Alteration of Labels on Containers of Distilled Spirits, Wine, and Beer (CRD-94-8)

DEPARTMENT OF THE TREASURY

Bureau of Alcohol, Tobacco and Firearms

27 CFR Parts 4, 5, and 7

[Notice No. 804; Re Notice No. 803]

RIN: AB32

Alteration of Labels on Containers of Distilled Spirits, Wine,

and Beer (CRD-94-8)

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

the Treasury.

ACTION: Corrected Notice of Proposed Rulemaking.

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SUMMARY: On January 4, 1995, the Bureau of Alcohol, Tobacco and

Firearms (ATF) published a notice of proposed rulemaking (Notice No.

803, 60 FR 411) in the Federal Register. Because the notice contained

errors which could cause confusion to the public, ATF is reprinting the

entire corrected text here, in this correction notice, as it should

have appeared in Notice No. 803. The original text of Notice No. 803

should be disregarded; instead, all interested parties should refer to

the reprinted text in this document. ATF is extending the comment

period accordingly to allow 60 days from the date of this correction

notice.

ATF is proposing to amend the regulations in 27 CFR Parts 4, 5, and

7 which implement section 105(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 eliminate a requirement that persons obtain ATF approval before

relabeling wine and malt beverage products. Instead, persons who intend

to relabel wine, malt beverage, or distilled spirits products would be

required to notify ATF, in writing, of their intent to relabel. The

proposed amendments 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 14, 1995.

ADDRESSES: Send written comments to: Chief, Wine, Beer, and Spirits

Regulations Branch, Bureau of Alcohol, Tobacco and Firearms, P.O. Box

50221, Washington, DC 20091-0221. [Attn: Notice No. 804.]

FOR FURTHER INFORMATION CONTACT: Daniel J. Hiland, Wine, Beer, and

Spirits Regulations 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 ATF

regulations. However, the effect of such action is to make it

impossible for the producers to rely on production codes to trace

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

containers 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

[[Page 3172]] 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

purpose, 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 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 giving notice to 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 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

[[Page 3173]] 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

requirement on small producers.

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 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.

Elimination of Prior Approval Requirement

The proposed amendments to parts 4, 5, and 7 relating to the

relabeling of wine, distilled spirits, and malt beverages would also

resolve an inconsistency in the present regulations. Currently, persons

who wish to relabel wine and malt beverages are required to make

written application and receive approval from ATF prior to relabeling

these products. However, persons who wish to relabel distilled spirits

are not [[Page 3174]] required to receive prior approval from ATF, as

long as the distilled spirits products are relabeled in accordance with

an approved label.

The proposed amendments would eliminate the requirement to receive

approval from the regional director prior to relabeling wine and malt

beverages. Instead, any persons who wished to relabel wine, malt

beverages, or distilled spirits would be required to notify the

Director, in writing, of their intent to relabel. This letterhead

notice must be accompanied by duplicate copies of the old and new

labels, together with a written statement of the reasons for

relabeling, the quantity and location of the product to be relabeled,

and the name and address of the person conducting the relabeling

activities.

ATF believes that the proposed amendment will eliminate the

inconsistencies in the current regulations, while still enabling the

tracing of products in the event of a safety hazard or a compliance

issue. Since the requirement for prior approval is being eliminated,

the proposed amendments will provide that the notice should be sent to

the Director, rather than the regional director. This proposal will

increase efficiency in the Bureau's tracing of labels, since copies of

certificates of label approval are maintained at Bureau headquarters.

As previously noted, the proposed regulations will provide that ATF

does not need to be notified of the relabeling of alcoholic beverage

products in Customs bonded warehouses or foreign trade zones, as long

as all other requirements are met.

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 any notice requirement, 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 notice 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 require

submission of evidence of label approval for label changes.

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 impose a notice

requirement on the relabeling of distilled spirits, wine, and malt

beverages, while eliminating the prior approval requirement previously

imposed by the wine and malt beverage regulations. 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

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 notify 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 collection

requirement is included in OMB Control Number 1512-0092, which covers

the relabeling of distilled spirits, wines, and beer. 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 will receive about 180 notices of intent 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 filing a notice with

the 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 estimate

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 [[Page 3175]] consideration if it is

practical to do so, but assurance of consideration cannot be given

except as to comments received on 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, Alcohol

and Tobacco 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) Relabeling. (i) Persons may engage in additional labeling or

relabeling of wine in containers for purposes of compliance with the

requirements of this subpart or of State law only if the new labels are

covered by certificates of label approval, and the relabeling will not

result in the removal from the container or label of 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) Persons who wish to relabel in accordance with paragraph

(b)(2)(i) of this section must give prior written notice to the

Director of their intent to relabel. A notice of intent to relabel wine

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 conducting the relabeling

activity. In addition, persons desiring to relabel wine must provide

evidence that they have applied for and received a certificate of label

approval, ATF F 5100.31, covering such products.

(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

notice to ATF, 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.

(c) Customs bonded warehouses. (1) Domestic wines which have been

removed without payment of tax for transfer to a Customs bonded

warehouse pending exportation may be relabeled without notice to 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 notice to 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 notice to 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 notice to 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.

[[Page 3176]] 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) Relabeling. (i) Persons may engage in additional labeling or

relabeling of distilled spirits in containers for purposes of

compliance with the requirements of this subpart or of State law only

if the new labels are covered by certificates of label approval, and

the relabeling will not result in the removal from the container or

label of 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) Persons who wish to relabel in accordance with paragraph

(b)(2)(i) of this section must give prior written notice to the

Director of their intent to relabel. A notice of intent to relabel

distilled spirits 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 conducting the relabeling activity. In addition, persons

desiring to relabel distilled spirits must provide evidence that they

have applied for and received a certificate of label approval, ATF F

5100.31, covering such products.

(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 notice to ATF, a label

identifying the wholesale or retail distributor thereof or identifying

the purchaser or consumer, and containing no references whatever to the

characteristics of the product.

(c) Customs bonded warehouses. (1) Domestic distilled spirits which

have been removed without payment of tax for transfer to a Customs

bonded warehouse pending exportation may be relabeled without notice to

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 notice to 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 notice to 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 notice to 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. 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 paragraphs (d) and (e) to read as follows:

Sec. 7.20 General.

* * * * *

(c) Alteration of labels. (1) It shall be unlawful for any person

to alter, mutilate, destroy, obliterate, or remove any mark, brand, or

label upon malt beverages held for sale in interstate or foreign

commerce or after shipment therein, including malt beverages held in

Customs bonded warehouses or foreign trade zones, except as authorized

by Federal law, or as provided in this section.

(2) Relabeling. (i) Malt beverages in containers may be relabeled

for purposes of compliance with the requirements of this subpart or of

State law only if the new labels are covered by certificates of label

approval, and the relabeling will not result in the removal from the

container or label of 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) Persons who wish to relabel in accordance with paragraph

(c)(2)(i) of this section must give prior written notice to the

Director of their intent to relabel. A notice of intent to relabel malt

beverages shall be accompanied by two complete sets of the old labels

and two complete sets of any proposed new labels, together with a

statement of the reasons for relabeling, the quantity and the location

of the malt beverages, and the name and address of the person

conducting the relabeling activity. In addition, persons desiring to

relabel malt beverages must provide evidence that they have applied for

and received a certificate of label approval, ATF F 5100.31, covering

such products.

(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 notice to ATF, a label

identifying the wholesale or retail distributor thereof or

[[Page 3177]] identifying the purchaser or consumer, and containing no

references whatever to the characteristics of the product.

(d) Customs bonded warehouses. Imported malt beverages held in a

Customs bonded warehouse may be relabeled without notice to ATF, as

long as such relabeling is done under the supervision of Customs

officers, in compliance with all applicable Customs requirements, and

the effect of the relabeling is not to remove from the container or

label any product identification code placed on the container or label

by the producer for tracing purposes. As provided in Sec. 7.31, no

imported malt beverages in containers shall be released from Customs

custody for consumption without a certificate of label approval.

(e) Foreign trade zones. (1) Domestic malt beverages which have

been withdrawn without payment of tax for deposit in a foreign trade

zone pending exportation may be relabeled without notice to ATF as long

as such relabeling is done under the supervision of Customs officers,

in compliance with all applicable Customs requirements, and the effect

of the relabeling is not to remove from the container or label any

markings required by Part 25 of this chapter or any product

identification code placed on the container or label by the producer

for tracing purposes.

(2) Imported malt beverages which have been entered into a foreign

trade zone may be relabeled without notice to ATF, as long as such

relabeling is done under Customs supervision and in compliance with

Customs requirements, and the effect of such relabeling is not to

remove from the label or container any product identification code

placed on the label or container by the producer for tracing purposes.

As provided in Sec. 7.31, no imported malt beverages in containers

shall be released from Customs custody for consumption without a

certificate of label approval.

Par. 9. Section 7.60 is revised to read as follows:

Sec. 7.60 Exports.

With the exception of the regulations at Sec. 7.20(c), (d) and (e),

the regulations in this part shall not apply to malt beverages exported

in bond.

Signed: January 10, 1995.

Daniel R. Black,

Acting Director.

[FR Doc. 95-997 Filed 1-11-95; 1:43 pm]

BILLING CODE 4810-31-U