[Federal Register Volume 67, Number 76 (Friday, April 19, 2002)]
[Rules and Regulations]
[Pages 19332-19333]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-9633]


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DEPARTMENT OF THE TREASURY

Bureau of Alcohol, Tobacco and Firearms

27 CFR Part 40

[T.D. ATF--478; Re: Notice No. 931]
RIN 1512-AC32


Elimination of Application To Remove Tobacco Products From 
Manufacturer's Premises for Experimental Purposes

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

ACTION: Final rule.

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SUMMARY: This final rule eliminates the requirements that manufacturers 
of tobacco products apply to ATF to remove tobacco products from their 
factories in bond for experimental purposes and that they maintain the 
approved applications for their records. In place of these 
requirements, manufacturers of tobacco products will prepare and 
maintain records of tobacco products removed from their factories in 
bond for experimental purposes. In addition, this final rule defines 
``experimental purposes'' under section 5704(a) of Title 26 of the 
United States Code.

DATES: The effective date for this final rule is May 20, 2002.

FOR FURTHER INFORMATION CONTACT: Robert Ruhf, Regulations Division, 
Bureau of Alcohol, Tobacco and Firearms, 650 Massachusetts Avenue NW., 
Washington, DC 20226 (telephone 202-927-8210 or e-mail 
[email protected]).

SUPPLEMENTARY INFORMATION:

Background

    We published a notice of proposed rulemaking in the Federal 
Register on October 6, 2001 (66 FR 52730). It requested comments about 
a proposal to eliminate the requirements that manufacturers of tobacco 
products apply to ATF to remove tobacco products from their factories 
in bond for experimental purposes and that they maintain the approved 
applications for their records. In place of these requirements, 
manufacturers of tobacco products will prepare and maintain records of 
tobacco products removed from their factories in bond for experimental 
purposes. In addition, the proposed rule defined ``experimental 
purposes'' under section 5704(a) of Title 26 of the United States Code.
    We did not receive any comments in response to our notice of 
proposed rulemaking. Consequently, we are publishing this final rule 
without any substantial changes except for the control number given by 
the Office of Management and Budget.

Regulatory Requirements

Regulatory Flexibility Act

    We certify that these regulations will not have a significant 
economic impact on a substantial number of small entities. 
Consequently, the provisions of the Regulatory Flexibility Act (5 
U.S.C. 601 et seq.) do not apply. We also submitted the revised 
regulations to the Chief Counsel for Advocacy of the Small Business 
Administration for comment in accordance with 26 U.S.C. 7805(f). No 
comments were received.

Executive Order 12866

    We have 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.

Paperwork Reduction Act

    The collection of information contained in this regulation has been 
reviewed under the requirements of the Paperwork Reduction Act of 1995 
(44 U.S.C. 3507(j)). No public comments were received. The Office of 
Management and Budget (OMB) has issued control number 1512-0562 for 
this recordkeeping requirement. An agency may not conduct or sponsor, 
and a person is not required to respond to, a collection of information 
unless it displays a valid control number assigned by OMB.
    The collection of information in this rule is found in 27 CFR 
40.232. We use

[[Page 19333]]

this information to verify the kind and amount of tobacco products 
removed in bond from the premises of manufacturers for experimental 
purposes. In addition, we may use this information to determine that 
the persons to whom such removals are made are using the tobacco 
products for legitimate experimental purposes and that the tobacco 
products are properly destroyed or returned to the premises of a 
manufacturer following their experimental use. If such tobacco products 
are not destroyed or returned to the premises of a manufacturer, we 
will use this information to collect the taxes due.
    The collection of information is mandatory. The likely respondents 
may include small businesses or organizations. We have estimated 165 
recordkeepers and the total annual recordkeeping burden as 1 hour. The 
recordkeeping is customary and usual for business purposes.

Administrative Procedure Act

    In accordance with the provisions of 5 U.S.C. 553, we issued a 
notice of proposed rulemaking (66 FR 52730) prior to this final rule.

List of Subjects in 27 CFR Part 40

    Administrative practice and procedure, Authority delegations, 
Cigars and cigarettes, Claims, Electronic fund transfers, Excise taxes, 
Imports, Labeling, Packaging and containers, Penalties, Reporting and 
recordkeeping requirements, Seizures and forfeitures, Surety bonds, 
Tobacco.

Authority and Issuance

    For the reasons set forth in the preamble, part 40 of title 27 of 
the Code of Federal Regulations is amended to read as follows:

PART 40--MANUFACTURERS OF TOBACCO PRODUCTS AND CIGARETTE PAPERS AND 
TUBES

    1. The authority citation for part 40 continues to read as follows:

    Authority: 26 U.S.C. 5142, 5143, 5146, 5701, 5703-5705, 5711-
5713, 5721-5723, 5731, 5741, 5751, 5753, 5761-5763, 6061, 6065, 
6109, 6151, 6301, 6302, 6311, 6313, 6402, 6404, 6423, 6676, 6806, 
7011, 7212, 7325, 7342, 7502, 7503, 7606, 7805, 31 U.S.C. 9301, 
9303, 9304, 9306.

    2. Revise Sec. 40.232 to read as follows:


Sec. 40.232  Experimental purposes.

    A manufacturer of tobacco products may use tobacco products for 
experimental purposes without determination and payment of tax as set 
forth in this section.
    (a) What are experimental purposes? Experimental purposes are 
operations or tests carried out under controlled conditions to discover 
an unknown scientific principle or fact, to gather or confirm data 
about a known scientific principle or fact, or to test manufacturing, 
packaging, or other such equipment. Examples of uses for experimental 
purposes are:
    (1) Use by manufacturers to determine scientific facts relating to 
tobacco products, such as their chemical content;
    (2) Use by producers of packaging machines to test the operation of 
such machines; and
    (3) Use by laboratories, hospitals, medical centers, institutes, 
colleges, or universities, for scientific, technical, or medical 
research.
    (b) What purposes are not experimental? The uses of tobacco 
products outside the factory premises for advertising or consumer 
testing or as salespersons' or customers' samples are not experimental 
purposes.
    (c) Use in factory. A manufacturer of tobacco products may use 
tobacco products without determination and payment of tax for 
experimental purposes in a factory.
    (d) Use outside factory. A manufacturer may remove tobacco products 
in bond for experimental purposes outside a factory. When tobacco 
products are shipped for experimental purposes outside the factory, the 
proprietor of the factory remains liable for the taxes imposed by 26 
U.S.C. 5701 until the occurrence of one of the following events:
    (1) The tobacco products are returned to the premises of the 
factory from which they were shipped; or
    (2) The tobacco products are destroyed during or after their use 
for experimental purposes.
    (e) Record of use. In addition to the records prescribed by 
Sec. 40.183, a manufacturer who removes tobacco products in bond for 
experimental purposes outside a factory must prepare and maintain a 
record containing the following information:
    (1) Name and address of the consignee;
    (2) Kind and quantity of tobacco products removed;
    (3) Description of packaging, if any, of the tobacco products 
removed;
    (4) Description of how and when the consignee will use the tobacco 
products; and
    (5) Disposition of any remaining tobacco products after the 
consignee's use.
    (Approved by the Office of Management and Budget under Control 
Number 1512-0562.)

(72 Stat. 1418, as amended; 26 U.S.C. 5704)


    Signed: February 26, 2002.
Bradley A. Buckles,
Director.
    Approved: March 28, 2002.
Timothy E. Skud,
Deputy Assistant Secretary, (Regulatory, Tariff, and Trade 
Enforcement).
[FR Doc. 02-9633 Filed 4-18-02; 8:45 am]
BILLING CODE 4810-31-U