[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