) Requests for forms should be mailed to the ATF Distribution
Center, PO Box 5950, Springfield, Virginia 22153-5950
Subpart B--Definitions
Sec. 1.4 Meaning of terms.
As used in this part, unless the context otherwise requires, terms
shall have the meaning ascribed in this part.
Act. The Federal Alcohol Administration Act.
Alcohol. Ethyl alcohol distilled at or above 190 deg. proof.
Applicant. Any person who has filed with the regional director
(compliance) an application for a basic permit under the Federal
Alcohol Administration Act.
ATF officer. An officer or employee of the Bureau of Alcohol,
Tobacco and Firearms (ATF) authorized to perform any function relating
to the administration and enforcement of this part.
Basic permit. A formal document issued under the Act in the form
prescribed by the Director, authorizing the person named therein to
engage in the activities specified at the location stated.
Brandy. Brandy or wine spirits for addition to wines as permitted
by internal revenue law.
Director. The Director, Bureau of Alcohol, Tobacco and Firearms,
the Department of the Treasury, Washington, DC.
Distilled spirits. Section 117(a) of the Federal Alcohol
Administration Act (27 U.S.C. 211(a)) defines ``distilled spirits'' as
ethyl alcohol, hydrated oxide of ethyl, spirits of wine, whiskey, rum,
brandy, gin, and other distilled spirits, including all dilutions and
mixtures thereof for nonindustrial use.
In bulk. Distilled spirits in containers having a capacity in
excess of one wine gallon.
Other term. Any other term defined in the Federal Alcohol
Administration Act and used in this part shall have the same meaning
assigned to it by the Act.
Permittee. Any person holding a basic permit issued under the
Federal Alcohol Administration Act.
Person. Any individual, partnership, joint-stock company, business
trust, association, corporation, or other form of business enterprise,
including a receiver, trustee, or liquidating agent.
Regional director (compliance). The principal ATF regional official
responsible for administering regulations in this part.
Resale at wholesale. A sale to any trade buyer.
Trade buyer. Any person who is a wholesaler or retailer of
distilled spirits, wine, or malt beverages.
Wine. Section 117(a) of the Federal Alcohol Administration Act (27
U.S.C. 211(a)) defines ``wine'' as:
(a) Wine as defined in section 610 and section 617 of the Revenue
Act of 1918 (26 U.S.C. 5381-5392), as now in force or hereafter
amended, and
(b) Other alcoholic beverages not so defined, but made in the
manner of wine, including sparkling and carbonated wine, wine made from
condensed grape must, wine made from other agricultural products than
the juice of sound, ripe grapes, imitation wine, compounds sold as
wine, vermouth, cider, perry, and sake; in each instance, only if
containing not less than 7 percent and not more than 24 percent of
alcohol by volume, and if for nonindustrial use.
Wine gallon. The liquid measure equivalent to the volume of 231
cubic inches.
Subpart C--Basic Permits
When Required
Sec. 1.20 Importers.
No person, except pursuant to a basic permit issued under the Act,
shall:
[[Page 26099]]
(a) Engage in the business of importing into the United States
distilled spirits, wine, or malt beverages; or
(b) While so engaged, sell, offer or deliver for sale, contract to
sell, or ship, in interstate or foreign commerce, directly or
indirectly or through an affiliate, distilled spirits, wine, or malt
beverages so imported.
Sec. 1.21 Domestic producers, rectifiers, blenders, and warehousemen.
No person, except pursuant to a basic permit issued under the Act,
shall:
(a) Engage in the business of distilling distilled spirits,
producing wine, rectifying or blending distilled spirits or wine, or
bottling, or warehousing and bottling, distilled spirits; or
(b) While so engaged, sell, offer or deliver for sale, contract to
sell, or ship, in interstate or foreign commerce, directly or
indirectly or through an affiliate, distilled spirits or wine so
distilled, produced, rectified, blended, or bottled, or warehoused and
bottled.
Sec. 1.22 Wholesalers.
No person, except pursuant to a basic permit issued under the Act,
shall:
(a) Engage in the business of purchasing for resale at wholesale,
distilled spirits, wine, or malt beverages; or,
(b) While so engaged, receive, sell, offer or deliver for sale,
contract to sell, or ship in interstate or foreign commerce, directly
or indirectly or through an affiliate, distilled spirits, wine, or malt
beverages so purchased.
Sec. 1.23 State agencies.
This subpart shall not apply to any agency of a State or political
subdivision thereof or to any officer or employee of any such agency,
and no such agency or officer or employee thereof shall be required to
obtain a basic permit under this subpart.
Persons Entitled to Basic Permits
Sec. 1.24 Qualifications of applicants.
The application of any person shall be granted and the permit
issued by the regional director (compliance) if the applicant proves to
the satisfaction of the regional director (compliance) that:
(a) Such person (or in case of a corporation, any of its officers,
directors, or principal stockholders) has not, within 5 years prior to
the date of application, been convicted of a felony under Federal or
State law, and has not, within 3 years prior to date of application,
been convicted of a misdemeanor under any Federal law relating to
liquor, including the taxation thereof; and
(b) Such person, by reason of the person's business experience,
financial standing or trade connections, is likely to commence
operations as a distiller, warehouseman and bottler, rectifier, wine
producer, wine blender, importer, or wholesaler, as the case may be,
within a reasonable period and to maintain such operations in
conformity with Federal law; and
(c) The operations proposed to be conducted by such person are not
in violation of the law of the State in which they are to be conducted.
Applications for Permits
Sec. 1.25 General.
Applications for basic permits to engage in any of the operations
set forth in Secs. 1.20 to 1.22 shall be made on the appropriate form
prescribed by the Director, verified as required by Sec. 1.56, and
shall be accompanied by such affidavits, documents, and other
supporting data, as the Director or the regional director (compliance)
shall require. All data, written statements, affidavits, documents, or
other evidence submitted in support of the application, or upon hearing
thereon, shall be deemed to be a part of the application. All
applications shall be filed by mailing or delivering the same to the
office of the regional director (compliance).
Sec. 1.26 Incomplete or incorrectly executed applications.
Incomplete or incorrectly executed applications will not be acted
upon, but the applicant shall be entitled to file a new application
without prejudice, or to complete the application already filed.
Sec. 1.27 Change in ownership, management, or control of the
applicant.
In the event of any change in the ownership, management, or control
of the applicant (in case of a corporation, any change in the officers,
directors, or persons holding more than 10 percent of the corporate
stock), after the date of filing of any application for a basic permit
and prior to final action on such application, the applicant shall
notify the regional director (compliance) immediately of such change.
Sec. 1.29
Individual plant or premises.
An application for a basic permit must be filed, and permit issued,
to cover each individual plant or premises where any of the businesses
specified in section 103 of the Act is engaged in, such application to
be filed with and permit issued by the regional director (compliance)
for the region wherein such plant or premises is located.
Sec. 1.30 Power of attorney; Form 5000.8 (1534).
If the application and other documents in support of such
application are signed by an attorney in fact of an individual,
partnership, association, or corporation, or by one of the members of a
copartnership or association, or, in the case of a corporation by an
officer or other person not authorized by the corporation's bylaws or
by its board of directors to sign such applications and supporting
documents, the applications must be supported by a duly authenticated
copy of the power of attorney conferring authority upon the person
signing the documents to execute the same. Such powers of attorney will
be executed on Form 5000.8 (1534), in triplicate, and submitted to the
regional director (compliance).
(Approved by the Office of Management and Budget under control
number 1512-0079)
Sec. 1.31 Denial of permit applications.
If, upon examination of any application for a basic permit, the
regional director (compliance) has reason to believe that the applicant
is not entitled to such a permit, the regional director (compliance)
shall institute proceedings for the denial of the application in
accordance with the procedure set forth in part 200 of this chapter.
Authorization
Sec. 1.35 Authority to issue, amend, deny, suspend, revoke, or annul
basic permits.
The authority and power of issuing, amending, or denying basic
permits, or amendments thereof, is conferred upon the Director and
(except as to agency initiated curtailment) upon the regional director
(compliance). The authority and power of suspending, revoking, or
annulling basic permits is conferred upon the Director, and upon the
administrative law judges referred to in part 200 of this chapter. The
Director, upon consideration of appeals on petitions for review, may
order the regional director (compliance) to issue, deny, suspend,
revoke, or annul basic permits.
Amendment and Duration of Basic Permits
Sec. 1.40 Change of name.
In the event of any change in the name (trade or corporate name) of
a permittee, or, in the event a permittee desires to engage in
operations under an additional trade name, such permittee must file
application Form 5100.18 (1643), with the regional director
(compliance), for an amended basic
[[Page 26100]]
permit, which application must be approved, and amended permit issued,
before operations may be commenced under the new name.
(Approved by the Office of Management and Budget under control
number 1512-0090)
Sec. 1.41 Change of address.
In the event of a change in address the permittee must file
application Form 5100.18 (1643), with the regional director
(compliance), for an amended basic permit.
Sec. 1.42 Change in ownership, management, or control of business.
In the event of any change in the ownership, management, or control
of any business operated pursuant to a basic permit (if the permittee
is a corporation, if any change occurs in the officers, directors, or
persons owning or controlling more than 10 percent of the voting stock
of said corporation) the permittee shall immediately notify the
regional director (compliance) of such change, giving the names and
addresses of all new persons participating in the ownership,
management, or control of such business, or in the case of a
corporation, the names and addresses of such new officers, directors,
or persons owning or controlling more than 10 percent of the voting
stock. Notice to the regional director (compliance) of any such change
shall be accompanied or supplemented by such data in reference to the
personal or business history of such persons as the regional director
(compliance) may require.
Sec. 1.43 Duration of permits.
A basic permit shall continue in effect until suspended, revoked,
annulled, voluntarily surrendered, or automatically terminated, as
provided in the Act and in this part.
Sec. 1.44 Automatic termination of permits.
No basic permit shall be leased, sold, or otherwise voluntarily
transferred, and, in the event of such lease, sale, or other voluntary
transfer, such basic permit shall automatically terminate thereupon. If
any basic permit is transferred by operation of law or if actual or
legal control of the permittee is acquired, directly or indirectly
whether by stock ownership or in any other manner, by any person, then
such permit shall be automatically terminated at the expiration of 30
days thereafter: Provided, That if within such 30-day period
application for a new basic permit is made by the transferee or
permittee, respectively, then the outstanding basic permit shall
continue in effect until such time as the application is finally acted
upon.
Revocation, Suspension, or Annulment of Basic Permits
Sec. 1.50 Revocation or suspension.
Whenever the regional director (compliance) has reason to believe
that any permittee has willfully violated any of the conditions of the
permittee's basic permit or has not engaged in the operations
authorized by the permit for a period of more than two years, the
regional director (compliance) shall institute proceedings for the
revocation or suspension of such permit, in accordance with the
procedure set forth in part 200 of this chapter, which part is made
applicable to such proceedings.
Sec. 1.51 Annulment.
Whenever the regional director (compliance) has reason to believe
that any basic permit was procured through fraud, or misrepresentation
or concealment of material fact, the regional director (compliance)
shall institute proceedings for the annulment of such permit in
accordance with the procedure set forth in part 200 of this chapter,
which part is made applicable to such proceedings.
Sec. 1.52 Disposition of stocks of alcoholic beverages upon
revocation, annulment, or automatic termination of basic permit.
In the event of the revocation or annulment of a basic permit,
pursuant to part 200 of this chapter, or in the event such permit is
automatically terminated by operation of law (27 U.S.C. 204(g) and
Sec. 1.44 of this part), the regional director (compliance) may
authorize the orderly disposition of stocks of distilled spirits,
wines, or malt beverages then held by the permittee or former permittee
upon such conditions as may be considered proper.
Miscellaneous
Sec. 1.55 Recalling permits for correction.
Whenever it shall be discovered that any basic permit has been
issued authorizing acts, or combinations of acts, which may not
properly, under the law and regulations, as of now or hereafter in
force, be authorized, or that any material mistake has occurred in the
issuance thereof, the holder of such permit shall forthwith surrender
the same for correction or amendment upon demand of the regional
director (compliance).
Sec. 1.56 Oaths and affirmations.
Any document required by regulations or instructions of the
Director to be verified, shall be so verified upon oath or affirmation
taken before a person authorized by the laws of the United States or by
State or local law to administer oaths or affirmations in the
jurisdiction wherein such document is to be executed.
Sec. 1.57 Procedure.
The procedures prescribed by the rules of practice in permit
proceedings (part 200 of this chapter) are applicable to administrative
proceedings for the issuance, amendment, denial, revocation,
suspension, or annulment of basic permits, the issuance of subpoenas
and the taking of depositions under the Act.
Sec. 1.58 Filing of permits.
Every person receiving a basic permit under the provisions of this
part must file the same, at the place of business covered by the basic
permit, so that it may be examined by ATF officers.
Sec. 1.59 Public information as to applications acted upon.
The regional director (compliance) shall cause to be maintained
currently in the regional director's (compliance) office for public
inspection, until the expiration of one year following final action on
the application, the following information with respect to each
application for basic permit filed:
(a) The name, including trade name or names, if any, and the
address of the applicant; the kind of permit applied for and the
location of the business; whether the applicant is an individual, a
partnership or a corporation; if a partnership, the name and address of
each partner; if a corporation, the name and address of each of the
principal officers and of each stockholder owning 10 percent or more of
the corporate stock.
(b) The time and place set for any hearing on the application.
(c) The final action taken on the application. In the event a
hearing is held upon an application for a basic permit, the regional
director (compliance) shall make available for inspection at the
regional director's (compliance) office, upon request therefor: The
transcript of the hearing, a copy of the administrative law judge's
recommended decision, a copy of the regional director's (compliance)
decision and, in the event of an appeal to the Director, the decision
on appeal with the reasons given in support thereof.
Subpart D--Nonindustrial Use of Distilled Spirits and Wine
Uses Regarded as Industrial
Sec. 1.60 Use of distilled spirits.
The following uses of distilled spirits are regarded as
``industrial'' and will be
[[Page 26101]]
excluded from any application of the term ``nonindustrial use.'' The
use of distilled spirits:
(a) Free of tax by, and for the use of, the United States or any
governmental agency thereof, any State, any political subdivision of a
State, or the District of Columbia, for nonbeverage purposes; or
(b) Free of tax for nonbeverage purposes and not for resale or use
in the manufacture of any product for sale:
(1) For the use of any educational organization described in 26
U.S.C. 170(b)(1)(A)(ii) which is exempt from income tax under 26 U.S.C.
501(a), or for the use of any scientific university or college of
learning;
(2) For any laboratory for use exclusively in scientific research;
(3) For use at any hospital, blood bank, or sanitarium (including
use in making analysis or test at such hospital, blood bank, or
sanitarium), or at any pathological laboratory exclusively engaged in
making analyses, or tests, for hospitals or sanitariums; or
(4) For the use of any clinic operated for charity and not for
profit (including use in compounding of bona fide medicines for
treatment outside of such clinics of patients thereof); or
(c) Free of tax, after denaturation of such spirits in the manner
prescribed by law for:
(1) Use in the manufacture of ether, chloroform, or other definite
chemical substance where such distilled spirits are changed into some
other chemical substance and do not appear in the finished product; or
(2) Any other use in the arts and industries (except for uses
prohibited by 26 U.S.C. 5273 (b) or (d)) and for fuel, light, and
power.
Sec. 1.61 Use of wine.
The following uses of wine are regarded as ``industrial'' and will
be excluded from any application of the term ``nonindustrial''. The use
of wine:
(a) Without payment of tax for use in the production of vinegar; or
(b) Free of tax for experimental or research purposes by any
scientific university, college of learning, or institution of
scientific research; or
(c) Free of tax for use by the United States or any agency thereof,
and for use for analysis, testing, research, or experimentation by the
governments of the several States and the District of Columbia or of
any political subdivision thereof or by any agency of such governments;
or
(d) Which has been rendered unfit for beverage use.
Sec. 1.62 Use of distilled spirits or wine for experimental purposes
and in manufacture of nonbeverage products.
The use of distilled spirits or wine for experimental purposes and
in the manufacture of (a) medicinal, pharmaceutical, or antiseptic
products, including prescriptions compounded by retail druggists; (b)
toilet preparations; (c) flavoring extracts, syrups, or food products;
or (d) scientific, chemical, mechanical, or industrial products,
provided such products are unfit for beverage use, is regarded as
``industrial,'' and will be excluded from any application of the term
``nonindustrial use.''
Uses Classed as Nonindustrial
Sec. 1.70 General.
All uses of distilled spirits and wines, except as provided in
Secs. 1.60, 1.61, and 1.62 of this part, are regarded as
``nonindustrial.'' Such ``nonindustrial'' use shall include, but not be
limited to, distilled spirits or wine used for beverage purposes, or in
the manufacture, rectification, or blending of alcoholic beverages; or
in the preparation of food or drink by a hotel, restaurant, tavern, or
similar establishment; or for sacramental purposes; or as a medicine.
Sec. 1.71 Distilled spirits in containers of a capacity of one gallon
or less.
Distilled spirits in containers of a capacity of one wine gallon or
less, except anhydrous alcohol and alcohol which may be withdrawn free
of tax under the internal revenue laws, will be deemed to be for
nonindustrial use.
Subpart E--Bulk Sales and Bottling of Distilled Spirits
Bulk Sales and Bottling
Sec. 1.80 Sales of distilled spirits in bulk.
It is unlawful for any person to sell, offer to sell, contract to
sell, or otherwise dispose of distilled spirits in bulk, for
nonindustrial use, except for export or to the classes of persons
enumerated in Secs. 1.82, 1.83, and 1.84.
Sec. 1.81 Importation of distilled spirits in bulk.
It is unlawful for any person to import distilled spirits in bulk,
for nonindustrial use, except for sale to or for use by the classes of
persons enumerated in Secs. 1.82, 1.83 and 1.84.
Sec. 1.82 Acquiring or receiving distilled spirits in bulk for
redistillation, processing, rectification, warehousing, or warehousing
and bottling.
(a) Proprietors of distilled spirits plants. Persons holding basic
permits (issued under subpart B of this part) authorizing the
distilling, processing, rectifying, or warehousing and bottling of
distilled spirits, or operating permits (issued under Sec. 19.157 and
succeeding sections of this chapter) may acquire or receive in bulk and
redistill, warehouse, or process distilled spirits, so far as permitted
by law.
(b) Proprietors of class 8 customs bonded warehouses. If the
permittee operates a class 8 customs bonded warehouse, the permittee
may acquire or receive in bulk, and warehouse and bottle, imported
distilled spirits, so far as permitted by the customs laws.
(26 U.S.C. 7805 (68A Stat. 917, as amended); 27 U.S.C. 205 (49 Stat.
981, as amended))
Sec. 1.83 Acquiring or receiving distilled spirits in bulk for
addition to wine.
Persons holding permits as producers and blenders of wine, may,
pursuant to such permit, acquire or receive in bulk alcohol or brandy
for addition to wines.
Sec. 1.84 Acquisition of distilled spirits in bulk by Government
agencies.
Any agency of the United States, or of any State or political
subdivision thereof, may acquire or receive in bulk, and warehouse and
bottle, imported and domestic distilled spirits in conformity with the
internal revenue laws.
Warehouse Receipts
Sec. 1.90 Distilled spirits in bulk.
By the terms of the Act (27 U.S.C. 206), all warehouse receipts for
distilled spirits in bulk must require that the warehouseman shall
package such distilled spirits, before delivery, in bottles labeled and
marked in accordance with law, or deliver such distilled spirits in
bulk only to persons to whom it is lawful to sell or otherwise dispose
of distilled spirits in bulk.
Sec. 1.91 Bottled distilled spirits.
The provisions of the Act, which forbid any person to sell, offer
to sell, contract to sell, or otherwise dispose of warehouse receipts
for distilled spirits in bulk, do not apply to warehouse receipts for
bottled distilled spirits.
Cross Reference: For labeling of distilled spirits, see part 5
of this chapter.
Sales of Distilled Spirits for Industrial Use
Sec. 1.95 General.
Distillers, rectifiers, and other permittees engaged in the sale or
other disposition of distilled spirits for nonindustrial use shall not
sell or otherwise dispose of distilled spirits in bulk (other than
alcohol) for industrial use, unless such distilled spirits are
[[Page 26102]]
shipped or delivered directly to the industrial user thereof.
Bradley A. Buckles,
Acting Director.
Approved: April 29, 1996.
John P. Simpson,
Deputy Assistant Secretary (Regulatory, Tariff and Trade Enforcement).
[FR Doc. 96-12965 Filed 5-23-96; 8:45 am]
BILLING CODE 4810-31-P
