[Federal Register Volume 60, Number 2 (Wednesday, January 4, 1995)]
[Proposed Rules]
[Pages 411-416]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-138]



[[Page 411]]

DEPARTMENT OF THE TREASURY

Bureau of Alcohol, Tobacco and Firearms

7 CFR Parts 4, 5, and 7

[Notice No. 803; CRD-94-8]
RIN AB32


Alteration of Labels on Containers of Distilled Spirits, Wine, 
and Beer

AGENCY: Bureau of Alcohol, Tobacco and Firearms (ATF), Department of 
the Treasury.

ACTION: Notice of proposed rulemaking.

-----------------------------------------------------------------------

SUMMARY: ATF is proposing to amend the regulations in 27 CFR Parts 4, 
5, and 7 which implement section 205(e) of the Federal Alcohol 
Administration Act of 1935, which makes it unlawful for any person to 
alter, mutilate, destroy, obliterate, or remove any mark, brand or 
label on wine, distilled spirits, or malt beverages held for sale in 
interstate or foreign commerce or after shipment therein. The proposed 
amendments will reinstate a requirement that ATF approval be obtained 
before relabeling distilled spirits, and will make it unlawful to 
relabel a distilled spirits, wine, or malt beverage container if the 
effect of such action is to remove from the container or label any 
information required by ATF regulations, or a product identification 
code placed on the product by the producer for tracing purposes.

DATES: Written comments must be received on or before March 6, 1995.

ADDRESSES: Send written comments to: Chief, Distilled Spirits and 
Tobacco Branch, Bureau of Alcohol, Tobacco Firearms, P.O. Box 50221, 
Washington, DC 20091-0221. [Attn: Notice No. 803.]

FOR FURTHER INFORMATION CONTACT:
Daniel J. Hiland, Distilled Spirits and Tobacco Branch, Bureau of 
Alcohol, Tobacco and Firearms, 650 Massachusetts Avenue, NW., 
Washington, DC 20226 (202-927-8210).

SUPPLEMENTARY INFORMATION:

Background

    Several producers and importers of alcoholic beverages have 
complained to the Bureau of Alcohol, Tobacco and Firearms (ATF) that 
product identification code markings placed on containers and labels of 
wines and distilled spirits by producers for tracing purposes are being 
removed or mutilated after the product has left the producer's 
premises. Such alterations of labels or packages have been permitted in 
foreign trade zones and Customs bonded warehouses, because ATF 
regulations do not specifically address such activities, and because 
product identification codes are not mandatory information under our 
regulations. However, the effect of such action is to make it 
impossible for the producers to rely on production codes to trade 
mislabeled, adulterated, or unsafe products.

Federal Alcohol Administration Act

    Section 105(e) of the Federal Alcohol Administration Act (FAA Act), 
27 U.S.C. Sec. 205(e), authorizes ATF to prescribe regulations relating 
to the packaging, marking, branding, labeling, and size and fill of 
container as will prohibit deception of the consumer with respect to 
such products or the quantity thereof.
    In order to prevent the sale or shipment or other introduction of 
distilled spirits, wine, or malt beverages in interstate or foreign 
commerce which are not bottled, packaged, or labeled in compliance with 
the regulations, the FAA Act requires that prior to bottling distilled 
spirits, wines, or malt beverages, the producer or bottler must obtain 
a certificate of label approval covering the product. Similarly, the 
law provides that no person shall remove bottled distilled spirits, 
wines, or malt beverages from Customs custody for consumption in 
bottles, for sale or any other commercial purposes, without having 
first obtained a certificate of label approval covering the product.
    Thus, the certificate of label approval requirement ensures that 
mislabeled distilled spirits, wines, or malt beverages cannot be 
introduced in interstate or foreign commerce. To ensure that products 
with proper labels were not altered once such products had been removed 
from bond, section 205(e) further provides as follows:

    It shall be unlawful for any person to alter, mutilate, destroy, 
obliterate, or remove any mark, brand, or label upon distilled 
spirits, wine, or malt beverages held for sale in interstate or 
foreign commerce or after shipment therein, except as authorized by 
Federal law or except pursuant to regulations of the Secretary of 
the Treasury authorizing relabeling for purposes of compliance with 
the requirements of this subsection or of State law.

Regulations which implement these provisions of the FAA Act, as they 
relate to wine, distilled spirits, and malt beverages, are set forth in 
title 27, Code of Federal Regulations (CFR), Parts 4, 5, and 7, 
respectively. These regulations provide for relabeling in certain 
circumstances.
    Sections 4.30 and 7.20 provide that someone wanting to relabel must 
receive prior permission from the Regional Director (Compliance). 
Section 5.31 does not currently require prior approval for the 
relabeling of distilled spirits, as long as such relabeling is done in 
accordance with an approved certificate of label approval.
    The regulations provide that distilled spirits, wines and malt 
beverages may be relabeled as authorized by Federal law. Such products 
may also be relabeled for purposes of compliance with the requirements 
of the regulations, or of State law. Finally, there may be added to 
wine and distilled spirits bottles, after removal from Customs custody, 
or prior to or after removal from bonded premises, without application 
for permission to relabel, a label identifying the wholesale or retail 
distributor thereof, and containing no reference whatever to the 
characteristics of the product.

Customs Bonded Warehouses and Foreign Trade Zones

    The statutory prohibition against the alteration or mutilation of 
distilled spirits, wine, or malt beverage labels applies to all 
products held for sale in interstate or foreign commerce. The terms of 
the statute thus apply to nontaxpaid domestic and imported products 
held for storage or manipulation in a Customs bonded warehouse or 
foreign trade zone.
    However, since domestic nontaxpaid alcoholic beverages bottled for 
exportation are exempt from the certificate of label approval 
requirement, and certificates of label approval are not required for 
imported alcoholic beverages until they are withdrawn from Customs 
custody for consumption in the United States, ATF has previously taken 
the position that relabeling activities could occur in a Customs bonded 
warehouse or foreign trade zone without prior ATF approval. ATF 
regulations authorize the relabeling of alcoholic beverages in Customs 
custody in order to bring such products in compliance with a 
certificate of label approval prior to withdrawal for consumption. 
However, current regulations do not specifically set forth the 
limitations on other types of relabeling activities in Customs bonded 
warehouses or foreign trade zones. In general, ATF saw no need to 
scrutinize labeling activities involving such products unless and until 
they were withdrawn from Customs custody for consumption in the United 
States.
    While ATF has not required that persons relabeling alcoholic 
beverages in Customs bonded warehouses or foreign trade zones obtain 
prior approval, such activities are subject to regulation by the United 
States Customs Service (``Customs''). Because the [[Page 412]] current 
regulations do not clarify the scope of the prohibition against 
alteration of labels, there has been considerable confusion as to what 
types of labeling activities are authorized in a Customs bonded 
warehouse or foreign trade zone.
    ATF has taken the position that there are restrictions as to the 
removal of mandatory information from domestic nontaxpaid distilled 
spirits, wines, and malt beverages. Pursuant to Parts 19, 24, and 25, 
such products must be marked with certain mandatory information, which 
is necessary to protect the revenue, and to ensure the tracing of the 
product in the event of diversion. Thus, it has been ATF's policy that 
such mandatory information may not be removed from products, regardless 
of the fact that they are in a Customs bonded warehouse or foreign 
trade zone awaiting exportation. However, this policy is not set forth 
in the current regulations.
    ATF is thus proposing to amend the regulations in parts 4, 5, and 7 
to clarify that the prohibition against alteration or mutilation of 
labels applies to products held in a foreign trade zone or customs 
bonded warehouse. The proposed amendments will specify the type of 
relabeling activities permissible for both domestic nontaxpaid 
alcoholic beverages and imported alcoholic beverages stored in a 
Customs bonded warehouse or foreign trade zone. Since current 
regulations do not authorize removal of domestic nontaxpaid malt 
beverages to Customs bonded warehouses pending exportation, the 
relabeling of malt beverages in Customs bonded warehouses is not 
discussed.
    The proposed regulations will provide that relabeling of distilled 
spirits, wines, and malt beverages in Customs bonded warehouses or 
foreign trade zones can be accomplished without obtaining permission 
from ATF, as long as such relabeling is done under the supervision of 
Customs officials, in compliance with Customs requirements, and does 
not involve the removal from the label or package of information made 
mandatory by ATF regulations. The proposed language concerning the 
supervision of Customs officials and compliance with Customs 
requirements is not intended to impose any new requirements; instead, 
this language merely recognizes current requirements under Customs 
regulations. See, generally 19 C.F.R. 19.11 and 146.51.

Product Identification Codes

    The complaints about the mutilation of product identification codes 
in Customs bonded warehouses and foreign trade zones brought to the 
surface an issue which ATF had previously been considering--whether lot 
identification numbers or product identification codes should be made 
mandatory information on consumer packages of alcoholic beverages. Such 
codes are not currently required under the regulations. Instead, labels 
on domestic distilled spirits, wines, and malt beverages are merely 
required to list the name and address of the bottler. For imported 
products, the name and address of the importer is required information 
on the label.
    Obviously, these requirements provide enough information so that if 
a product is mislabeled, adulterated, or poses a health hazard, it is 
possible to determine the source of the product. However, this does not 
allow either ATF or the producer to trace a particular consumer package 
back to a bottling line or production shift.
    Current regulations in Parts 19, 24 and 25 promulgated pursuant to 
the Internal Revenue Code require certain markings on cases of 
distilled spirits, wines, and malt beverages. Cases of distilled 
spirits and wines must be marked with serial numbers. These markings 
are required in order to protect the revenue, and to facilitate tracing 
in the event of the diversion of nontaxpaid goods. However, case 
markings have limited value in tracing consumer packages such as 
bottles and cans. Once the product is removed from the case, those 
markings are obviously of no value in tracing the product.
    The purpose of product identification codes (i.e., lot 
identification numbers, bottling dates, freshness dates, etc.) on 
labels or packages of products is to facilitate the tracing of a 
product for safety, compliance or quality control issues. For example, 
if an alcoholic beverage product is found to have been tampered with, 
or contaminated, any type of code which would enable the tracing of the 
product back to the bottling line or production batch would be 
extremely valuable in determining how the tampering or contamination 
occurred, and in allowing the producer to make an informed decision as 
to the extent of the problem, and the need for product recalls.
    For this reason, ATF believes that product identification codes are 
useful as a consumer protection measure. Safety, labeling and quality 
control problems often come to light by virtue of consumer complaints 
or market place testing of products by ATF. In such instances, case 
markings will generally be of no avail. However, the use of product 
identification codes can help to readily identify the hazardous or 
defective product, and, in the event that a health hazard exists, 
assist in a speedier and more orderly recall of these products from the 
marketplace.
    The use of lot identification numbers has already been mandated by 
the Council of the European Communities, in Council Directive 89/396/
EEC, dated June 14, 1989. In view of the fact that many European 
countries now require such markings, and many large producers in the 
United States voluntarily place such codes on product labels or 
containers, ATF raised the issue of mandatory product identification 
codes at an industry meeting held in Washington, D.C. on July 26, 1994.
    The purpose of raising this issue with industry members was to 
gather information on current industry practices regarding product 
identification codes. ATF has learned that many domestic and foreign 
producers of alcoholic beverages voluntarily place product 
identification codes or lot identification numbers on the labels or 
containers of wines, distilled spirits, and malt beverages. Typically, 
the label or container of the product will be marked with a code 
indicating the batch from which the product was made, a bottling date, 
a production shift code, or some other type of mark which will enable 
the producer to trace the consumer package to a specific production 
batch or bottling line.
    While large producers are more likely to have their own system of 
product codes, small producers often find that such a system is 
unnecessary, because their own records will enable them to do any 
necessary tracing. At the industry meeting, questions were raised as to 
whether it was necessary to impose a product identification code.
    Rather than impose a mandatory product identification code 
requirement on all producers, ATF is proposing to leave the decision as 
to whether to place product identification codes on consumer packages 
to the producer. At this time, we believe that the consumer is 
adequately protected by the information required under the current 
regulations. However, in order to allow producers to efficiently 
develop a system in which they can ensure the tracing of their own 
products, we believe that the voluntary placement of product 
identification codes on consumer packages by producers should be 
protected by regulation. This will address the specific problem 
currently faced by producers--the removal of product identification 
codes by distributors or other third parties.
    If a producer believes that the only way it can efficiently trace 
products is [[Page 413]] to put product identification codes on the 
consumer packages, ATF does not believe it should allow the intent of 
the producer to be frustrated by third parties. It is the producer who 
will have to bear the costs of recalls if product identification codes 
have been obliterated by distributors. It is the consumer who will 
suffer if the obliteration of such marks makes it impossible to trace 
problems with contaminated products. Finally, such actions make it more 
difficult for ATF to trace problems with products already in the market 
place.
    Thus, ATF is proposing an amendment to the regulations which will 
specifically prohibit the labeling or relabeling of products if the 
effect of such action is to remove from labels or containers ``product 
identification codes'' placed on the label or container by the producer 
for tracing purposes. The term ``product identification code'' is 
defined to include any numbers, letters, symbols, dates, or other codes 
placed on the label or container by which the producer may be able to 
trace a product back to a particular production lot or batch, bottling 
line, or date of removal.
    Under the proposed regulations, if it is necessary for anyone but 
the producer to remove the original label from the product, the product 
identification code must be put back on the new label. ATF believes 
that this proposal will adequately address the problem before us, 
without imposing an undue burden on any part of the industry. Most 
importantly, it will ensure that an important consumer protection 
mechanism voluntarily placed on consumer packages by manufacturers will 
not be thwarted.
    Although ATF is not proposing to require product identification 
codes on labels or packages, it is the opinion of the Bureau that such 
codes are useful, and should be encouraged. If at any time we find that 
the lack of such codes is hampering the exercise of our consumer 
protection function, we may wish to reconsider this option.

Products Bottled for Exportation

    Although products which are bottled for exportation are not 
required to be covered by certificates of label approval, ATF believes 
that the prohibition on alteration of labels applies to such products. 
The alteration or mutilation of required information on labels, as well 
as product identification codes, would hamper ATF's efforts in tracing 
the illegal diversion of nontaxpaid alcoholic beverages which were 
intended for exportation. One of the purposes of the FAA Act was to aid 
in the collection of taxes on distilled spirits, wines, and malt 
beverages. Thus, we have authority under the FAA Act to extend these 
provisions to products which are intended to be exported.

Prior Approval for Relabeling Distilled Spirits

    The amendments to Part 5, relating to the labeling of distilled 
spirits products, would also resolve a problem which was inadvertently 
created by T.D. ATF-198, 50 FR 8456 (1985). In that amendment to the 
regulations, the requirement that ATF give prior approval for the 
relabeling of distilled spirits was removed, as long as the products 
were relabeled in accordance with an approved label. This created an 
unintended inconsistency with Parts 4 and 7, which do require prior 
approval for the relabeling of wines and malt beverages, respectively.
    The proposed amendment would reinstate in section 5.31 the 
requirement that approval be obtained from ATF prior to relabeling 
distilled spirits. ATF does not believe that this is a burdensome 
requirement, in light of the statutory provision prohibiting any 
relabeling unless done in accordance with regulations issued by the 
Secretary. However, the proposed regulations will specify that such 
permission need not be obtained for relabeling products in Customs 
bonded warehouses or foreign trade zones, as long as such relabeling is 
done under the supervision of Customs officers, in compliance with all 
applicable Customs requirements, and the effect of the relabeling is 
not to remove from the container or label any information which is 
mandatory under ATF regulations, or any product identification code 
placed on the container or label by the producer for tracing purposes.

Miscellaneous

    ATF is also proposing to add to section 7.20 a provision which is 
already found in slightly different forms in sections 4.30 and 5.31. 
This provision authorizes, without prior approval from ATF, the 
addition of a label identifying the wholesale or retail distributor, or 
identifying the purchaser or consumer, as long as the label contains no 
reference whatever to the characteristics of the product. The proposed 
regulations will standardize this provision for wines, distilled 
spirits, and malt beverages. Furthermore, the approval procedure in all 
three sections is also standardized for the sake of consistency. 
Although the current regulations in sections 4.30 and 7.20 do not 
specifically condition approval for relabeling on the existence of a 
certificate of label approval for the new labels, such a policy has 
always been enforced by ATF. The proposed regulations will spell out 
this requirement.

Executive Order 12866

    It has been determined that this proposed regulation is not a 
significant regulatory action as defined by Executive Order 12866. 
Accordingly, this proposal is not subject to the analysis required by 
this Executive Order.

Regulatory Flexibility Act

    It is hereby certified that this regulation will not have a 
significant impact on a substantial number of small entities. This 
notice requests comments on a proposal to make it unlawful for any 
person to alter, mutilate, destroy, obliterate, or remove any mark, 
brand or label on wine, distilled spirits, or malt beverages held for 
sale in interstate or foreign commerce or after shipment therein, 
including products held in a foreign trade zone or Customs bonded 
warehouse. if the effect of such action is to remove mandatory 
information required by ATF regulations, or to remove a product 
identification code placed on the label or container by the producer 
for tracing purposes. The proposal would also reinstate a requirement 
for prior approval for relabeling of distilled spirits products. This 
proposal does not mandate new labeling requirements, but merely 
protects and preserves mandatory information already required under the 
regulations, and product identification codes which a producer 
voluntarily chooses to put on the product. Thus, the proposal should 
not have a significant economic impact on a substantial number of small 
entities.
    Accordingly, a regulatory flexibility analysis is not required 
because the proposal, if promulgated as a final rule, is not expected: 
(1) to have significant secondary or incidental effects on a 
substantial number of small entities, or (2) to impose, or otherwise 
cause, a significant increase in the reporting, recordkeeping, or other 
compliance burdens on a substantial number of small entities.

Paperwork Reduction Act

    The collection of information contained in this notice of proposed 
rulemaking has been submitted to the Office of Management and Budget 
for review in accordance with the Paperwork Reduction Act of 1980, 44 
U.S.C. 3504(h).
    Comments on the collection of information should be directed to the 
[[Page 414]] Office of Management and Budget, Attention: Desk Officer 
for the Department of the Treasury, Bureau of Alcohol, Tobacco and 
Firearms, Office of Information and Regulatory Affairs, Washington, DC 
20503, with copies to: Reports Management Officer, Information Programs 
Branch, Room 3450, Bureau of Alcohol, Tobacco and Firearms, 650 
Massachusetts Avenue, NW., Washington, DC 20226.
    The collections of information in this regulation are in 27 CFR 
4.30, 5.31, and 7.20. These sections require that persons who wish to 
alter approved labels must apply for permission to ATF. This 
information is required by the Bureau of Alcohol, Tobacco and Firearms 
to ensure that alterations of labels are done in compliance with the 
regulations. The likely respondents are businesses or other for-profit 
institutions, including small businesses or organizations. This 
information collected requirement is included in OMB Control Number 
1512-0092, which covers the requirement to obtain prior approval from 
ATF for all labels on distilled spirits, wines, and beer. This 
requirement for prior approval of labels is mandated by statute (27 
U.S.C. 205(e)).
    The estimated total number of label approvals issued annually under 
Control Number 1512-0092 is 54,601. Based on an estimated average time 
of 30 minutes to complete the application for label approval, the total 
annual burden associated with Control Number 1512-0092 is 27,300 hours. 
We estimate that ATF receives about 180 applications for permission to 
relabel distilled spirits, wines, and malt beverages every year.
    The amendments proposed in this document will not change the 
estimated number of 54,601 responses, because any person wanting to 
relabel an alcoholic beverage product is already required to obtain a 
certificate of label approval. The requirement for obtaining prior 
approval from the regional director will not change the estimated 
average time of 30 minutes to complete the application for a 
certificate of label approval, because only about 180 of the 54,601 
responses will involve relabeling. The additional time required for 
those 180 responses is not significant enough to affect the estimated 
average time of 30 minutes to complete the application for label 
approval. Thus, the total burden estimated associated with Control 
Number 1512-0092 is not affected by the amendments proposed in this 
document.

Public Participation

    ATF requests comments from all interested persons concerning the 
amendments proposed by this notice. Comments received on or before the 
closing date will be carefully considered. Comments received after that 
date will be given the same consideration if it is practical to do so, 
but assurance of consideration cannot be given except as to comments 
received or or before the closing date. ATF will not recognize any 
material in comments as confidential. Comments may be disclosed to the 
public. Any material which the commenter considers to be confidential 
or inappropriate for disclosure to the public should not be included in 
the comment. The name of the person submitting the comment is not 
exempt from disclosure.
    Any interested person who desires an opportunity to comment orally 
at a public hearing on the proposed amendments to the regulations 
should submit his or her request, in writing, to the Director within 
the 60-day comment period. The Director, however, reserves the right to 
determine, in light of all circumstances, if a public hearing is 
necessary.

Disclosure

    Copies of this notice and the written comments will be available 
for public inspection during normal business hours at: ATF Public 
Reading Room, Room 6480, 650 Massachusetts Avenue, NW., Washington, DC 
20226

Drafting Information

    The principal author of this document is Daniel J. Hiland, Revenue 
Programs Division, Bureau of Alcohol, Tobacco and Firearms.

List of Subjects

27 CFR Part 4

    Advertising, Consumer Protection, Customs duties and inspection, 
Imports, Labeling, Liquors, Packaging and Containers, Wine.

27 CFR Part 5

    Advertising, Consumer Protection, Customs duties and inspection, 
Imports, Liquors, Packaging and containers.

27 CFR Part 7

    Advertising, Consumer Protection, Customs duties and inspection, 
Imports, Labeling.

Issuance

    Title 27, Chapter I, is proposed to be amended as follows:

PART 4--LABELING AND ADVERTISING OF WINE

    Paragraph 1. The authority citation for 27 CFR Part 4 continues to 
read as follows:

    Authority: 27 U.S.C. 205.

    Par. 2. Section 4.30(b) is revised, and new paragraphs (c) and (d) 
are added to read as follows:


Sec. 4.30  General.

* * * * *
    (b) Alteration of labels. (1) it shall be unlawful for any person 
to alter, mutilate, destroy, obliterate, or remove any mark, brand, or 
label upon wine held for sale in interstate or foreign commerce or 
after shipment therein, including wine held in Customs bonded 
warehouses or foreign trade zones, except as authorized by Federal law, 
or as provided for in this section.
    (2) Approval procedure. (i) The regional director (compliance) may, 
upon written application, permit additional labeling or relabeling of 
wine in containers for purposes of compliance with the requirements of 
this subpart or of State law. Permission to relabel shall not be given 
if the effect of the relabeling is to remove from the container or 
label a product identification code placed on the container or label by 
the producer for tracing purposes. For purposes of this section, the 
term ``product identification code'' includes any numbers, letters, 
symbols, dates, or other codes placed on the label or container by 
which the producer may be able to trace a product back to a particular 
production lot or batch, bottling line, or date of removal.
    (ii) Application for permission to relabel shall be accompanied by 
two complete sets of the old labels and two complete sets of any 
proposed new labels, together with a statement of the reasons for 
relabeling, the quantity and the location of the wine, and the name and 
address of the person by whom the wine will be relabeled. In addition, 
the person desiring to relabel the wine must provide evidence that the 
proposed new labels are covered by a certificate of label approval, ATF 
F 5100.31.
    (3) Labels identifying wholesale or retail distributor. There may 
be added to the container, after removal from customs custody, or prior 
to or after removal from the premises where bottled or packed, without 
application for permission to relabel, a label identifying the 
wholesale or retail distributor thereof or identifying the purchaser or 
consumer, and containing no references whatever to the characteristics 
of the products. [[Page 415]] 
    (c) Customs bonded warehouses. (1) Domestic wines which have been 
removed without payment of tax for transfer to a Customs bonded 
warehouse pending exportation may be relabeled without permission from 
ATF, as long as such relabeling is done under the supervision of 
Customs officers, in compliance with all applicable Customs 
requirements, and the effect of the relabeling is not to remove from 
the container or label any markings which are required under Part 24 of 
this chapter, or any product identification code placed on the 
container or label by the producer for tracing purposes.
    (2) Imported wines held in a Customs bonded warehouse may be 
relabeled without permission from ATF, as long as such relabeling is 
done under the supervision of Customs officers, in compliance with all 
applicable Customs requirements, and the effect of the relabeling is 
not to remove from the container or label any product identification 
code placed on the container or label by the producer for tracing 
purposes. As provided in Sec. 4.40, imported beverage wine in 
containers shall not be released from Customs custody for consumption 
without a certificate of label approval.
    (d) Foreign trade zones. (1) Domestic wines which have been 
withdrawn without payment of tax for deposit in a foreign trade zone 
pending exportation may be relabeled without permission from ATF as 
long as such relabeling is done under the supervision of Customs 
officers, in compliance with all applicable Customs requirements, and 
the effect of the relabeling is not to remove from the container or 
label any markings required by Part 24 of this chapter, or any product 
identification code placed on the container or label by the producer 
for tracing purposes.
    (2) Imported wines which have been entered into a foreign trade 
zone may be relabeled without receiving prior permission from ATF, as 
long as such relabeling is done under Customs supervision and in 
compliance with Customs requirements, and the effect of such relabeling 
is not to remove from the label or container any product identification 
code placed on the label or container by the producer for tracing 
purposes. As provided in Sec. 4.40, imported beverage wine in 
containers shall not be released from Customs custody for consumption 
without a certificate of label approval.
    Par. 3. Section 4.80 is revised to read as follows:


Sec. 4.80  Exports.

    With the exception of the regulations at Sec. 4.30(b), (c), and 
(d), the regulations in this part shall not apply to wine exported in 
bond.

PART 5--LABELING AND ADVERTISING OF DISTILLED SPIRITS

    Par. 4. The authority citation for 27 CFR Part 5 continues to read 
as follows:

    Authority. 26 U.S.C. 5301, 7805; 27 U.S.C. 205.

    Par. 5. Section 5.1 is revised to read as follows:


Sec. 5.1  General.

    The regulations in this part relate to the labeling and advertising 
of distilled spirits. This part applies to the several States of the 
United States, the District of Columbia, and the Commonwealth of Puerto 
Rico. With the exception of the regulations at Sec. 5.31(b), (c), and 
(d), the regulations in this part do not apply to distilled spirits for 
export.
    Par. 6. Section 5.31(b) is revised, and new paragraphs (c) and (d) 
are added to read as follows:


Sec. 5.31  General.

* * * * *
    (b) Alteration of labels. (1) It shall be unlawful for any person 
to alter, mutilate, destroy, obliterate, or remove any mark, brand, or 
label upon distilled spirits held for sale in interstate or foreign 
commerce or after shipment therein, including distilled spirits held in 
Customs bonded warehouses or foreign trade zones, except as authorized 
by Federal law, or as provided in this section.
    (2) Approval procedure. (i) The regional director (compliance) may, 
upon written application, permit additional labeling or relabeling of 
distilled spirits in containers for purposes of compliance with the 
requirements of this subpart or of State law. Permission to relabel 
shall not be given if the effect of the relabeling is to remove from 
the container or label a product identification code placed on the 
container or label by the producer for tracing purposes. For purposes 
of this section, the term ``product identification code'' includes any 
numbers, letters, symbols, dates, or other codes placed on the label or 
container by which the producer may be able to trace a product back to 
a particular production lot or batch, bottling line, or date of 
removal.
    (ii) Application for permission to reliable shall be accompanied by 
two complete sets of the old labels and two complete sets of any 
proposed new labels, together with a statement of the reasons for 
relabeling, the quantity and the location of the distilled spirits, and 
the name and address of the person by whom the distilled spirits will 
be relabeled. In addition, the person desiring to relabel the distilled 
spirits must provide evidence that the proposed new labels are covered 
by a certificate of label approval, ATF F 5100.31.
    (3) Labels identifying wholesale or retail distributor. There may 
be added to the bottle, after removal from customs custody, or prior to 
or after removal from bonded premises, without application for 
permission to relabel, a label identifying the wholesale or retail 
distributor thereof or identifying the purchaser or consumer, and 
containing no references whatever to the characteristics of the 
product.
    (c) Customs bonded warehouses. (1) Domestic distilled spirits which 
have been removed without payment of tax for transfer to a Customs 
bonded warehouse pending exportation may be relabeled without 
permission from ATF, as long as such relabeling is done under the 
supervision of Customs officers, in compliance with all applicable 
Customs requirements, and the effect of the relabeling is not to remove 
from the container or label any markings which are required under Part 
19 of this chapter, or any product identification code placed on the 
container or label by the producer for tracing purposes.
    (2) Imported distilled spirits held in a Customs bonded warehouse 
may be relabeled without permission from ATF, as long as such 
relabeling is done under the supervision of Customs officers, in 
compliance with all applicable Customs requirements, and the effect of 
the relabeling is not to remove from the container or label any product 
identification code placed on the container or label by the producer 
for tracing purposes. As provided in Sec. 5.51, bottled distilled 
spirits shall not be released from Customs custody for consumption 
without a certificate of label approval.
    (d) Foreign trade zones. (1) Domestic distilled spirits which have 
been withdrawn without payment of tax for deposit in a foreign trade 
zone pending exportation may be relabeled without permission from ATF 
as long as such relabeling is done under the supervision of Customs 
officers, in compliance with all applicable Customs requirements, and 
the effect of the relabeling is not to remove from the container or 
label any markings required by Part 19 of this chapter, or any product 
identification code placed on the container or label by the producer 
for tracing purposes.
    (2) Imported distilled spirits which have been entered into a 
foreign trade zone may be relabeled without receiving prior permission 
from ATF, as long as [[Page 416]] such relabeling is done under Customs 
supervision and in compliance with Customs requirements, and the effect 
of such relabeling is not to remove from the label or container any 
product identification code placed on the label or container by the 
producer for tracing purposes. As provided in Sec. 5.51, bottled 
distilled spirits shall not be released from Customs custody for 
consumption without a certificate of label approval.

PART 7--LABELING AND ADVERTISING OF MALT BEVERAGES

    Par. 7. The authority citation for 27 CFR Part 7 continues to read 
as follows:

    Authority: 27 U.S.C. 205.

    Par. 8. Section 7.20 is amended by revising paragraph (c), and 
adding new paragraph (d) and (e) to read as follows:


Sec. 7.20  General.

* * * * *
    (c) Alteration of labels. (1) It shall be unlawful for any person 
to alter, mutilate, destroy, obliterate, or remove any mark, brand, or 
label upon malt beverages held for sale in interstate or foreign 
commerce or after shipment therein, including malt beverages held in 
Customs bonded warehouses or foreign trade zones, except as authorized 
by Federal law, or as provided in this section.
    (2) Approval procedure. (i) The regional director (compliance) may, 
upon written application, permit additional labeling or relabeling of 
malt beverages in containers for purposes of compliance with the 
requirements of this subpart or of State law. Permission to relabel 
shall not be given if the effect of the relabeling is to remove from 
the container or label a product identification code placed on the 
container or label by the producer for tracing purposes. For purposes 
of this section, the term ``product identification code'' includes any 
numbers, letters, symbols, dates, or other codes placed on the label or 
container by which the producer may be able to trace a product back to 
a particular production lot or batch, bottling line, or date of 
removal.
    (ii) Application for permission to relabel shall be accompanied by 
two complete sets of the old labels and two complete sets of any 
proposed new labels, together with a statement of the reasons for 
relabeling, the quantity and the location of the malt beverages, and 
the name and address of the person by whom they will be relabeled. In 
addition, the person desiring to relabel the malt beverages must 
provide evidence that the proposed new labels are covered by a 
certificate of label approval, ATF F 5100.31.
    (3) Labels identifying wholesale or retail distributor. There may 
be added to the bottle, after removal from customs custody, or prior to 
or after removal from bonded premises, without application for 
permission to relabel, a label identifying the wholesale or retail 
distributor thereof or identifying the purchaser or consumer, and 
containing no references whatever to the characteristics of the 
product.
    (d) Customs bonded warehouses. Imported malt beverages held in a 
Customs bonded warehouse may be relabeled without permission from ATF, 
as long as such relabeling is done under the supervision of Customs 
officers, in compliance with all applicable Customs requirements, and 
the effect of the relabeling is not to remove from the container or 
label any product identification code placed on the container or label 
by the producer for tracing purposes. As provided in Sec. 7.31, no 
imported malt beverages in containers shall be released from Customs 
custody for consumption without a certificate of label approval.
    (e) Foreign trade zones. (1) Domestic malt beverages which have 
been withdrawn without payment of tax for deposit in a foreign trade 
zone pending exportation may be relabeled without permission from ATF 
as long as such relabeling is done under the supervision of Customs 
officers, in compliance with all applicable Customs requirements, and 
the effect of the relabeling is not to remove from the container or 
label any markings required by Part 25 of this chapter or any product 
identification code placed on the container or label by the producer 
for tracing purposes.
    (2) Imported malt beverages which have been entered into a foreign 
trade zone may be relabeled without receiving prior permission from 
ATF, as long as such relabeling is done under Customs supervision and 
in compliance with Customs requirements, and the effect of such 
relabeling is not to remove from the label or container any product 
identification code placed on the label or container by the producer 
for tracing purposes. As provided in Sec. 7.31, no imported malt 
beverages in containers shall be released from Customs custody for 
consumption without a certificate of label approval.
    Par. 9. Section 7.60 is revised to read as follows:


Sec. 7.60  Exports.

    With the exception of the regulations at Sec. 7.20(c), (d) and (e), 
the regulations in this part shall not apply to malt beverages exported 
in bond.

    Dated: September 9, 1994.
John W. Magaw,
Director.

    Approved: September 28, 1994.
John P. Simpson,
Deputy Assistant Secretary, (Enforcement).
[FR Doc. 95-138 Filed 1-3-95; 8:45 am]
BILLING CODE 4810-31-M