1513-0089 Laws and Regs.

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Liquors and Articles from Puerto Rico or the Virgin Islands (TTB REC 5530/3)

1513-0089 Laws and Regs.

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1513-0089

26 U.S.C.

Sec. 5131. Eligibility and rate of tax

(a) Eligibility for drawback

Any person using distilled spirits on which the tax has been

determined, in the manufacture or production of medicines, medicinal

preparations, food products, flavors, flavoring extracts, or perfume,

which are unfit for beverage purposes, on payment of a special tax per

annum, shall be eligible for drawback at the time when such distilled

spirits are used in the manufacture of such products as provided for in

this subpart.

(b) Rate of tax

The special tax imposed by subsection (a) shall be $500 per year.

(Added Pub. L. 85-859, title II, Sec. 201, Sept. 2, 1958, 72 Stat. 1345; amended Pub. L. 94-455, title XIX, Sec. 1905(a)(11), Oct. 4, 1976, 90 Stat. 1819; Pub. L. 100-203, title X, Sec. 10512(d), Dec. 22, 1987, 101 Stat. 1330-448; Pub. L. 103-465, title I, Sec. 136(b), Dec. 8, 1994, 108 Stat. 4841.)

Sec. 5132. Registration and regulation

Every person claiming drawback under this subpart shall register

annually with the Secretary; keep such books and records as may be

necessary to establish the fact that distilled spirits received by him

and on which the tax has been determined were used in the manufacture or production of medicines, medicinal preparations, food products, flavors, flavoring extracts, or perfume, which were unfit for use for beverage purposes; and be subject to such rules and regulations in relation thereto as the Secretary shall prescribe to secure the Treasury against frauds.

(Added Pub. L. 85-859, title II, Sec. 201, Sept. 2, 1958, 72 Stat. 1345; amended Pub. L. 94-455, title XIX, Sec. 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1834; Pub. L. 103-465, title I, Sec. 136(b), Dec. 8, 1994, 108 Stat. 4841.)

Sec. 5133. Investigation of claims

For the purpose of ascertaining the correctness of any claim filed

under this subpart, the Secretary is authorized to examine any books,

papers, records, or memoranda bearing upon the matters required to be

alleged in the claim, to require the attendance of the person filing the claim or of any officer or employee of such person or the attendance of any other person having knowledge in the premises, to take testimony with reference to any matter covered by the claim, and to administer oaths to any person giving such testimony.

(Added Pub. L. 85-859, title II, Sec. 201, Sept. 2, 1958, 72 Stat. 1346; amended Pub. L. 94-455, title XIX, Sec. 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1834.)

Sec. 5134. Drawback

(a) Rate of drawback

In the case of distilled spirits on which the tax has been paid or

determined, and which have been used as provided in this subpart, a

drawback shall be allowed on each proof gallon at a rate of $1 less than the rate at which the distilled spirits tax has been paid or determined.

(b) Claims

Such drawback shall be due and payable quarterly upon filing of a

proper claim with the Secretary; except that, where any person entitled

to such drawback shall elect in writing to file monthly claims therefor, such drawback shall be due and payable monthly upon filing of a proper claim with the Secretary. The Secretary may require persons electing to file monthly drawback claims to file with him a bond or other security in such amount and with such conditions as he shall by regulations prescribe. Any such election may be revoked on filing of notice thereof with the Secretary. No claim under this subpart shall be allowed unless filed with the Secretary within the 6 months next succeeding the quarter in which the distilled spirits covered by the claim were used as provided in this subpart.

(1) In general

No claim for drawback under this section shall be denied in the

case of a failure to comply with any requirement imposed under this

subpart or any rule or regulation issued thereunder upon the

claimant's establishing to the satisfaction of the Secretary that

distilled spirits on which the tax has been paid or determined were

in fact used in the manufacture or production of medicines,

medicinal preparations, food products, flavors, flavoring extracts,

or perfume, which were unfit for beverage purposes.

(2) Penalty

(A) In general

In the case of a failure to comply with any requirement

imposed under this subpart or any rule or regulation issued

thereunder, the claimant shall be liable for a penalty of

$1,000 for each failure to comply unless it is shown that the

failure to comply was due to reasonable cause.

(B) Penalty may not exceed amount of claim

The aggregate amount of the penalties imposed under

subparagraph (A) for failures described in paragraph (1) in

respect of any claim shall not exceed the amount of such claim

(determined without regard to subparagraph (A)).

(3) Penalty treated as tax

The penalty imposed by paragraph (2) shall be assessed,

collected, and paid in the same manner as taxes, as provided in

section 6665(a).

(Added Pub. L. 85-859, title II, Sec. 201, Sept. 2, 1958, 72 Stat. 1346; amended Pub. L. 90-615, Sec. 2(a), Oct. 21, 1968, 82 Stat. 1210; Pub. L. 94-455, title XIX, Sec. 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1834; Pub. L. 98-369, div. A, title IV, Sec. 452, July 18, 1984, 98 Stat. 819; Pub. L. 103-465, title I, Sec. 136(b), Dec. 8, 1994, 108 Stat. 4841; Pub. L. 104-188, title I, Sec. 1704(t)(12), Aug. 20, 1996, 110 Stat. 1888.)

Sec. 7652. Shipments to the United States

g) Drawback for medicinal alcohol, etc.

In the case of medicines, medicinal preparations, food products,

flavors, flavoring extracts, or perfume containing distilled spirits,

which are unfit for beverage purposes and which are brought into the

United States from Puerto Rico or the Virgin Islands--

(1) subpart F of part II of subchapter A of chapter 51 shall be

applied as if--

(A) the use and tax determination described in section

5131(a) had occurred in the United States by a United States

person at the time the article is brought into the United

States, and

(B) the rate of tax were the rate applicable under

subsection (f) of this section, and

(2) no amount shall be covered into the treasuries of Puerto

Rico or the Virgin Islands.

27 CFR

Sec. 26.51 Formulas for articles, eligible articles and products

manufactured with denatured spirits.

(a) Formulas for articles and eligible articles. Formulas for

articles made with distilled spirits must show the quantity and proof of the distilled spirits used, and the percentage of alcohol by volume

contained in the finished product. Formulas for articles made with beer

or wine must show the kind and quantity thereof (liquid measure), and

the percent of alcohol by volume of such beer or wine. Formulas and

samples for eligible articles are required in accordance with subpart F

of part 17 of this chapter.

(b) Formulas for products manufactured with denatured spirits.

Products manufactured with denatured spirits shall be manufactured in

accordance with the formula requirements of part 20 of this chapter for

similar products made in the United States.

(1) Products may be made with completely denatured alcohol for sale

under brand names under part 20 of this chapter without obtaining an

approved formula. If ingredients are added in sufficient quantities to

materially change the composition and character of the completely

denatured alcohol, the product is not classified as completely denatured alcohol and may not be marked, branded, or sold as completely denatured alcohol.

(2) Products made with specially denatured spirits shall be made in

accordance with (i) a general-use formula approved as provided in part

20 of this chapter, or (ii) an approved formula on Form 5150.19, or

previously approved on TTB Form 1479-A or 27-B Supplemental.

submitted on Form 5150.19, except that formulas for eligible articles

shall be submitted on Form 5154.1 (formerly 1678). Formulas shall be

submitted in accordance with Sec. 26.54. Any formula for an eligible

article approved on Form 5150.19 prior to October 23, 1986 shall

continue to be valid until revoked or voluntarily surrendered. Any

person holding such a formula is not required to submit a new formula.

(Approved by the Office of Management and Budget under control number

1513-0089)

[44 FR 71709, Dec. 11, 1979, as amended by T.D. ATF-199, 50 FR 9198,

Mar. 6, 1985; T.D. ATF-263, 52 FR 46593, Dec. 9, 1987; T.D. ATF-379, 61

FR 31427, June 20, 1996. Redesignated and amended by T.D. ATF-459, 66 FR 38550, 38551, July 25, 2001]

Sec. 26.173 Claims for drawback.

(a) General. Persons bringing eligible articles into the United

States from Puerto Rico must file claim for drawback on TTB Form 2635

(5620.8). Upon finding that the claimant has satisfied the requirements

of this subpart, the appropriate TTB officer must allow the drawback of

taxes at a rate of $1 less than the lesser of $10.50 a proof gallon or

the rate specified in 26 U.S.C. 5001(a).

(b) Information on claims. The claim must set forth the following:

(1) That the special tax has been paid;

(2) That the eligible articles brought into the United States on

which drawback is claimed are fully tax paid or tax-determined;

(3) That the eligible articles on which drawback is claimed are

nonbeverage products; and

(4) That the eligible articles were manufactured in Puerto Rico in

compliance with an approved formula in accordance with Sec. 26.51.

data as specified in this paragraph. TTB Form 5154.2, Supporting Data

for Nonbeverage Drawback Claims, may be used, or the claimant may use

any suitable format that provides the following information:

(1) The control number of the Special Tax Stamp and the tax year for which issued;

(2) A description of each eligible article as follows:

(i) Name and type of each product;

(ii) Name and address of the manufacturer of each product;

(iii) Formula number;

(iv) Alcohol content of each product;

(v) Quantity of each product;

(vi) Proof gallons of distilled spirits contained in each product;

(vii) Date of entry of the eligible product into the United States,

and

(viii) The serial number of each TTB Form 487-B (5170.7) covering

such articles shipped to the United States.

(d) Date of filing claim. Quarterly claims for drawback shall be

filed within the 6 months next succeeding the quarter in which the

eligible products covered by the claim were brought into the United

States. Monthly claims for drawback may be filed at any time after the

end of the month in which the eligible products covered by the claim

were brought into the United States, but must be filed not later than

the close of the sixth month succeeding the quarter in which the eligible products were brought into the United States.

(Approved by the Office of Management and Budget under control number

1513-0089)

[T.D. ATF-263, 52 FR 46594, Dec. 9, 1987, as amended by T.D. ATF-271, 53 FR 17559, May 17, 1988; T.D. ATF-379, 61 FR 31427, June 20, 1996; T.D. ATF-451, 66 FR 21669, May 1, 2001. Redesignated and amended by T.D. ATF-459, 66 FR 38550, 38552, July 25, 2001]

Sec. 26.174 Records.

(a) General. Every person intending to file claim for drawback on

eligible articles brought into the United States from Puerto Rico shall

keep permanent records of the data elements required by this section.

Such records shall be maintained at the business premises for which the

claim is filed and shall be available for inspection by any appropriate

TTB officer during business hours.

(b) Details of records. Each person intending to claim drawback on

eligible articles brought into the United States shall maintain

permanent records showing the following data:

(1) The name, description, quantity, and formula number of each such article.

(2) The alcohol content of each such article.

(3) Name and address of the manufacturer and shipper, and date of

entry into the United States.

(4) Evidence of taxpayment of distilled spirits in accordance with

paragraph (c) of this section.

eligible articles from Puerto Rico to the United States shall be

supported by the vendor's commercial invoice which must bear a

certification as to taxpayment by the person who determined or paid the

tax, and include the following information:

(1) The name and address of vendor;

(2) The number of the applicable invoice;

(3) The serial or package identification number of the container;

(4) Name, type, and formula number of the product;

(5) The kind of spirits, proof, and proof gallons in the container;

and

(6) The serial number of each Form 487-B (5170.7) covering such

articles shipped to the United States.

(d) Form of record. No particular form of record is prescribed, but

the data required to be shown shall be readily ascertainable from the

records kept by the drawback claimant.

(e) Retention of records. Each drawback claimant shall retain for a

period of not less than three years all records required by this

subpart, all commercial invoices or shipping documents, and all bills of lading received evidencing receipt and tax determination of the spirits. In addition, a copy of each approved formula returned to the

manufacturer of eligible articles shall be retained for not less than

three years from the date he files his last claim for drawback under the formula. The records, forms, and formulas shall be readily available during regular business hours for examination by appropriate TTB officers.

(Approved by the Office of Management and Budget under control number

1513-0089)

[T.D. ATF-263, 52 FR 46594, Dec. 9, 1987, as amended by T.D. ATF-451, 66 FR 21669, May 1, 2001]

Sec. 26.221 Formulas for articles, eligible articles and products