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

Federal RegisterJan 4, 1995

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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]]

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.

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.

* * * * *

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