[Federal Register Volume 74, Number 184 (Thursday, September 24, 2009)]
[Rules and Regulations]
[Pages 48650-48654]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-23180]


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DEPARTMENT OF THE TREASURY

Alcohol and Tobacco Tax and Trade Bureau

27 CFR Parts 40, 41, and 45

[Docket No. TTB-2009-0002; T.D. TTB-81; Re: Notice No. 99, T.D. TTB-78, 
Notice No. 95]
RIN 1513-AB75


Extension of Package Use-Up Rule for Roll-Your-Own Tobacco and 
Pipe Tobacco (2009R-368P)

AGENCY: Alcohol and Tobacco Tax and Trade Bureau, Treasury.

ACTION: Temporary rule; Treasury decision.

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SUMMARY: On June 22, 2009, the Alcohol and Tobacco Tax and Trade Bureau 
published T.D. TTB-78, which included amendments to the notice 
requirements applicable to packages of roll-your-own tobacco and pipe 
tobacco. The temporary regulations provided a use-up period, until 
August 1, 2009, for manufacturers and importers to continue to remove 
packages that did not meet the new notice requirements. Those temporary 
regulations also included a new rule governing when a product in a 
package bearing the declaration ``pipe tobacco'' would be classified as 
roll-your-own tobacco for tax purposes. This temporary rule extends the 
use-up period and delays application of the new classification rule. It 
also corrects two minor errors in the previously published regulatory 
texts. We also are soliciting comments from all interested parties on 
these new amendments through a notice of proposed rulemaking published 
elsewhere in this issue of the Federal Register.

DATES: Effective Date: This temporary rule is effective September 24, 
2009 through June 22, 2012.

FOR FURTHER INFORMATION CONTACT: Amy R. Greenberg, Regulations and 
Rulings Division, Alcohol and Tobacco Tax and Trade Bureau (202-453-
2265).

SUPPLEMENTARY INFORMATION:

Background

    On June 22, 2009, the Alcohol and Tobacco Tax and Trade Bureau 
(TTB) published a temporary rule in the Federal Register (T.D. TTB-78, 
74 FR 29401) to implement certain changes made to the Internal Revenue 
Code of 1986 by the Children's Health Insurance Program Reauthorization 
Act of 2009 (Pub. L. 111-3; 123 Stat. 8) (the Act). The regulatory 
changes made by the temporary rule went into effect on June 22, 2009. 
In the same issue of the Federal Register, TTB published a notice of 
proposed rulemaking (Notice No. 95, 74 FR 29433) inviting comments on 
the temporary regulations.
    The temporary rule included new requirements regarding the 
packaging and labeling of pipe tobacco and roll-your-own tobacco to 
distinguish between these two products for tax purposes and to reflect 
the expansion of the statutory definition of roll-your-own tobacco 
generally to include cigar wrapper and filler. Specifically, the 
amendments adopted in the temporary rule resulted in the following 
regulatory standards:
     A package of processed tobacco that bears the notice 
required for pipe tobacco is deemed to be roll-your-own tobacco if the 
package does not bear the words ``pipe tobacco'' in direct conjunction 
with, parallel to, and in substantially the same conspicuousness of 
type and background as the brand name each time the brand name appears 
on the package, or if the package or accompanying materials bear any 
representation that would suggest a use other than as pipe tobacco. 
(See 27 CFR 40.25a(b) and 41.30(b)).
     Only the words ``pipe tobacco'' are acceptable as a 
designation on a package of pipe tobacco. The words ``Tax Class L'' are 
no longer authorized as an alternative designation. (See 27 CFR 
40.216a(a), 41.72a(a), and 45.45a(a)). However, a manufacturer or 
importer

[[Page 48651]]

may, until August 1, 2009, continue to remove packages of pipe tobacco 
that bear the designation ``Tax Class L'', if such packages were in use 
prior to April 1, 2009. (See 27 CFR 40.216c(a), 41.72c(a), and 
45.45c(a)).
     Only the words ``roll-your-own tobacco'', ``cigarette 
tobacco'', ``cigar tobacco'', ``cigarette wrapper'', and ``cigar 
wrapper'' are acceptable as designations on a package of roll-your-own 
tobacco. The words ``Tax Class J'' are no longer authorized as an 
alternative designation. (See 27 CFR 40.216b(a), 41.72b(a), and 
45.45b(a)). However, a manufacturer or importer may, until August 1, 
2009, continue to remove packages of roll-your-own tobacco that bear 
the designation ``Tax Class J'', if such packages were in use prior to 
April 1, 2009. (See 27 CFR 40.216c(a), 41.72c(a), and 45.45c(a)). In 
addition, a manufacturer or importer may, until August 1, 2009, remove 
roll-your-own tobacco for which the appropriate designation is ``cigar 
tobacco,'' ``cigarette wrapper,'' or ``cigar wrapper'' even if the 
packages of such products do not meet the requirements of Sec. Sec.  
40.216b, 41.72b, or 45.45b. (See 27 CFR 40.216c(b), 41.72c(b), and 
45.45c(b)).
    In the preamble to T.D. TTB-78, we set forth the rationale for 
these regulatory changes. Among other points, we noted that the tax 
increases adopted in section 701 of the Act resulted in a significant 
difference in the rate of tax imposed on pipe tobacco ($2.8311 per 
pound) and the rate of tax imposed on roll-your-own tobacco ($24.78 per 
pound); prior to the amendments made by the Act, the two rates were the 
same. Because of the revenue implications resulting from the tax rate 
changes, we stated that we are currently evaluating analytical methods 
and other standards to differentiate between the two products for tax 
purposes, as the current regulations contain no such standard beyond a 
repeat of the statutory definitions. We also noted that the definitions 
of these products require consideration of the packaging and labeling 
of the product in order to determine its classification. Under 26 
U.S.C. 5702(n), the term ``pipe tobacco'' means any tobacco which, 
because of its appearance, type, packaging, or labeling, is suitable 
for use and likely to be offered to, or purchased by, consumers as 
tobacco to be smoked in a pipe. Under 26 U.S.C. 5702(o), as amended by 
section 702 of the Act, the term ``roll-your-own tobacco'' means any 
tobacco which, because of its appearance, type, packaging, or labeling, 
is suitable for use and likely to be offered to, or purchased by, 
consumers as tobacco for making cigarettes or cigars, or for use as 
wrappers thereof. Accordingly, due to the incentive for industry 
members to present roll-your-own tobacco as pipe tobacco in the 
marketplace (and thus pay the lower tax rate), and due to the inclusion 
of packaging and labeling as a determining factor in the definitions 
(and thus classifications) of these products, the packaging and 
labeling of the products must clearly distinguish one product from the 
other. The circumstances in which a product is deemed to be roll-your-
own tobacco rather than pipe tobacco in the amended texts are intended 
to ensure that the tax collected on the product is consistent with the 
way the product is presented to the consumer.
    The inclusion of the terms ``cigar wrapper,'' ``cigarette 
wrapper,'' and ``cigar filler'' as terms that would be acceptable 
designations on packages of roll-your-own merely reflects the statutory 
change to the definition of roll-your-own tobacco. As with the removal 
of the words ``Tax Class J'' and ``Tax Class L'', the inclusion of 
these new terms is intended to ensure both that the product clearly 
conveys the appropriate classification of the product for tax purposes 
and that the manufacturer and importer can use as a designation a term 
more specific to the type of product being offered.
    The use-up provisions were intended to allow industry members time 
to comply with these new requirements while, at the same time, 
minimizing the jeopardy to the revenue.

Comments Received

    In response to Notice No. 95, we have received two comments raising 
concerns regarding the classification and notice provisions described 
above, which we believe warrant immediate consideration. The commenters 
are Kellie L. Newton, who submitted a comment on behalf of the Pipe 
Tobacco Council, Inc. (``PTC''), and Harold N. Bynum, who submitted a 
comment on behalf of John Middleton Co. (``JMC''). Both commenters 
requested that TTB extend use-up periods for the notice and 
classification-related requirements that apply to pipe tobacco 
products, asserting that the use-up period in the temporary regulations 
(that is, to August 1, 2009) gave insufficient time for manufacturers 
and importers of pipe tobacco to comply with the new requirements.
    In its comment, PTC requested that TTB extend the period during 
which packaging not in compliance with the new regulatory provisions 
could be used to ``at least May 1, 2010.'' PTC asserted that the 
existing use-up period would cause ``substantial irreparable economic 
harm to the manufacturers and importers of pipe tobacco.'' PTC stated 
that the 40 days provided ``is not sufficient time for the 
manufacturers and importers of pipe tobacco to fully comprehend the 
required packaging and labeling changes, to assess current inventory, 
and to design, order and receive new packaging or stickers that comply 
with the required changes.'' PTC stated: (1) It often takes five to six 
months for companies to introduce new packaging; (2) the existing use-
up period could cost the industry as much as $2,400,000 to obtain and 
put into use new packaging; (3) extending the use-up to May 1, 2010, 
would still cause the industry to incur as much as $1,400,000 in 
design, packaging, delivery, and labor costs; and (4) additional 
financial losses would include the loss of existing inventories of 
packaging that could not be brought into compliance with the new 
provisions. PTC estimated significant losses to the U.S. economy if 
manufacturers must stop removing product because of issues arising from 
the packaging and labeling requirements. The commenter noted that, in 
the past, TTB has provided for longer use-up periods when it has 
required the industry to change labels and packages of tobacco 
products. For example, on June 29, 2000, TTB's predecessor agency, the 
Bureau of Alcohol, Tobacco and Firearms (ATF) published in the Federal 
Register an extension of a compliance date for the marking of roll-
your-own tobacco, thereby adding six months to an original four month 
use-up period.
    In its comment, JMC asserted that the classification and notice 
requirements are ``unnecessarily burdensome.'' JMC asked that TTB 
extend the use-up provision related to the notice requirement on pipe 
tobacco packaging to allow use of existing packaging materials until 
final rules are adopted. With regard to the classification issue, JMC 
pointed out that the provisions set forth in Sec. Sec.  40.25a and 
41.30, in which the packaging bears on the classification of the 
products in question, were not subject to a use-up period in the 
temporary regulations, and JMC asked that TTB make a use-up provision 
equally applicable to both the classification and notice-related 
packaging provisions.
    According to JMC, very little of the pipe tobacco packaging on the 
market on June 22, 2009, met both the new notice and classification-
related marking requirements, and there was no indication in the Act 
that such requirements would be forthcoming. JMC estimated that it will 
take

[[Page 48652]]

approximately three months or more for JMC to develop, print, and move 
into use new packaging materials, at a cost in excess of $150,000.00, 
and JMC further stated that the company will have in excess of one 
million pieces of packaging materials on hand that will be wasted if 
the use-up period is not extended. JMC further noted that, for JMC's 
last packaging change with TTB implications, TTB allowed a one-year use 
up of its previous packaging. JMC believes the extension of a use-up 
period until the temporary regulations are finalized through 
publication of a final rule is need because of the ``fluid nature of 
rule making'' under which, based on comments received, TTB may make 
changes to the requirements that would result in yet another packaging 
change.
    In addition to concerns about the length of the use-up period, JMC 
asserted that it is unreasonable for the new regulations to apply the 
use-up period only to packages that were in use on April 1, 2009, 
because manufacturers may have begun using new packaging materials 
after April 1, 2009, but prior to June 22, 2009, unaware of the 
impending changes required by the temporary rule. According to JMC, it 
would be legitimate to restrict the use-up provision to products that 
were marketed as pipe tobacco prior to the passage of the Act.
    JMC further asserted that the extension of the use-up provision 
``can be done in such a way that the revenue from roll-your-own tobacco 
products will not be threatened,'' by applying the extension only to 
products that were marketed as pipe tobacco prior to the passage of the 
Act. JMC noted that the new regulations also provide that a product 
will be deemed to be roll-your-own tobacco even if it bears a ``pipe 
tobacco'' notice if the package or accompanying materials bear any 
representation that would suggest a use other than as pipe tobacco. JMC 
believes that this provision, in combination with the application of 
the extension only to products that were sold as pipe tobacco prior to 
the passage of the Act, would be adequate to protect the revenue 
``without placing an unreasonable burden on established manufacturers 
of pipe tobacco.''
    We note that the submission by JMC also questioned the new package 
labeling requirements as ``not authorized or required by the CHIPRA 
legislation.'' We are not addressing this issue at this time. We will 
address this issue along with other comments received in response to 
Notice No. 95.

TTB Analysis and Finding

    We have carefully considered the above comments, including the 
statements regarding the costs that would be incurred by manufacturers 
and importers without an extension of the use-up period, and the 
potential for jeopardy to the revenue involved in extending the 
compliance deadline under the second use-up rule. We have also received 
and considered requests from persons who are engaged in business as 
manufacturers or importers of cigar wrappers and who, by virtue of the 
change to the definition of roll-your-own tobacco made by section 702 
of the Act, only recently came into the TTB statutory and regulatory 
regime. These industry members have asked TTB to provide an extended 
use-up period applicable to the notice requirements for their products.
    Based on the information before us, we believe that a persuasive 
case has been made for an extension of the periods specified for the 
use-up rules and for delaying application of the new classification 
rule. Accordingly, in this document we are amending Sec. Sec.  40.25a 
and 41.30 to provide that during the period from June 22, 2009, through 
March 23, 2010, manufacturers and importers may continue to remove 
products as pipe tobacco even though the packages do not bear the 
declaration ``pipe tobacco'' with the brand name in the manner 
prescribed in paragraph (b)(3)(i) of each of those sections. We are 
also revising the use-up rules in Sec. Sec.  40.216c, 41.72c, and 
45.45c to provide that during the period from June 22, 2009, through 
March 23, 2010, a manufacturer or importer of tobacco products may 
remove packages of pipe tobacco or roll-your-own tobacco that do not 
meet the applicable notice requirements, provided that such packages 
bear the designation ``Tax Class L'' (to designate pipe tobacco) or 
``Tax Class J'' (to designate roll-your-own tobacco) and were in use 
prior to June 22, 2009. These revised use-up provisions also provide 
that, during the same period, a manufacturer or importer may remove 
roll-your-own tobacco for which the applicable designation is ``cigar 
tobacco,'' ``cigarette wrapper,'' or ``cigar wrapper'' even if the 
packages of such products do not meet the requirements of Sec. Sec.  
40.216b, 41.72b, or 45.45b. Thus, these amendments provide an extension 
of the use-up period for current packaging that is equally applicable 
to both the classification and the notice-related packaging provisions. 
In addition, these amendments provide additional time for manufacturers 
and importers to bring packaging into compliance with the new packaging 
requirements.
    As the amendments in this document reflect, we do not believe it is 
appropriate to extend the date by which packages must be brought into 
compliance until May 2010 (as was proposed by PTC) or until a final 
rule is published (as was proposed by JMC). We believe that the 
extended use-up periods suggested by these commenters are too long to 
be consistent with good regulatory practice. In addition, we do not 
believe that the circumstances here are sufficiently similar to those 
of prior, longer, use-up periods that the commenters described in their 
submissions.
    As was noted in T.D. TTB-78, in the present circumstance the 
classification of the products has significant revenue implications. 
The extent to which the packaging clearly conveys the use for which the 
product is offered will directly affect the assessment of whether a 
product is, because of its packaging or labeling, ``likely to be 
offered to, or purchased by, consumers'' as a pipe tobacco or a roll-
your-own tobacco. The incentive for industry members to manipulate the 
packaging and labeling of such products, particularly during the period 
in which TTB is evaluating but has not published definitive analytical 
methods or other standards for distinguishing between the two products, 
is significant. Earlier examples of use-up periods provided by TTB or 
ATF did not have similar revenue consequences. For example, the 
extension of the use-up period for roll-your-own tobacco product 
packages published by ATF in the Federal Register on June 29, 2000, 
took place when the tax rates imposed on pipe tobacco and on roll-your-
own tobacco were equivalent ($0.9567 per pound). We believe that the 
extended use-up period provided in the present temporary rule 
recognizes both the financial concerns of industry members and the 
revenue requirements of the Act (and the implementation and enforcement 
realities that accompany them).
    With regard to the comment by JMC concerning the unreasonableness 
of the requirement that packages must have been in use prior to April 
1, 2009, to qualify for continued removal until the end of the use-up 
period, we note that the use of the June 22, 2009, date in the amended 
regulatory texts contained in this document address that concern. This 
change conforms the start of the new use-up period to the date of the 
publication of T.D. TTB-78 (that is, June 22, 2009). It also obviates 
the need to address the suggestion of JMC to apply

[[Page 48653]]

the use-up provision only to products that were marketed as pipe 
tobacco prior to the passage of the Act.
    Finally, we note that the temporary regulations adopted in T.D. 
TTB-78 contained two minor errors of omission, which this document 
corrects. Specifically, we are amending 27 CFR 41.81(c)(6) and (7) to 
bring those provisions, which concern information on pipe tobacco and 
roll-your-own tobacco that importers must include on customs forms or 
in authorized electronic transmissions, into conformity with the 
amendments that T.D. TTB-78 made to the notice requirements for such 
products. In Sec.  41.81(c)(6), we have removed the term ``Tax Class 
L'' as a designation for pipe tobacco. In Sec.  41.81(c)(7), we have 
removed the term ``Tax Class J'' as a designation for roll-your-own 
tobacco and have added the other acceptable designations for roll-your-
own tobacco: ``cigarette tobacco'', ``cigarette wrapper'', ``cigar 
tobacco'', or ``cigar wrapper''.

Temporary Rule

    Based on the June 22, 2009, effective date of the package and 
notice provisions which are the subject of the regulatory changes 
contained in this document, and based on the need to extend the August 
1, 2009, termination date of the use-up provisions and to delay 
application of the new classification rule as discussed above, TTB 
believes that it is necessary to adopt these regulatory changes 
immediately.

Public Participation

    To submit comments on this proposal, please refer to the notice of 
proposed rulemaking, Notice No. 99, published in the ``Proposed Rules'' 
section of this issue of the Federal Register.
    You may view copies of all the CHIPRA-related rulemaking documents 
and any comments we receive about them within Docket No. TTB-2009-0002 
at http://www.regulations.gov. A direct link to this docket is posted 
on the TTB Web site at http://www.ttb.gov/tobacco/tobacco-rulemaking.shtml under Notice No. 99. You also may view copies of those 
rulemaking documents and comments by appointment at the TTB Information 
Resource Center, 1310 G Street, NW., Washington, DC 20220. Please call 
202-453-2270 to make an appointment.

Regulatory Flexibility Act

    We certify that this temporary rule will not have a significant 
economic impact on a substantial number of small entities. Accordingly, 
a regulatory flexibility analysis is not required. The regulatory 
obligations and relevant collections of information which are the 
subject of this temporary rule derive directly from the Internal 
Revenue Code of 1986, as amended. Likewise, any secondary or incidental 
effects, and any reporting, recordkeeping, or other compliance burdens 
flow directly from the statute. Pursuant to 26 U.S.C. 7805(f), this 
temporary regulation will be submitted to the Chief Counsel for 
Advocacy of the Small Business Administration for comment on its impact 
on small businesses.

Paperwork Reduction Act

    TTB has provided estimates of the burden that the collection of 
information contained in these regulations imposes, and the estimated 
burden has been reviewed and approved by the Office of Management and 
Budget (OMB) in accordance with the Paperwork Reduction Act of 1995 (44 
U.S.C. 3507) and assigned control number 1513-0101.
    Under the Paperwork Reduction Act of 1995, 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 OMB control 
number. Comments concerning suggestions for reducing the burden of the 
collections of information in this document should be directed to Mary 
A. Wood, Alcohol and Tobacco Tax and Trade Bureau, at any of these 
addresses:
     P.O. Box 14412, Washington, DC 20044-4412;
     202-453-2686 (facsimile); or
     [email protected] (e-mail).

Executive Order 12866

    This is not a significant regulatory action as defined in E.O. 
12866. Therefore, it requires no regulatory assessment.

Inapplicability of Prior Notice and Comment and Delayed Effective Date 
Procedures

    Because this document makes necessary changes to regulatory 
provisions that are already in effect, and because these changes are 
needed immediately to avoid unintended negative consequences on 
industry members arising out of the existing regulations, it is found 
to be impracticable to issue this Treasury decision with notice and 
public procedure under 5 U.S.C. 553(b).
    Pursuant to the provisions of 5 U.S.C. 553(d)(2), and (d)(3), we 
are issuing these regulatory amendments without a delayed effective 
date. These amendments affect regulatory provisions that TTB adopted as 
an interpretative rule implementing Public Law 111-3 as provided for in 
section 553(d)(2). TTB also has determined that good cause exists to 
provide industry members with immediate relief from the unintended 
consequences of the existing regulations, in accordance with section 
553(d)(3).

Drafting Information

    Amy R. Greenberg of the Regulations and Rulings Division, Alcohol 
and Tobacco Tax and Trade Bureau, drafted this document.

List of Subjects

27 CFR Part 40

    Cigars and cigarettes, Claims, Electronic funds transfers, Excise 
taxes, Imports, Labeling, Packaging and containers, Reporting and 
recordkeeping requirements, Surety bonds, Tobacco.

27 CFR Part 41

    Cigars and cigarettes, Claims, Customs duties and inspection, 
Electronic funds transfers, Excise taxes, Imports, Labeling, Packaging 
and containers, Puerto Rico, Reporting and recordkeeping requirements, 
Surety bonds, Tobacco, Virgin Islands, Warehouses.

27 CFR Part 45

    Administrative practice and procedure, Authority delegations 
(Government agencies), Cigars and cigarettes, Excise taxes, Labeling, 
Packaging and containers, Reporting and recordkeeping requirements, 
Tobacco.

Amendments to the Regulations

0
For the reasons set forth in the preamble, title 27, chapter I, of the 
Code of Federal Regulations is amended as follows:

PART 40--MANUFACTURE OF TOBACCO PRODUCTS, CIGARETTE PAPERS AND 
TUBES, AND PROCESSED TOBACCO

0
1. The authority citation for part 40 continues to read as follows:

    Authority: 26 U.S.C. 5142, 5143, 5146, 5701-5705, 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.


0
2. In Sec.  40.25a, paragraph (b)(3) is amended by removing the words 
``Any tobacco'' and adding, in their place, the words ``Subject to 
paragraph (b)(4) of this section, any tobacco'', and a new paragraph 
(b)(4) is added to read as follows:

[[Page 48654]]

Sec.  40.25a  Pipe tobacco and roll-your-own tobacco tax rates and 
classification.

* * * * *
    (b) * * *
    (4) During the period from June 22, 2009, through March 23, 2010, 
manufacturers may continue to remove products as pipe tobacco in 
packages that do not bear the declaration ``pipe tobacco'' in the 
manner prescribed in paragraph (b)(3)(i) of this section.


0
3. Section 40.216c is revised to read as follows:


Sec.  40.216c  Package use-up rule.

    (a) During the period from June 22, 2009, through March 23, 2010, a 
manufacturer of tobacco products may remove packages of pipe tobacco or 
roll-your-own tobacco that do not meet the requirements of Sec.  
40.216a(a) or Sec.  40.216b(a), provided that such packages bear the 
designation ``Tax Class L'' (to designate pipe tobacco) or ``Tax Class 
J'' (to designate roll-your-own tobacco) and were in use prior to June 
22, 2009.
    (b) During the period from June 22, 2009, through March 23, 2010, a 
manufacturer may remove roll-your-own tobacco for which the applicable 
designation is ``cigar tobacco,'' ``cigarette wrapper,'' or ``cigar 
wrapper'' even if the packages of such products do not meet the 
requirements of Sec.  40.216b.

PART 41--IMPORTATION OF TOBACCO PRODUCTS, CIGARETTE PAPERS AND 
TUBES, AND PROCESSED TOBACCO

0
4. The authority citation for part 41 continues to read as follows:

    Authority: 26 U.S.C. 5701-5705, 5708, 5712, 5713, 5721-5723, 
5741, 5754, 5761-5763, 6301, 6302, 6313, 6402, 6404, 7101, 7212, 
7342, 7606, 7651, 7652, 7805; 31 U.S.C. 9301, 9303, 9304, 9306.



0
5. In Sec.  41.30, paragraph (b)(3) is amended by removing the words 
``Any tobacco'' and adding, in their place, the words ``Subject to 
paragraph (b)(4) of this section, any tobacco'', and a new paragraph 
(b)(4) is added to read as follows:


Sec.  41.30  Pipe tobacco and roll-your-own tobacco.

* * * * *
    (b) * * *
    (4) During the period from June 22, 2009, through March 23, 2010, 
importers may continue to remove products as pipe tobacco in packages 
that do not bear the declaration ``pipe tobacco'' in the manner 
prescribed in paragraph (b)(3)(i) of this section.

0
6. Section 41.72c is revised to read as follows:


Sec.  41.72c  Package use-up rule.

    (a) During the period from June 22, 2009, through March 23, 2010, 
an importer of tobacco products may remove packages of pipe tobacco or 
roll-your-own tobacco that do not meet the requirements of Sec.  
41.72a(a) or Sec.  41.72b(a), provided that such packages bear the 
designation ``Tax Class L'' (to designate pipe tobacco) or ``Tax Class 
J'' (to designate roll-your-own tobacco) and were in use prior to June 
22, 2009.
    (b) During the period from June 22, 2009, through March 23, 2010, 
an importer may remove roll-your-own tobacco for which the applicable 
designation is ``cigar tobacco,'' ``cigarette wrapper,'' or ``cigar 
wrapper'' even if the packages of such products do not meet the 
requirements of Sec.  41.72b.

0
7. In Sec.  41.81, paragraphs (c)(6) and (c)(7) are revised to read as 
follows:


Sec.  41.81  Taxpayment.

* * * * *
    (c) * * *
    (6) For pipe tobacco: The importer will show the designation ``pipe 
tobacco'', the number of pounds and ounces, the rate of tax, and the 
tax due.
    (7) For roll-your-own tobacco: The importer will show the 
designation ``roll-your-own tobacco'' or any other acceptable 
designation (``cigarette tobacco'', ``cigarette wrapper'', ``cigar 
tobacco'', or ``cigar wrapper''), the number of pounds and ounces, the 
rate of tax, and the tax due.
* * * * *

PART 45--REMOVAL OF TOBACCO PRODUCTS AND CIGARETTE PAPERS AND 
TUBES, WITHOUT PAYMENT OF TAX, FOR USE OF THE UNITED STATES

0
8. The authority citation for part 45 continues to read as follows:

    Authority: 26 U.S.C. 5702-5705, 5723, 5741, 5751, 5762, 5763, 
6313, 7212, 7342, 7606, 7805; 44 U.S.C. 3504(h).


0
9. Section 45.45c is revised to read as follows:


Sec.  45.45c  Package use-up rule.

    (a) During the period from June 22, 2009, through March 23, 2010, a 
manufacturer of tobacco products may remove packages of pipe tobacco or 
roll-your-own tobacco that do not meet the requirements of Sec.  
45.45a(a) or Sec.  45.45b(a), provided that such packages bear the 
designation ``Tax Class L'' (to designate pipe tobacco) or ``Tax Class 
J'' (to designate roll-your-own tobacco)) and were in use prior to June 
22, 2009.
    (b) During the period from June 22, 2009, through March 23, 2010, a 
manufacturer may remove roll-your-own tobacco for which the applicable 
designation is ``cigar tobacco,'' ``cigarette wrapper,'' or ``cigar 
wrapper'' even if the packages of such products do not meet the 
requirements of Sec.  45.45b.

    Signed: August 23, 2009.
John J. Manfreda,
Administrator.

    Approved: September 4, 2009.
Timothy E. Skud,
Deputy Assistant Secretary, Tax, Trade, and Tariff Policy.
[FR Doc. E9-23180 Filed 9-23-09; 8:45 am]
BILLING CODE 4810-31-P