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pdfFederal Register / Vol. 78, No. 124 / Thursday, June 27, 2013 / Rules and Regulations
DEPARTMENT OF TRANSPORTATION
Federal Aviation Administration
14 CFR Part 71
[Docket No. FAA–2013–0074; Airspace
Docket No. 13–ASO–3]
Amendment of Class E Airspace;
Selmer, TN
Federal Aviation
Administration (FAA), DOT.
ACTION: Final rule.
AGENCY:
This action amends Class E
Airspace at Selmer, TN, as the Sibley
Non-Directional Beacon (NDB) has been
decommissioned and new standard
instrument approach procedures
developed for Instrument Flight Rules
(IFR) operations at Robert Sibley
Airport. This enhances the safety and
management of aircraft operations at the
airport. This action also updates the
geographic coordinates of the airport.
DATES: Effective 0901 UTC, August 22,
2013. The Director of the Federal
Register approves this incorporation by
reference action under title 1, Code of
Federal Regulations, part 51, subject to
the annual revision of FAA Order
7400.9 and publication of conforming
amendments.
SUMMARY:
John
Fornito, Operations Support Group,
Eastern Service Center, Federal Aviation
Administration, P.O. Box 20636,
Atlanta, Georgia 30320; telephone (404)
305–6364.
SUPPLEMENTARY INFORMATION:
FOR FURTHER INFORMATION CONTACT:
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History
On March 14, 2013, the FAA
published in the Federal Register a
notice of proposed rulemaking (NPRM)
to amend Class E airspace at Robert
Sibley Airport, Selmer, TN. (78 FR
16202). Interested parties were invited
to participate in this rulemaking effort
by submitting written comments on the
proposal to the FAA. No comments
were received.
Class E airspace designations are
published in paragraph 6005 of FAA
Order 7400.9W dated August 8, 2012,
and effective September 15, 2012, which
is incorporated by reference in 14 CFR
71.1. The Class E airspace designations
listed in this document will be
published subsequently in the Order.
The Rule
This amendment to Title 14, Code of
Federal Regulations (14 CFR) part 71
amends Class E airspace extending
upward from 700 feet above the surface
within a 6.7-mile radius of Robert Sibley
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Airport, Selmer, TN. Airspace
reconfiguration is necessary due to the
decommissioning of the Sibley NDB and
cancellation of the NDB approach, and
for continued safety and management of
IFR operations at the airport. The
geographic coordinates of the airport
also are adjusted to be in concert with
FAAs aeronautical database.
The FAA has determined that this
regulation only involves an established
body of technical regulations for which
frequent and routine amendments are
necessary to keep them operationally
current, is non-controversial and
unlikely to result in adverse or negative
comments. It, therefore, (1) is not a
‘‘significant regulatory action’’ under
Executive Order 12866; (2) is not a
‘‘significant rule’’ under DOT
Regulatory Policies and Procedures (44
FR 11034; February 26, 1979); and (3)
does not warrant preparation of a
Regulatory Evaluation as the anticipated
impact is so minimal. Since this is a
routine matter that only affects air traffic
procedures and air navigation, it is
certified that this rule, when
promulgated, does not have a significant
economic impact on a substantial
number of small entities under the
criteria of the Regulatory Flexibility Act.
The FAA’s authority to issue rules
regarding aviation safety is found in
Title 49 of the United States Code.
Subtitle I, Section 106 describes the
authority of the FAA Administrator.
Subtitle VII, Aviation Programs,
describes in more detail the scope of the
agency’s authority. This rulemaking is
promulgated under the authority
described in Subtitle VII, Part A,
Subpart I, Section 40103. Under that
section, the FAA is charged with
prescribing regulations to assign the use
of airspace necessary to ensure the
safety of aircraft and the efficient use of
airspace. This regulation is within the
scope of that authority as it amends
controlled airspace at Robert Sibley
Airport, Selmer, TN.
Environmental Review
The FAA has determined that this
action qualifies for categorical exclusion
under the National Environmental
Policy Act in accordance with FAA
Order 1050.1E, ‘‘Environmental
Impacts: Policies and Procedures,’’
paragraph 311a. This airspace action is
not expected to cause any potentially
significant environmental impacts, and
no extraordinary circumstances exist
that warrant preparation of an
environmental assessment
Lists of Subjects in 14 CFR Part 71
Airspace, Incorporation by reference,
Navigation (Air).
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Adoption of the Amendment
In consideration of the foregoing, the
Federal Aviation Administration
amends 14 CFR part 71 as follows:
PART 71—DESIGNATION OF CLASS A,
B, C, D, AND E AIRSPACE AREAS; AIR
TRAFFIC SERVICE ROUTES; AND
REPORTING POINTS
1. The authority citation for Part 71
continues to read as follows:
■
Authority: 49 U.S.C. 106(g); 40103, 40113,
40120; E.O. 10854, 24 FR 9565, 3 CFR, 1959–
1963 Comp., p. 389.
§ 71.1
[Amended]
2. The incorporation by reference in
14 CFR 71.1 of Federal Aviation
Administration Order 7400.9W,
Airspace Designations and Reporting
Points, dated August 8, 2012, effective
September 15, 2012, is amended as
follows:
■
Paragraph 6005. Class E Airspace Areas
Extending Upward from 700 feet or More
Above the Surface of the Earth.
*
*
*
*
*
ASO TN E5 Selmer, TN [Amended]
Robert Sibley Airport, TN
(Lat. 35°12′11″ N., long. 88°29′54″ W.)
That airspace extending upward from 700
feet above the surface within a 6.7-mile
radius of Robert Sibley Airport.
Issued in College Park, Georgia, on June 19,
2013.
Barry A. Knight,
Manager, Operations Support Group, Eastern
Service Center, Air Traffic Organization.
[FR Doc. 2013–15286 Filed 6–26–13; 8:45 am]
BILLING CODE 4910–13–P
DEPARTMENT OF THE TREASURY
Alcohol and Tobacco Tax and Trade
Bureau
27 CFR Parts 40, 41, and 44
[Docket No. TTB–2013–0006; T.D. TTB–115;
Re: Notice No. 137; T.D. ATF–421; T.D. ATF–
422; ATF Notice Nos. 887 and 888]
RIN 1513–AB37
Importer Permit Requirements for
Tobacco Products and Processed
Tobacco, and Other Requirements for
Tobacco Products, Processed
Tobacco, and Cigarette Papers and
Tubes
Alcohol and Tobacco Tax and
Trade Bureau, Treasury.
ACTION: Temporary rule; Treasury
decision.
AGENCY:
This temporary rule amends
the regulations of the Alcohol and
SUMMARY:
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Tobacco Tax and Trade Bureau (TTB)
pertaining to permits for importers of
tobacco products and processed tobacco
by extending the duration of new
permits from three years to five years.
Based on its experience in the
administration and enforcement of
importer permits over the past decade,
TTB believes that it can gain
administrative efficiencies and reduce
the burden on industry members, while
still meeting the purposes of the
limited-duration permit, by extending
the permit duration to five years. This
temporary rule also makes several
technical corrections by amending the
definition of ‘‘Manufacturer of tobacco
products’’ to reflect a recent statutory
change, and by amending a reference to
the sale price of large cigars to
incorporate a clarification published in
a prior TTB temporary rule. Finally, this
temporary rule incorporates and
reissues TTB regulations pertaining to
importer permit requirements for
tobacco products, and minimum
manufacturing and marking
requirements for tobacco products and
cigarette papers and tubes, and, as a
result, these temporary regulations
replace temporary regulations originally
published in 1999. TTB is soliciting
comments from all interested parties on
these regulatory provisions through a
notice of proposed rulemaking
published elsewhere in this issue of the
Federal Register.
DATES: This temporary rule is effective
on August 26, 2013 through August 26,
2016.
FOR FURTHER INFORMATION CONTACT:
David Berenbaum, Regulations and
Rulings Division, Alcohol and Tobacco
Tax and Trade Bureau, 1310 G Street
NW., Box 12, Washington, DC 20005;
telephone (202) 453–1039, ext. 100 or
email [email protected].
SUPPLEMENTARY INFORMATION:
Authority
Chapter 52 of the Internal Revenue
Code of 1986 (IRC) contains excise tax
and related provisions pertaining to
tobacco products and cigarette papers
and tubes. Section 5701 of the IRC (26
U.S.C. 5701) imposes various rates of
tax on such products manufactured in,
or imported into, the United States.
Section 5704 of the IRC (26 U.S.C. 5704)
provides for certain exemptions from
those taxes. Sections 5712 and 5713 of
the IRC (26 U.S.C. 5712 and 5713)
provide that manufacturers and
importers of tobacco products or
processed tobacco and export
warehouse proprietors must apply for
and possess a permit in order to engage
in such businesses. Section 5712 also
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allows for the promulgation of
regulations prescribing minimum
manufacturing and activity
requirements for such permittees, and
section 5713 also sets forth standards
regarding the suspension and revocation
of permits. Section 5754 of the IRC (26
U.S.C. 5754) sets forth restrictions on
the importation of previously exported
tobacco products. Section 5761 of the
IRC (26 U.S.C. 5761) sets forth civil
penalties for, among other things,
selling, relanding, or receiving any
tobacco products or cigarette papers or
tubes that were labeled or shipped for
exportation.
Regulations implementing the
Chapter 52 provisions are contained in
chapter I of title 27 of the Code of
Federal Regulations (27 CFR). Those
regulations include: Part 40
(Manufacture of tobacco products,
cigarette papers and tubes, and
processed tobacco); part 41 (Importation
of tobacco products, cigarette papers
and tubes, and processed tobacco); and
part 44 (Exportation of tobacco products
and cigarette papers and tubes, without
payment of tax, or with drawback of
tax).
Prior to January 24, 2003, the former
Bureau of Alcohol, Tobacco and
Firearms (ATF) administered these
statutory and regulatory provisions.
These provisions are now administered
by the Alcohol and Tobacco Tax and
Trade Bureau (TTB) (see section 1111 of
the Homeland Security Act of 2002,
Pub. L. 107–296, 116 Stat. 2274).
Balanced Budget Act of 1997
Section 9302 of the Balanced Budget
Act of 1997 (BBA), Public Law 105–33,
111 Stat. 251, 671–676, enacted on
August 5, 1997, amended sections
5704(b), 5712, and 5713 of the IRC and
added IRC sections 5754 and 5761(c).
These statutory changes, among other
things:
• Placed new restrictions on the
importation of previously exported
tobacco products;
• Required that importers of tobacco
products apply for and obtain a permit
before commencing business as an
importer, with a transitional rule to
allow existing importers of tobacco
products, who filed an application for a
permit with ATF before January 1, 2000,
to continue in such business pending
final action on their applications;
• Required markings, as prescribed by
regulations, on tobacco products and
cigarette papers and tubes removed or
transferred without payment of Federal
excise tax;
• Provided penalties for selling,
relanding, or receiving, within the
jurisdiction of the United States,
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tobacco products or cigarette papers and
tubes that were labeled or shipped for
exportation and that were removed on
or after the effective date of the section
9302 amendments, that is, January 1,
2000; and
• Authorized the Secretary of the
Treasury (the Secretary) to prescribe
minimum capacity or activity
requirements as a criterion for issuance
of a permit.
The above statutory changes are
discussed in more detail below.
Import Restrictions on Previously
Exported Tobacco Products
Section 9302(h)(1)(E)(i) of the BBA
added section 5754 to the IRC, which at
that time provided that previously
exported tobacco products and cigarette
papers and tubes may be imported or
brought into the United States only as
provided in section 5704(d). At that
time, section 5704(d) provided that
tobacco products and cigarette papers
and tubes previously exported and
returned could be released from
customs custody, without payment of
internal revenue tax, for delivery to a
manufacturer of tobacco products or
cigarette papers and tubes or to the
proprietor of an export warehouse, in
accordance with such regulations and
under such bond as the Secretary shall
prescribe.
Permit Requirement and Transitional
Rule
Section 9302(h)(2) of the BBA
amended sections 5712 and 5713 of the
IRC to require, in part, that importers of
tobacco products apply for and obtain a
permit before commencing business as
such importers. The BBA also provided
a transitional rule to allow existing
importers of tobacco products, who filed
applications for a permit with ATF
before January 1, 2000, to continue in
such businesses pending final action on
their applications.
Required Markings on Tobacco Products
and Cigarette Papers and Tubes
Removed or Transferred Without
Payment of the Federal Excise Tax
Prior to the BBA’s being enacted,
section 5704(b) of the IRC provided that,
in accordance with regulations
promulgated by the Secretary:
‘‘(1) A manufacturer or export
warehouse proprietor may transfer
tobacco products and cigarette papers
and tubes, without payment of tax, to
the bonded premises of another
manufacturer or export warehouse
proprietor, or remove such articles,
without payment of tax, for shipment to
a foreign country, Puerto Rico, the U.S.
Virgin Islands, or a possession of the
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United States, or for consumption
beyond the jurisdiction of the U.S.
internal revenue laws; and
(2) A manufacturer may similarly
remove such articles for use of the
United States.’’
Section 9302(h)(1)(A) of the BBA
added a sentence at the end of section
5704(b) of the IRC to provide that
tobacco products and cigarette papers
and tubes may not be transferred or
removed under 5704(b) unless they bear
such marks, labels, or notices as the
Secretary shall prescribe by regulation.
The authority of the Secretary to
prescribe regulations regarding the
marks, labels, and notices that must
appear on packages of tobacco products
and cigarette papers and tubes, before
removal, is also contained in section
5723(b) of the IRC (26 U.S.C. 5723(b)).
a separate temporary rule, T.D. ATF–
422, described later in this document.
When earlier rulemaking documents are
discussed in this preamble, any
references to section numbers and
regulatory texts are as they existed when
that earlier rulemaking document was
published. Specifically, T.D. ATF–421
adopted regulatory amendments
pertaining to:
• Marks, labels, and notices;
• Minimum manufacturing activity
requirements;
• Import restrictions on previously
exported tobacco products, and cigarette
papers, and tubes;
• Penalty and forfeiture provisions;
• Repackaging, and
• Form numbers, manufacturer and
export warehouse proprietor records,
and definitions.
Penalty and Forfeiture Provisions
Section 9302(h)(1)(B) of the BBA
added a new subsection (c) to section
5761 of the IRC to impose a civil penalty
on persons, other than manufacturers or
export warehouse proprietors operating
in accordance with sections 5704(b) and
(d) of the IRC, who sell, reland, or
receive within the jurisdiction of the
United States tobacco products or
cigarette papers or tubes that have been
labeled or shipped for exportation under
chapter 52 of the IRC. The civil penalty
is the greater of $1,000 or five times the
amount of tax imposed on the product.
Section 9302(h)(2)(A) of the BBA
amended sections 5762(a)(1) and
5763(b) and (c) to apply criminal
penalties and forfeiture provisions to
importers of tobacco products.
Marks, Labels, and Notices
As noted above, the Secretary is
authorized to prescribe the type of
marks, labels, and notices that must
appear on packages of tobacco products
and cigarette papers and tubes,
including on products that are exempt
from Federal excise taxation under
5704(b) of the IRC. In the preamble of
T.D. ATF–421, ATF noted that
Congress, by adopting section
9302(h)(1)(A) of the BBA, wanted to:
• Specifically authorize ATF to
determine required marks, labels, and
notices for products exempt from
taxation under section 5704(b) to ensure
protection of the Federal excise tax
revenue;
• Ensure that non-taxpaid products
intended for exportation bear the proper
markings; and
• Require that taxpaid products that
are ultimately sold on the domestic
market not bear export markings. ATF
noted in this regard that allowing
products with export markings on the
domestic U.S. market would hinder the
enforcement of lawfully due taxes and
cause confusion as to whether the
product had been taxpaid.
Accordingly, in T.D. ATF–421, ATF
amended 27 CFR 270.233, 290.61, and
290.181 to require that tobacco products
and cigarette papers and tubes bear the
required marks, labels, and notices in
order to qualify for transfer or removal
of the product without payment of tax.
• Section 270.233 was amended to
provide that tobacco products may not
be transferred in bond unless they bear
all required marks, labels, and notices.
• Section 290.61 was amended to
provide that tobacco products and
cigarette papers and tubes may not be
removed for exportation without
payment of tax unless they bear all
required marks, labels, and notices.
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Minimum Manufacturing Activity
Requirements
Section 9302(h)(5) of the BBA
amended section 5712 of the IRC by
adding an additional factor for rejecting
an application and denying a permit.
The new provision stated that the
application may be rejected and the
permit denied if ‘‘the activity proposed
to be carried out at such premises does
not meet such minimum capacity or
activity requirements as the Secretary
may prescribe.’’
Temporary Rule T.D. ATF–421
On December 22, 1999, ATF
published in the Federal Register (64
FR 71918) a temporary rule, T.D. ATF–
421, amending or adding various
provisions within 27 CFR parts 200
(now part 71), 270 (now part 40), 275
(now part 41), and 290 (now part 44) to
implement the statutory amendments
made by section 9302 of the BBA other
than the new importer permit
requirements which were addressed in
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• Section 290.181 was amended to
provide that all tobacco products and
cigarette papers and tubes must, before
removal or transfer, bear the required
marks, labels, or notices. Under the
authority of the Secretary in section
5723(a) of the IRC to prescribe rules for
the packages in which tobacco products
and cigarette papers and tubes must be
put up before removal, § 290.181 was
further amended to clarify that the
‘‘package’’ upon which the marking,
labeling, and notice requirements are to
appear, does not include any cellophane
wrapping material that may enclose a
package. A package, thus, is only
intended to include the actual material
that holds and encloses the tobacco
products and cigarette papers or tubes.
This amended definition clarified
placement requirements of marks,
labels, and notices. In keeping with
Congressional intent to prevent
diversion of tobacco products, ATF
wanted to ensure that marks, labels, and
notices on products destined for export
were clear and not easily destroyed.
Minimum Manufacturing Activity
Requirements
Based on the language that section
9302 of the BBA added to section 5712
of the IRC, ATF concluded that it was
authorized to establish minimum
capacity or activity requirements and to
deny a permit application based on an
applicant’s failure to meet such
minimum capacity or activity
requirements. ATF noted in T.D. ATF–
421 that Congress enacted the
provisions in question to ensure that
those who apply for a permit actually
intend to engage in the bona fide
business of manufacturing tobacco
products in a manner that would
adequately protect the revenue and
comply with the law and regulations.
In promulgating regulations that
establish minimum capacity or activity
requirements, ATF considered several
issues. ATF did not want to establish
criteria that would effectively exclude
small tobacco products manufacturers
from obtaining a permit. In addition,
ATF wanted to establish criteria that
would ensure that only those actually
engaged in the business of
manufacturing tobacco products would
be able to obtain a permit. Accordingly,
ATF established criteria that effectively
excluded any person who is not a
legitimate manufacturer and whose
primary interest in obtaining a
manufacturer’s permit is to obtain the
tax deferral benefits that a permit might
facilitate (those tax deferral benefits are
otherwise referred to as
‘‘downstreaming of taxes’’) by setting up
premises covered by a permit where the
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only business purpose of the premises
was to store non-taxpaid products that
were transferred in bond to such
premises.
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Small Manufacturers
ATF noted that section 5712 of the
IRC requires that prior to engaging in
the business of manufacturing tobacco
products, a person must obtain a permit
from ATF. ATF believed that any
applicant who proposes to engage in the
business of manufacturing of tobacco
products, regardless of size, should be
eligible to receive a permit, so long as
the applicant meets the definition of
manufacturer in section 5702(d) and has
fulfilled the other conditions in the law
and regulations. ATF noted that it had
issued permits to some small
manufacturers of tobacco products, such
as those who manufacture hand-rolled
cigars, and for this reason ATF did not
want to establish minimum capacity or
activity criteria that would exclude
small tobacco products manufacturers.
Downstreaming of Taxes
As noted above, ATF wanted to
ensure that permits were not issued to
persons who intended to use the permit
to delay tax payment. Prior to the
publication of T.D. ATF–421, ATF had
received inquiries from persons who
wanted to obtain a permit and establish
bonded premises for the primary
purpose of receiving tobacco products
in bond and delaying payment of
Federal excise taxes.
ATF noted that the Federal excise tax
on tobacco products attaches to the
products as soon as they are
manufactured, and that the
manufacturer is liable for the tax on
tobacco products held in bond. Under
section 5703 of the IRC the
manufacturer is required to pay the tax
when the tobacco product is removed
from bond. ATF noted that tobacco
products generally are distributed under
a three-tier distribution system: at the
first level, the manufacturer pays
Federal excise tax after removal of the
products from bonded premises; then
the products are transferred to a
wholesaler, which is the second level in
the distribution system; and finally to
the retailer, who is the customer of the
wholesaler and the third level in this
three-tier system.
However, as noted above, section
5704 of the IRC provides that tobacco
products may be transferred from one
manufacturer or export warehouse
proprietor to another manufacturer or
export warehouse proprietor without
payment of tax. ATF noted that because
of this exemption from taxation, a
business could attempt to set up one or
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more wholesale warehouses with some
de minimis production capability, and
obtain a manufacturer’s permit for each
wholesale warehouse. Using the in bond
transfer provision provided by section
5704, each warehouse would then be
eligible to receive tobacco products in
bond at each wholesale warehouse,
without payment of the excise tax. The
taxes on the product would not be due
until the product was distributed from
the wholesale level to the retail level.
This downstreaming of taxes moves the
collection point for the excise tax from
the production level to the wholesale
level. ATF noted that while this is
potentially beneficial for manufacturers
since they can effectively delay
taxpayment until the product is
removed from the wholesale level, it has
an adverse effect on Federal tax receipts
since it delays payment of the Federal
excise tax.
ATF stated that it wanted to prevent
the downstreaming of taxes because it
undermines the effect and purpose of
obtaining a permit to engage in the
business of manufacturing tobacco
products and because it also
contravenes the safeguards in obtaining
a permit, that is, to protect and collect
Federal excise tax revenues.
Additionally, ATF was concerned with
the potential number of new taxpayers
(that is, wholesalers qualifying as
manufacturers), and the proliferation of
tax payment points, if this approach
became widely used. ATF stated that it
had found that the collection of excise
taxes is best achieved at the highest
level within the three-tier distribution
chain (that is, the manufacturer’s level).
ATF noted in this regard that when the
Federal excise tax is collected at the
manufacturer’s level, the agency has
fewer taxpayers to monitor and thus has
more efficient tax collections and fewer
administrative costs.
Recognizing these concerns, ATF
wanted to ensure that the new
minimum manufacturing criteria would
prevent issuance of permits to
businesses that principally want to
receive tobacco products in bond and
delay Federal excise tax payments.
Thus, ATF stated that it amended the
regulations whereby it would continue
to issue permits to small manufacturers
of tobacco products, despite limited
production capacity, and would deny
permits to persons who seek a permit
for the principal purposes of receiving
in bond untaxed tobacco products.
The following summarizes ATF’s
explanation of the regulatory changes.
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Regulations Implementing the Minimum
Manufacturing Activity Criteria for
Tobacco Products Manufacturers
In T.D. ATF–421, ATF amended the
regulations at 27 CFR 270.61 to provide
that a permit would only be granted to
those persons whose principal business
activity under such permit would be the
original manufacture of tobacco
products. A permit would not be
granted to any person whose proposed
principal activity under such permit
would be the receipt or transfer of nontaxpaid tobacco products in bond.
Furthermore, to qualify for a permit, the
amount of tobacco products
manufactured under a permit must
exceed the amount transferred or
received in bond under such permit. For
example, a person who only
manufactures 1,000 cigarettes per month
may receive a maximum of 999
cigarettes in bond during the month
under that permit. Likewise, a person
who manufactures 10,000,000 cigarettes
a month could receive up to 9,999,999
cigarettes in bond during the month
under that permit.
ATF noted that it believed that these
changes to the regulations effectively
accommodated small manufacturers
while protecting the timely assessment
and collection of the Federal excise tax
revenue. T.D. ATF–421 also amended
27 CFR 200.49b to include this activity
criterion as a basis for rejecting an
application for a permit. ATF stated that
it did not amend 27 CFR 200.46,
regarding revocation or suspension of
tobacco permits, because compliance
with regulations issued under the IRC
was already required.
Importers and Export Warehouse
Proprietors
ATF noted that it did not require a
minimum capacity or activity criterion
for importers or export warehouse
proprietors. ATF did not believe that
either an importer or export warehouse
permittee would or could engage in
misuse of its permit for downstreaming
of taxes in a manner similar to the way
that a manufacturer might misuse its
permit. However, ATF did state that it
would consider imposing minimum
manufacturing or activity criteria on
importers and export warehouse
proprietors if the need should arise.
Import Restrictions on Previously
Exported Tobacco Products and
Cigarette Papers and Tubes
ATF noted that when the BBA was
enacted section 5704(d) of the IRC
allowed previously exported tobacco
products to be lawfully transferred to
any manufacturer of tobacco products or
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cigarette papers and tubes, or to any
export warehouse proprietor; and
section 5704(d) did not mandate that the
previously exported products return to
the original manufacturer or export
warehouse proprietor. Also, ATF noted
that, under new IRC section 5754 as
described above, previously exported
tobacco products and cigarette papers
and tubes could only be imported or
brought into the United States by release
from customs custody to a manufacturer
or an export warehouse proprietor as an
in bond transfer. ATF further noted that
section 5754 precluded the importation
and tax payment of such products by an
importer since the law was very clear
and left no discretion to ATF in that
regard. Section 5754 at that time clearly
stated that such products could only be
imported or brought into the United
States by the method provided in
section 5704(d) of the IRC (26 U.S.C.
5704(d)), that is, a transfer, without
payment of tax, to a manufacturer or
export warehouse.
Based on the above, T.D. ATF–421
amended the following sections in 27
CFR part 275:
• 27 CFR 275.1: Section 275.1 was
revised to include a general discussion
of importation of tobacco products and
cigarette papers and tubes.
• 27 CFR 275.81: Paragraph (a) of
§ 275.81 was revised to distinguish
between tobacco products and cigarette
papers and tubes that were imported,
and those that had been previously
exported from the United States and
returned.
• 27 CFR 275.82: Section 275.82 was
added to discuss the new restrictions on
the return of exported products.
Penalty and Forfeiture Provisions
Except for a qualified manufacturer of
tobacco products or cigarette papers and
tubes or an export warehouse
proprietor, new section 5761(c) imposed
civil penalties on persons who sell,
reland, or receive within the jurisdiction
of the United States any tobacco
products that are labeled or shipped for
export.
In T.D. ATF–421, ATF noted that it
had considered ways to enforce new
section 5761(c) of the IRC, since the
domestic market would contain tobacco
products that had been lawfully
removed on or before December 31,
1999, as well as products marked for
export that had been unlawfully
introduced into the domestic market
(that is, unlawfully removed) after
December 31, 1999, and thus subject to
the new civil penalty. To differentiate
between the products that had been
lawfully removed and those that had
been unlawfully removed, ATF
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considered whether or not to change the
export marking requirements under 27
CFR 290.185 for products manufactured
after December 31, 1999. In T.D. ATF–
421, ATF discussed this alternative, but
declined to make these changes since it
would impose major burdens on tobacco
manufacturers. ATF decided that
voluntary commercial marks already
placed on packages by the tobacco
industry would enable ATF to
distinguish between these products.
Further, ATF stated that if future
investigations disclosed the need to do
so, it would consider changing the
export marking requirements on
products manufactured after December
31, 1999, to differentiate between
products removed.
Repackaging
With reference to new sections 5754
and 5761(c) of the IRC discussed above,
ATF in T.D. ATF–421 noted that
although manufacturers and export
warehouse proprietors were authorized
to receive relanded tobacco products or
cigarette papers or tubes from customs
custody without payment of the Federal
excise tax, there were limitations on
what manufacturers and export
warehouse proprietors could do with
such products. After noting that such
products could be destroyed or reexported, or (in the case of a
manufacturer) repackaged and removed
for sale in the domestic market, ATF
noted the following in regard to these
requirements, as they existed at that
time:
Export warehouse: Section 5702 of the
IRC defines ‘‘export warehouse’’ to
mean ‘‘a bonded internal revenue
warehouse for the storage of tobacco
products and cigarette papers and tubes,
upon which the internal revenue tax has
not been paid, for subsequent shipment
to a foreign country, Puerto Rico, the
Virgin Islands, or a possession of the
United States, or for consumption
beyond the jurisdiction of the internal
revenue laws of the United States.’’ An
export warehouse proprietor is defined
in section 5702 as any person who
operates an export warehouse. Export
warehouse proprietors are only
authorized to store non-taxpaid tobacco
products and cigarette papers and tubes
for subsequent exportation. Export
warehouses are specifically established
under the law to facilitate the
exportation of tobacco products without
payment of the excise tax. There is no
authority for an export warehouse
proprietor to pay the excise tax and
distribute tobacco products into the
domestic U.S. market. An export
warehouse proprietor may only lawfully
receive relanded tobacco products,
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38559
transfer them to a qualified
manufacturer, re-export them or destroy
them.
Manufacturers: In accordance with
section 5703, manufacturers are
authorized under the IRC to pay excise
tax on and distribute tobacco products
into the domestic market. However, the
IRC also requires that, before removal
from a manufacturer’s factory, tobacco
products must be put up in packages
and bear the marks, labels, and notices
required by the Secretary.
As noted above, the Secretary has the
general authority to prescribe packaging
and marking requirements for tobacco
products under section 5723(a) and (b)
of the IRC. Under this authority, prior to
the issuance of T.D. ATF–421, ATF had
prescribed regulations under 27 CFR
290.185 which require that products
removed for exportation exempt from
taxation must bear export markings.
Such markings include the words, ‘‘Taxexempt. For use outside U.S.’’ or ‘‘U.S.
Tax-exempt. For use outside U.S.’’
These export markings signify that the
product is not subject to Federal taxes
and that it is not intended for
distribution within the United States.
ATF stated in T.D. ATF–421 that it
relied on these markings to identify
these products as a tax-exempt export
for enforcement purposes. In addition,
ATF had prescribed regulations under
27 CFR 290.222 which require that
tobacco products and cigarette papers
and tubes on which tax has been paid
and a drawback claim has been made
must have a label affixed reading ‘‘For
Export With Drawback of Tax.’’
ATF further noted in T.D. ATF–421
that previously exported products that
are relanded in the United States also
bear the export markings required under
§§ 290.185 and 290.222 and may be
intended for distribution in the
domestic market. Because ATF could
not tell if a particular product on the
market had been lawfully taxpaid and
removed from customs custody, or if it
was smuggled into the U.S., the efficacy
of the export marking requirements was
severely reduced if these products were
allowed in the domestic market. ATF
concluded that since relanded tobacco
products were marked in accordance
with the tobacco export regulations at
27 CFR 290.185 and bore a statement
that said ‘‘Tax-exempt. For use outside
U.S.’’ or ‘‘U.S. Tax-exempt. For use
outside U.S.’’ or in accordance with
§ 290.222 bore a statement that said
‘‘For Export With Drawback of Tax,’’
they were not properly marked for
distribution in the domestic U.S.
market. Further, if products with export
markings were allowed in the domestic
market, this practice would hinder
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enforcement of the IRC and jeopardize
the revenue. ATF stated that its goal was
to protect the revenue, and to determine
whether the Federal excise tax on a
relanded product had been paid. ATF
considered various options for removing
these export markings and bringing
relanded products into compliance with
the domestic marking and labeling
requirements. In particular, ATF
considered:
• Allowing such products to be
overstamped;
• Allowing the obliteration of the taxexempt marking; or
• Allowing stickers to be placed over
the markings.
However, ATF concluded in T.D.
ATF–421 that the options of
overstamping, obliteration, or use of
stickers would negate the value of these
markings as a tax enforcement tool.
Overstamping, obliteration, or placing
stickers over the tax-exempt notice
would not necessarily mean that the
Federal excise tax had been paid on the
relanded product because any person
could obtain product that had not been
federally taxpaid, place stickers over the
‘‘tax exempt’’ notice on packages, and
distribute them in the domestic market.
After careful consideration of the
issue, ATF concluded that a
manufacturer who distributes relanded
tobacco products into the domestic
market must remove the product from
its original packages (bearing export
markings) and repackage them into new
packages with the proper mark and
notice requirements for domestic U.S.
distribution as prescribed in 27 CFR
part 270. ATF determined that in order
to protect the Federal excise tax
revenue, it is essential to require the
repackaging of these reimported
products before they are introduced in
domestic commerce.
Thus, ATF concluded that, under 26
U.S.C. 5761(c), products labeled for
export may not be sold in the domestic
U.S. market. However, manufacturers
were eligible to receive relanded
tobacco products and cigarette papers
and tubes and sell them in the domestic
market if such products were
completely repackaged under the laws
and regulations for products not
intended for exportation. Accordingly,
27 CFR 275.82(b) was added and
prescribed requirements for repackaging
under these circumstances. Also, T.D.
ATF–421 added 27 CFR 270.213, which
notified manufacturers that tobacco
products marked for export are not
eligible for distribution in the domestic
market, and of the need to repackage
such products.
Finally, ATF noted in T.D. ATF–421
that, like an export warehouse
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proprietor, a manufacturer was allowed
to transfer tobacco products to another
manufacturer or to an export warehouse
proprietor, re-export the relanded
tobacco products, or destroy the
relanded tobacco products.
Form Numbers, Manufacturer and
Export Warehouse Proprietor Records,
and Definitions
In addition to the changes discussed
above that were necessitated by the BBA
statutory amendments, T.D. ATF–421
made several administrative changes to
the ATF tobacco regulations:
Form numbers: The texts of 27 CFR
290.61a, 290.142, 290.198 through
290.208, 290.210, 290.213, and 290.256
through 290.267 were amended to
change references from obsolete form
number ATF F 2149/2150, to the new
form number ATF F 5200.14. The
regulations in 27 CFR 290.152 through
290.154 were amended to change all
references from the obsolete form
number ATF F 2635 to the new form
number ATF F 5620.8. Also, 27 CFR
290.62 was amended to delete obsolete
references to a customs form and
regulatory citation.
Record retention of ATF forms: Minor
changes were made in the regulations to
reflect the correct number of years that
ATF form numbers 5700.14 and 5620.8
must be retained. The regulations were
amended to change the records
retention period from 2 years to 3 years.
Manufacturer’s records: The
recordkeeping requirement for a
manufacturer of tobacco products
prescribed in 27 CFR 270.183 was
amended to include the term ‘‘roll-yourown tobacco’’ and to include records of
transfers to, and receipts from, foreign
trade zones.
Export warehouse records: The
recordkeeping requirements in 27 CFR
290.142 were amended to require that
records include information regarding
the manufacturer and brand name of
products that were received, removed,
transferred, destroyed, lost, or returned
to manufacturers or customs bonded
warehouses. In addition, the records
must include the number of containers
and unit type (e.g., cartons, cases).
Definitions: To clarify the regulations,
T.D. ATF–421 added several definitions
to the ‘‘meaning of terms’’ sections in 27
CFR 275.11 and 290.11. Section 275.11
was amended by adding definitions for
the terms ‘‘Export warehouse,’’ ‘‘Export
warehouse proprietor,’’ ‘‘Manufacturer
of tobacco products,’’ ‘‘Manufacturer of
cigarette papers and tubes,’’ and
‘‘Relanding’’. Section 290.11 was
amended by adding a definition for
‘‘Zone restricted status.’’
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Subsequent Court Action, Statutory
Changes, and Regulatory Amendments
On April 18, 2000, the United States
District Court for the District of
Columbia in the civil action World Duty
Free Americas, Inc. v. Treasury (D.D.C.
No. 00–00404 (RCL); 94 F. Supp. 2d 61
(D.D.C. 2000) issued a temporary
injunction enjoining the Treasury
Department from enforcing the
temporary regulations in T.D. ATF–421
at 27 CFR 275.11 and 275.83, to the
extent that they prohibited the
importation of cigarettes purchased in
U.S. duty free stores up to the limit
allowed by the personal use exemption
provided by 19 U.S.C. 1555 and
subheadings 9804.00.65, 9804.00.70,
and 9804.00.72 of the Harmonized Tariff
Schedule of the United States (HTSUS),
19 U.S.C. 1202.
On November 9, 2000, the President
signed into law the Tariff Suspension
and Trade Act of 2000, Public Law 106–
476, 114 Stat. 2101, which included the
Imported Cigarette Compliance Act of
2000 (ICCA). Sections 5704, 5754, and
5761(c) of the IRC, which had been
added or amended by section 9302 of
the BBA as discussed above, were
amended by the ICCA to:
• Provide in section 5704(d) that
tobacco products and cigarette papers
and tubes manufactured in the United
States and previously exported and
returned may be released from customs
custody without payment of tax only to
the original manufacturer or to an
export warehouse proprietor authorized
to receive them by the original
manufacturer;
• Provide in section 5754(a)(1)(C) that
tobacco products and cigarette papers
and tubes labeled for exportation may
not be sold or held for sale for domestic
consumption in the United States unless
they are removed from their export
packaging and repackaged by the
original manufacturer into new
packaging that does not contain an
export label; and
• Require in section 5761(c) the
forfeiture and destruction of all
relanded tobacco products and cigarette
papers and tubes, except as provided
under sections 5704(b) and (d).
On December 21, 2000, the President
signed into law the Consolidated
Appropriations Act, 2001 (CAA), Public
Law 106–554, 114 Stat. 2763, which
further amended section 5761(c) to
allow travelers entering the United
States to claim a personal use tax
exemption for tobacco products
manufactured within United States and
labeled for export that are brought back
into the United States. Under the CAA
amendment, travelers may bring U.S.
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manufactured and export labeled
tobacco products back into the United
States under a personal use exemption
free of Federal excise tax up to the limit
allowed under Chapter 98 of the
HTSUS. In addition, travelers entering
the United States and claiming a
personal use exemption for U.S.
manufactured and export labeled
tobacco products may voluntarily
relinquish any articles in excess of the
quantity allowed without incurring the
penalty prescribed under section
5761(c).
Notwithstanding the view of ATF that
the described above changes made by
the ICCA and the CAA were clear and
left no discretion in implementation, in
view of the pendency of the World Duty
Free Americas, Inc. case, ATF decided
to issue a notice of proposed rulemaking
prior to issuance of a final rule to
implement those statutory changes.
Accordingly, on March 26, 2001, ATF
published in the Federal Register (66
FR 16425) Notice No. 913 to solicit
comments on proposed implementing
regulations. In response to that
comment solicitation ATF received one
comment, which urged prompt adoption
of the proposed regulations without
change. Subsequently, on August 29,
2001, ATF published in the Federal
Register (66 FR 45613) a final rule, T.D.
ATF–465, adopting the proposed
regulatory amendments to implement
the changes made to the IRC by the
ICCA and the CAA. In addition to some
changes not relevant to the present
rulemaking, these regulatory
amendments included a complete
revision of the texts of §§ 275.82 and
275.83, which had been added by T.D.
ATF–421. In addition, T.D. ATF–465
amended the definition of ‘‘Relanding,’’
which had been added by T.D. ATF–
421, by removing the second sentence.
On November 27, 2001, United States
District Court for the District of
Columbia vacated the injunction that
prohibited the Treasury Department
from enforcing the temporary
regulations in T.D. ATF–421 referred to
above.
The regulations contained in 27 CFR
part 275 were later amended by T.D.
ATF–444, a temporary rule published in
the Federal Register (66 FR 13849) on
March 8, 2001. These regulations
eliminated ATF onsite supervision of
tobacco products and cigarette papers
and tubes of Puerto Rican manufacture
that are shipped from Puerto Rico to the
United States. This Treasury decision
also amended the definition of
‘‘Records’’ added to § 275.11 by T.D.
ATF–422 (discussed in greater detail
below) and revised in their entirety, and
thus superseded, the changes made by
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T.D. ATF–422 to §§ 275.106, 275.110,
and 275.111. The definition of
‘‘Records’’ set forth in this new
temporary rule incorporates the
amendment made by T.D. ATF–444.
The temporary rule in T.D. ATF–444
was finalized by T.D. TTB–68, which
was published in the Federal Register
(73 FR 16757) on March 31, 2008.
proprietor, and ATF interpreted this
provision as precluding the adoption of
a personal use exemption by regulation.
TTB notes that the personal use
exemption issue has been addressed by
the enactment of the CAA, which
included a personal use exemption, and
by the subsequent promulgation of T.D.
ATF–465, as discussed above.
Discussion of Comments Received in
Response to T.D. ATF–421
On the same day that T.D. ATF–421
was published, December 22, 1999, ATF
also published in the Federal Register
(64 FR 71927), a notice of proposed
rulemaking, Notice No. 887, soliciting
comments on the temporary regulatory
amendments contained in T.D. ATF–
421. The original comment period for
Notice No. 887 lasted 60 days and
closed on February 22, 2000.
During the comment period, ATF
received several requests to extend the
comment period on T.D. ATF–421 to
provide interested parties with
sufficient time to submit their
comments. On March 21, 2000, ATF
published Notice No. 893 (65 FR 15115)
which reopened the comment period for
an additional 30 days until April 20,
2000.
During the comment period, ATF also
received a request to hold a public
hearing regarding the temporary
regulations but declined to do so. ATF
determined that the two notices
requesting public comment, totaling 90
days, provided sufficient time for
interested parties to submit written
comments and that any oral comments
that could be made during a public
hearing could be provided in writing
within the 90 day comment period.
ATF received 26 comments from 24
different interested parties concerning
the temporary regulations published in
T.D. ATF–421. The comments are
discussed below.
Return to the Original Manufacturer
Section 5754 of the IRC as adopted by
the BBA allowed previously exported
tobacco products and cigarette papers
and tubes to be brought back into the
United States and released from
customs custody as provided in section
5704(d), that is, to a manufacturer of
tobacco products or cigarette papers and
tubes or to an export warehouse
proprietor. ATF received several
comments requesting that it change the
regulations to provide that only the
‘‘original’’ manufacturer of previously
exported tobacco products and cigarette
papers and tubes would be eligible to
receive reimported products.
The subsequent amendment of section
5704(d) of the IRC by the ICCA and the
resulting regulatory amendments
adopted in T.D. ATF–465, as discussed
above, addressed this issue.
Personal Use Exemption
Fifteen comments opposed the
position taken by ATF in T.D. ATF–421
that the BBA did not provide for a
personal use exemption for previously
exported tobacco products. The
commenters argued that Congress did
not intend for the amendments in
section 9302 of the BBA to apply to
people traveling into the United States
with previously exported non-taxpaid
U.S. manufactured cigarettes for
personal use. Section 5704(d) of the IRC
at that time provided that tobacco
products and cigarette papers that were
previously exported could only be
brought back into the United States and
released from customs custody to a
manufacturer or export warehouse
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Removal of Export-Labeled Tobacco
Products From the Market by a Certain
Date
Several comments noted that the
temporary regulations permitted the
domestic sale of export-labeled tobacco
products removed prior to January 1,
2000, and that there was no ‘‘cut-off
date’’ by which the sale of these
products in domestic commerce must
cease. These comments recommended
that ATF require all tobacco products
made in the United States and bearing
an export label to be removed from
domestic commerce by a specific date.
TTB notes that section 4002 of the
ICCA amended the IRC to provide that
previously exported articles that were
imported before January 1, 2000, for sale
in the domestic market could not be
legally sold or held for sale after
February 7, 2001, unless they were
removed from their export packaging
and repackaged by the original
manufacturer into new packaging that
does not contain an export label. This
change was discussed in the preamble
of T.D. ATF–465. TTB believes that the
ICCA adequately addressed the issue
raised by the commenters.
Minimum Manufacturing Activity
Requirements
As noted above, the BBA amended
section 5712 of the IRC by adding a
provision for minimum capacity or
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activity requirements, as prescribed by
the Secretary, as an additional factor for
rejecting an application and denying a
permit. T.D. ATF–421 amended § 270.61
(now § 40.61), to state that a permit to
manufacture tobacco products will only
be granted to those persons whose
principal business activity under that
permit will be the original manufacture
of tobacco products, and that a permit
will not be granted to any person whose
principal activity under that permit will
be to receive or transfer non-taxpaid
tobacco products in bond. Furthermore,
to qualify for a permit, the amount of
tobacco products manufactured under a
permit must exceed the amount
transferred or received in bond under
that permit.
Three comments were received in
response to the minimum
manufacturing activity requirements
adopted in T.D. ATF–421. One
expressed approval of the regulation.
Two comments expressed concern that
the new qualification to obtain a permit
did not require a manufacturer to sell its
products in the United States. The
commenters asserted that the absence of
this requirement creates a loophole
under which unauthorized reimporters
may circumvent the provisions of the
BBA by qualifying as ‘‘manufacturers’’
simply by setting up equipment and
producing a substandard ‘‘cigarette’’
product that was not intended to be sold
in the United States. As a means of
addressing this potential problem, one
comment recommended that ATF define
the term ‘‘manufacture of tobacco
products’’ to include the ‘‘physical
manufacturing of cigarettes from basic
components, as well as shipping of
those cigarettes into the market for sale
or consumption.’’
One commenter further expressed
concern that ATF did not propose
regulations providing for the
‘‘inspection of facilities for purposes of
verifying that a purported manufacturer
is (1) legitimately manufacturing and
selling product and (2) not receiving
more previously exported cigarettes
than is permitted under the Temporary
Regulations.’’
Based on TTB’s enforcement
experience, TTB does not believe that
the current regulatory text contains a
loophole that allows a person to set up
a sham operation as contended. TTB
believes that the permit application
review process and the Bureau’s audit
and investigation activities are sufficient
to identify persons who are not engaging
in the original manufacture of tobacco
products and, as such, do not qualify for
a TTB permit. TTB further notes that the
section of the regulations in question
was subsequently amended by T.D.
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TTB–78 and subject to its accompanying
notice and public comment procedures.
Therefore, it is unnecessary to further
address this section in this document.
Importation Restrictions on Previously
Exported Tobacco Products and
Cigarette Papers and Tubes
As noted above, the BBA added
section 5754 to the IRC entitled
‘‘Restriction on importation of
previously exported tobacco products.’’
Under section 5754, tobacco products
and cigarette papers and tubes
previously exported from the United
States may be imported or brought into
the United States only as provided in
section 5704(d), that is, by release from
customs custody, without payment of
tax, to a manufacturer or to an export
warehouse proprietor in accordance
with such regulations and under such
bonds as the Secretary shall prescribe.
ATF’s position, as stated in the
preamble of T.D. ATF–421, was that
section 5754 precluded an importer
from importing previously exported
products, paying tax, and selling them
in the domestic market, and that the
statutory text was clear and left no
discretion. There were two comments
from the same person in strong
opposition to ATF’s interpretation of
this statutory provision.
TTB notes that sections 5704(d) and
5754 were subsequently amended by the
ICCA to limit the parties that could
receive reimported products and to
require the repackaging of such
products prior to sale in the United
States. T.D. ATF–465 incorporated these
statutory changes in the regulations in
§ 275.82(c) (now § 41.82(c)). Thus, the
clear, limited wording of the statutory
provisions in question precludes the
adoption of a regulation that would
contravene the position taken by ATF.
Foreign Manufactured Cigarettes
Several commenters stated that the
regulations published in T.D. ATF–421
should address problems associated
with cigarettes manufactured outside of
the United States. TTB believes that the
issues raised in these comments are
beyond the scope of this rulemaking
action.
Repackaging of Reimported Products
Consistent with the provisions of the
BBA, T.D. ATF–421 included a
provision requiring that reimported
tobacco products and cigarette papers
and tubes bearing export marks must be
stripped of their original packaging and
repackaged with the proper marks and
notices as the Secretary prescribes for
the domestic U.S. market. Two
comments were received in response to
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this requirement. Both commenters
agreed with the new requirement, but
one suggested the inclusion of a
provision whereby manufacturers could
only repackage previously exported
cigarettes that were originally
manufactured in their own
manufacturing facilities.
TTB notes that, as discussed above,
the ICCA addressed this issue by
providing that previously exported
tobacco products and cigarette papers
and tubes could be released from
customs custody only to the original
manufacturer of the articles in question
or to an authorized export warehouse
proprietor and could be repackaged by
the original manufacturer. This
provision was incorporated in the
regulations by T.D. ATF–465.
Definitions
One commenter suggested that the
terms, ‘‘Sells,’’ ‘‘Relands,’’ and
‘‘Receives’’ as used in § 275.83 (now
§ 41.83) should be defined to clearly
indicate the nature of the activities
subject to citation under this provision.
The commenter stated that ‘‘[t]his
would encompass all direct importers
and each activity in the chain of
importation including the offshore seller
(if jurisdiction can be obtained),
wholesalers, merchandise brokers,
retailers, and consumers of illegally
reintroduced cigarettes.’’
TTB notes that the wording of § 41.83
is basically a verbatim recitation of the
language found in section 5761(c) of the
IRC. TTB believes that the statutory and
regulatory texts are sufficiently clear
and that therefore no further regulatory
change is necessary.
The same commenter suggested that
ATF define the term ‘‘Person’’ more
broadly to include: ‘‘in the case of a
corporate participant, any more than
50%-owned affiliated corporation, and
in the case of a closely held corporation,
its shareholders or directors. In the case
of a partnership, joint venture, or
limited liability company, the term
person should be defined to include
operating partners or managers.’’
TTB believes that the term ‘‘Person’’
is sufficiently defined in 27 CFR 41.11
and notes that the regulatory definition
is consistent with the IRC at 26 U.S.C.
7701(a).
Significant Regulatory Action
In T.D. ATF–421, ATF stated: ‘‘It has
been determined that this temporary
rule is not a significant regulatory action
as defined by Executive Order 12866
because any economic effects flow
directly from the underlying statute and
not from this temporary rule. Therefore,
a regulatory assessment is not required.’’
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One commenter stated: ‘‘This position
is incorrect because the effect of the
Proposed Regulation exceeds the
statutes that control, and which the
Proposed Regulation is purported to
augment. In addition, the effect of the
Proposed Regulation has significant
impact (by eliminating certain business
entities from doing business in the reimportation of tobacco products) and
has significant economic and tax impact
on such entities.’’
ATF did not, and TTB does not, have
the discretion in administering 26
U.S.C. 5754 to determine who can
reimport tobacco products. In fact, the
regulations that implement section 5754
merely repeat, essentially verbatim, the
language of the statute. The regulations
do not exceed the authority contained in
the statute as the commenter suggests,
and TTB continues to believe that the
regulation is not a significant regulatory
action as defined by Executive Order
12866 (as discussed in more detail
below).
Subsequent Regulatory Changes
In addition to the changes made by
T.D. ATF–465, published in the Federal
Register (66 FR 45613) on August 29,
2001, the following subsequent
regulatory amendments adopted by ATF
and TTB affected some of the sections
of the regulations that were added or
amended by T.D. ATF–421:
• T.D. ATF–424, published in the
Federal Register (64 FR 71929) on
December 22, 1999, revised the
introductory text of § 270.183 (now
§ 40.183).
• T.D. ATF–460, published in the
Federal Register (66 FR 39091) on July
27, 2001, recodified 27 CFR part 270 as
part 40.
• T.D. ATF–463, published in the
Federal Register (66 FR 42731) on
August 15, 2001, recodified 27 CFR part
200 as part 71.
• T.D. ATF–464, published in the
Federal Register (66 FR 43478) on
August 20, 2001, recodified 27 CFR part
290 as part 44.
• T.D. ATF–467, published in the
Federal Register (66 FR 49531) on
September 28, 2001, revised the
definition of ‘‘Manufacturer of cigarette
papers and tubes’’ in 27 CFR 275.11
(now § 41.11). This definition does not
appear in this document.
• T.D. TTB–16, published in the
Federal Register (69 FR 52421) on
August 26, 2004, recodified 27 CFR part
275 as part 41.
• T.D. TTB–44, published in the
Federal Register (71 FR 16918) on April
4, 2006, made nomenclature changes to
27 CFR chapter I to reflect
organizational changes that resulted
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from the Homeland Security Act of
2002. These nomenclature changes
included replacing references to the
‘‘Director’’ with ‘‘Administrator’’, and
‘‘ATF’’ with ‘‘TTB’’, and specific office
or officer titles with ‘‘appropriate TTB
officer.’’
• T.D. TTB–75, published in the
Federal Register (74 FR 14479) on
March 31, 2009, to implement certain
changes made to the IRC by sections 701
and 702 of the Children’s Health
Insurance Program Reauthorization Act
(CHIPRA), amended 27 CFR 40.183(e),
and 27 CFR 41.81(c)(4)(ii) and (iii).
• T.D. TTB–78, published in the
Federal Register (74 FR 29401) on June
22, 2009, to implement other changes
made by section 702 of the CHIPRA,
amended 27 CFR 40.61, the definition of
‘‘Export warehouse’’ in 27 CFR 41.11,
41.201, 41.202, 41.206 and 41.208, and
removed 27 CFR 41.192, 41.205 and
41.207.
Temporary Rule T.D. ATF–422
On December 22, 1999, ATF
published another temporary rule, T.D.
ATF–422, in the Federal Register (64 FR
71947) setting forth regulatory changes
to 27 CFR part 275 (now part 41)
implementing the changes made by
section 9302 of the BBA pertaining to
tobacco product importer permits.
In accordance with the transitional
rule contained in section 9302(i)(2) of
the BBA, ATF stated in T.D. ATF–422
that persons who were already engaged
in the business as an importer of
tobacco products could continue in
such business after January 1, 2000,
provided they had filed an application
for a permit with ATF before January 1,
2000. Such persons would be issued a
temporary permit, which would remain
valid for a period of one year or until
a final determination was made on their
application, if a final determination was
not made within that time. ATF stated
that all others must obtain a permit
before engaging in the business as an
importer of tobacco products or cigarette
papers and tubes beginning January 1,
2000.
In T.D. ATF–422, ATF noted that only
manufacturers and export warehouse
proprietors may import tobacco
products in bond. Hence, a bond is not
required to be filed by any other
importer of tobacco products in
conjunction with the permit because
such importers are not authorized to
import tobacco products without
payment of tax upon release from
customs custody.
ATF took the position in T.D. ATF–
422 that fully qualified applicants
would be issued a permit limited to a
three-year duration. ATF explained that
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38563
the three-year duration had been
determined to be a reasonable method to
avoid the proliferation of numerous
unused permits, which would pose
administrative difficulties and potential
jeopardy to the revenue. ATF stated that
keeping track of unused permits would
strain limited resources and that such
permits could eventually fall into the
hands of unqualified persons who
would be unknown and unaccountable
to ATF. ATF said that administrative
controls would be put in place to
facilitate timely renewals by permittees.
The tobacco product importer permit
provisions were added to part 275 as
new subparts K (tobacco products
importer) and L (changes after original
qualification of importers), which were
modeled on the permit qualification
provisions applicable to tobacco
product manufacturers but with some
differences to reflect the principles
applicable to importers noted above. In
addition, T.D. ATF–422 added, revised
or otherwise amended the following
sections in part 275 to conform them to
the new importer permit provisions or,
unrelated to the importer permit
provisions, for purposes of updating the
regulatory texts: §§ 275.11, 275.25,
275.40, 275.41, 275.50, 275.62, 275.81,
275.85, 275.85a, 275.86, 275.106,
275.110, 275.111, 275.115a, 275.140,
and 275.141.
Subsequent Regulatory Changes
Because the amendments made by
T.D. ATF–422 to §§ 275.105, 275.106,
275.110, 275.111, and 275.121 (now
§§ 41.105, 41.106, 41.110, 41.111, and
41.121) were superseded by the revision
of those sections by T.D. ATF–444 and
finalized by T.D. TTB–68, those
amendments are not included in this
new temporary rule.
Because §§ 275.205 through 275.208
(now §§ 41.205 through 41.208) added
by T.D ATF–422 were revised or
removed in the publication of T.D.
TTB–78, those sections are not included
in this temporary rule.
Discussion of Comments Received in
Response to T.D. ATF–422
In conjunction with the publication of
T.D. ATF–422, ATF published a notice
of proposed rulemaking, Notice No. 888,
in the Federal Register (64 FR 71955) on
December 22, 1999. This notice invited
comments on the regulations prescribed
in T.D. ATF–422. The original comment
period for Notice No. 888 lasted 60 days
and closed on February 22, 2000. On
April 3, 2000, ATF published Notice
No. 894 (65 FR 17477), which reopened
the comment period for Notice No. 888
until May 3, 2000.
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After the publication of T.D. ATF–
422, ATF published two corrections and
one amended correction to the
temporary regulations published as T.D.
ATF–422. The corrections were
published as T.D. ATF–422a (65 FR
15058), T.D. ATF–422b (65 FR 45523),
and T.D. ATF–422c (65 FR 63545). None
of the changes contained in these
correction documents affect this
temporary rule.
During the comment period for Notice
No. 888, ATF received comments from
two different parties. The comments
concerned recordkeeping and reporting
requirements and the preparation and
submission of one ATF form. These
comments are summarized, and TTB’s
responses to them are set forth, below.
Records and Reports
One commenter noted that § 275.204
(now § 41.204), which sets forth the
general requirement that tobacco
product importers keep records and
submit reports, also states that such
records and reports are not required
with respect to tobacco products while
in customs custody. The commenter
recommended that this regulation also
exclude from reporting and
recordkeeping tobacco products entered
under a temporary importation bond
(TIB). (TIBs involve entry of
merchandise under Chapter 98 of the
HTSUS, and under regulations
administered by United States Customs
and Border Protection, without payment
of duty and tax; merchandise imported
under a TIB must be re-exported or
destroyed within one year after
importation unless an extension of the
one year period is granted.) In addition,
the commenter asserted that the same
section should exclude from the
importer recordkeeping and reporting
requirements tobacco products imported
and delivered to export warehouses
because recordkeeping and reporting
requirements for those products are
prescribed in 27 CFR part 290 (now 27
CFR part 44).
With regard to products under a TIB,
TTB has viewed such products to be
under constructive customs custody for
purposes of § 41.204, that is, the
statement in § 41.204, that records and
reports will not be required under part
41 with respect to tobacco products
while in customs custody, applies to
such products covered by a TIB. TTB
may review its importer reporting and
recordkeeping requirements, and
specifically the issue of products
covered by a TIB, to ensure that
adequate documentation on imported
tobacco products is available and
sufficient to ensure appropriate tax
payment where applicable. The
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provision in question may be subject to
future notice and public comment but is
not part of this rulemaking or
accompanying notice.
With regard to products imported and
delivered to export warehouses, the
importer is not relieved of its
responsibility to maintain records and
submit reports covering products it has
delivered to an export warehouse, even
where the importer is also the export
warehouse proprietor. The importer’s
records and reports must include all
products that are shipped or consigned
to the importer, under its importer
permit. The export warehouse
proprietor must maintain records and
submit reports that cover all products
on hand, received, removed, transferred,
and lost or destroyed, under its export
warehouse permit. In some cases, where
an importer and export warehouse
proprietor are the same person, the same
commercial records may serve as
records for both purposes but, for
adequate protection of the revenue, the
activities occurring under the authority
of each permit must be fully reflected in
the records and reports related to that
permit.
The commenter also stated that ATF
should require additional information
about tobacco products on the reports
prescribed in part 275 (now part 41).
The commenter suggested that
importers be required to maintain
records and to submit reports that are as
rigorous as those required for domestic
manufacturers. For example, the
commenter suggested that importers
record the cigarette brand, the name of
the manufacturer of the cigarettes and
the manufacturing address, and whether
the cigarettes are purchased directly or
indirectly from the manufacturer.
As noted above, TTB may review the
current recordkeeping and reporting
requirements for importers of tobacco
products to ensure the requirements are
sufficient to protect the revenue. If TTB
determines that more restrictive
requirements are necessary, any
proposed changes would be made
available for public comment. TTB
believes it is not appropriate to include
more restrictive requirements in this
document without prior notice and
opportunity to comment. With regard to
the specific records suggested by the
commenter, we note that brand
information is currently required of both
domestic manufacturers and importers
only with regard to recording the sale
price (by brand) of large cigars. The
other records suggested by the
commenter must be carefully
considered in the context of
importation, particularly with regard to
whether such records are necessary for
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the collection of the Federal excise tax
on imported products.
Notice of Release for Small Test
Quantities
The second commenter stated that it
routinely imports small quantities of
previously exported cigarettes for
testing in the United States and that the
requirement to prepare and submit form
ATF F 2145 (now TTB F 5200.11),
Notice of Release of Tobacco Products,
Cigarette Papers, or Cigarette Tubes, in
order to obtain the release of a few
cartons of returned cigarettes is
unwarranted and burdensome. The
commenter stated that requiring the
preparation and submission of this form
in this situation ‘‘forces the importer to
incur administrative costs and expenses
that are inconsistent with the value of
the goods’’ to be imported and
‘‘unnecessarily adds to the importer’s
reporting burden.’’ Furthermore, the
commenter noted, ‘‘securing the
required certifications takes time and
delays the release and testing of the
goods.’’
The commenter requested that ATF
amend the temporary regulations to
permit a domestic manufacturer to
import up to six cartons of previously
exported cigarettes for testing without
having to prepare and submit ATF F
2145 (currently TTB F 5200.11). As an
alternative, the commenter suggested
that ATF allow manufacturers importing
small quantities of test cigarettes to
submit a ‘‘blanket’’ ATF F 2145 that
would cover such imports for a calendar
month or quarter.
As discussed above, the ICCA was
enacted after the publication of T.D.
ATF–422, and provided that tobacco
products and cigarette papers and tubes
manufactured in the United States and
previously exported and returned may
be released from customs custody
without payment of tax only to the
original manufacturer or to an export
warehouse proprietor authorized to
receive them by the original
manufacturer. This statutory provision
in effect significantly decreased the
number of persons who could import
previously exported tobacco products
and cigarette papers and tubes. Further,
since the original publication of this
provision, TTB has worked with and
continues to work with industry
members on a case-by-case basis to
facilitate such removals without risk to
the revenue. For example, in some
cases, based on case-specific
circumstances and the compliance
history of the importer, an importer may
submit copies of TTB F 5200.11 and
receive certification on those forms in
anticipation of releasing tobacco
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products or cigarette papers or tubes
from customs custody without payment
of tax. TTB believes that such flexibility
reduces the regulatory burden of this
requirement. Accordingly, we are not
changing the regulatory text in this
temporary rule action to incorporate the
commenter’s suggestion.
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Reissuance of T.D. ATF–421 and T.D.
ATF–422 as a New Temporary Rule
ATF did not take action to adopt, as
a final rule, the T.D. ATF–421 and T.D.
ATF–422 temporary regulations. TTB
notes that the regulatory amendments
adopted in T.D. ATF–421 and T.D.
ATF–422 were significantly altered by
the subsequent statutory and regulatory
amendments discussed above. In view
of this and the significant period of time
that has elapsed since those two
temporary rule documents were
published, TTB believes that the best
approach at this juncture is to publish
one temporary rule that, in effect,
reissues the regulatory texts adopted in
T.D. ATF–421 and T.D. ATF–422 with
changes to the texts to conform them to
the later changes noted earlier in this
document. In addition, in accordance
with the requirements of 26 U.S.C.
7805(e)(1), TTB is publishing, in the
proposed rules section of this issue of
the Federal Register, a notice of
proposed rulemaking inviting comments
from the public on this new temporary
rule.
Provisions of T.D. ATF–421 Reflected in
This New Temporary Rule
With the exceptions as stated above
and outdated references to form
numbers in part 44, this temporary rule
includes the following regulatory
provisions issued in T.D. ATF–421
(with appropriate section number
changes to reflect the recodification of
27 CFR parts 200, 270, 275, and 290 as
mentioned above).
• The record requirements of tobacco
product manufacturers in § 40.183
paragraphs (a), (b), (c), (d), (f), (g), (h),
and (i), which were revised by T.D.
ATF–421 are being reissued;
• Section 40.213, which was added
by T.D. ATF–421 to cover the
repackaging of tobacco products labeled
for export when they are destined to be
sold in the U.S. market, is being
reissued in this temporary rule;
• Section 40.233 was amended by
T.D. ATF–421 and is reissued in this
temporary rule to require that all
required marks, labels, or notices appear
on tobacco products shipped under
bond to a tobacco manufacturer or an
export warehouse;
• Section 41.1 was revised by T.D
ATF–421 and is reissued in this
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temporary rule to outline the scope of
the part;
• In § 41.11, T.D. ATF–421 added,
and this temporary rule is reissuing the
definition for the term ‘‘Export
warehouse proprietor’’ and similarly is
reissuing, with some minor wording
changes, the definitions for the terms
‘‘Export warehouse’’ and ‘‘Relanding’’;
• In § 44.11, T.D. ATF–421 added,
and this temporary rule is revising and
reissuing a definition of ‘‘Zone
restricted status’’;
• Sections 44.61 and 44.181 were
revised by T.D. ATF–421 and are
reissued, with a revision to § 44.61, in
this temporary rule to require that all
products bear the required marks,
labels, or notices before removal or
transfer;
• The fifth sentence in § 44.62
regarding the restriction on deliveries of
products to vessels and aircraft as
supplies was revised by T.D. ATF–421
and is revised and reissued in this
temporary rule; and
• Section 44.142, requiring export
warehouse records to include several
new items of information, was revised
in T.D. ATF–421 and is revised and
reissued in this new temporary rule.
Provisions of T.D. ATF–422 Reflected in
This New Temporary Rule
• With the above-stated exceptions
and with the exception of 27 CFR 41.39,
which was removed by T.D. ATF–422
and later reissued, this temporary rule
includes the following regulatory
provisions issued in T.D. ATF–422
(with appropriate section number
changes to reflect the recodification of
27 CFR part 275 as mentioned above).
This temporary rule also reaffirms the
removal of certain sections that were
removed by T.D. ATF–422 (§§ 41.101(d)
and (e), 41.107, 41.108, 41.117, 41.118,
and 41.135 through 41.138). In § 41.11,
the definitions for the terms ‘‘Customs
officer,’’ ‘‘Records’’, ‘‘Removal or
remove’’, and ‘‘Port Director of
Customs’’ are being revised and
reissued;
• Section 41.85 was revised and is
being further revised and reissued to,
among other things, to clarify that its
application is limited to tobacco
products and cigarette papers and tubes
that are not put up in packages and to
remove the reference to importations
prior to December 16, 1986;
• Sections 41.11, 41.25, 41.40, 41.41,
41.50, 41.62, 41.81, 41.85, 41.85a, 41.86,
41.106, 41.110, 41.111, 41.115a, 41.140,
and 41.141 were revised and are being
reissued with clarifying, editorial,
procedural, and technical amendments;
• In subpart K, §§ 41.190, 41.191,
41.193, 41.194, 41.195, 41.196, 41.197,
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38565
41.199, 41.200, 41.201, 41.202, 41.203,
and 41.204, were added. These
provisions concern application,
issuance, duration, renewal, and
retention requirements that apply to
tobacco product importer permits.
These sections are being reissued with
clarifying, editorial, procedural, and
technical changes, including changes to
41.201 and 41.202 to extend the
duration of importer permits, as
described below; and
• In subpart L, §§ 41.220 through
41.228 were revised. These sections
prescribe procedures for amending a
tobacco product importer permit or
providing notice when changes occur to
the name, ownership and control, or
location or address of a permittee. These
sections are being reissued with
editorial changes to enhance readability
of the texts.
Extension of the Duration of New
Importer Permits
As noted above, the regulations
promulgated under T.D. ATF–422
provided for the expiration of a tobacco
products importer permit three years
from the date of issuance. An importer
could, within 30 days of the expiration
date, apply for its renewal of the permit.
The reason for a limited-duration permit
was to ensure that permits were issued
to, and remained in the hands of,
persons actively engaged in the
importation of tobacco products under
that permit. TTB has now reconsidered
the three-year permit duration,
particularly with a view to reducing the
burden on industry members and more
efficiently allocating agency resources,
and has determined that the purposes of
the limited-duration permit could still
be met if the permit duration was
changed from three years to five years.
Accordingly, this temporary rule
amends §§ 41.201 and 41.202 to provide
that permits issued on or after the
effective date of this temporary rule will
be valid for a period of five years from
the date of issuance. So long as a timely
application for renewal is filed (that is,
within 30 days prior to the expiration
date), the permit will continue in effect
until TTB has taken final action on the
application for renewal. Consistent with
the minimum manufacturing and
activity requirements of the operations
regulations for tobacco products and
processed tobacco, permit renewal
would not be available to a person who
did not import tobacco products under
the permit within the one-year period
immediately prior to the application to
renew.
These temporary regulations also
address permits that pre-date the
effective date of this document. A
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person who is operating as an importer
of tobacco products, who holds such a
permit, and who wishes to continue in
business must apply for and receive a
new five-year permit. The application
must be submitted to TTB within 150
days after the effective date of this
temporary rule, or 30 days prior to the
expiration date shown on the permit
form, whichever is later. If a person
timely files an application but that
application is not complete (that is, the
applicant has not submitted information
or documentation sufficient for TTB to
take action on the permit), and if the
applicant has not provided the missing
information within one year of a written
request for it or within any shorter time
period specified in the written request,
the permit application will be deemed
abandoned and the applicant will be
notified in writing that no permit will
be issued in response to the incomplete
application. Provided that a timely
application is filed, the person may
continue operations until TTB takes
final action on the application.
Any person that is operating under a
permit that pre-dates the effective date
of this temporary rule, and that has
applied for a renewal of the permit but
whose application for renewal is still
pending on the effective date of this
temporary rule, must reapply for a
permit within 150 days after the
effective date of the temporary rule. TTB
will work with such applicants to obtain
any supplementary documentation and
information needed to complete the
application for a new permit. These
changes will, among other things,
enable TTB to purge its record of
inactive permits and ensure TTB has
complete, accurate, and up-to-date
information on entities that hold fiveyear permits.
Any application for an original permit
(rather than for a renewal of an existing
permit) that was received prior to the
effective date of this temporary rule and
that is still pending on the effective date
of this rule will be processed as though
it were filed on or after the effective date
of this temporary rule, that is, as an
application for a five-year permit. The
changes contained in this rulemaking do
not impose any new documentation or
information requirements on those
applying for an original permit.
For the same reasons noted above,
TTB intends to also extend the duration
of the permits it issues to importers of
processed tobacco. TTB notes that a
number of importers of tobacco
products have amended their permits to
provide for the importation of processed
tobacco and, because the permits are
often connected in this way, TTB
believes that it would be
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administratively preferable to amend at
the same time the regulations applicable
to importers of processed tobacco at 27
CFR 41.240, 41.241, and 41.242 which
provide for the issuance, duration, and
renewal of permits for the importation
of processed tobacco. These
amendments mirror the new texts of
§§ 41.200, 41.201, and 41.202. The same
considerations described above that
apply to a pending application for
permit renewal or to a pending
application for an original permit apply
equally to importers of processed
tobacco.
Clarification of the Term ‘‘Sale Price’’
in Reference to Large Cigars
The regulatory amendments
contained in T.D. TTB–78, referred to
above, included an amendment to the
definition of ‘‘Sale price’’ in 27 CFR
41.11. This amendment, which involved
the addition of the words ‘‘United
States’’ before the word ‘‘manufacturer,’’
was merely intended to reflect the longstanding agency position regarding what
sale transaction is the basis for the
determination of tax on the large cigars.
However, TTB inadvertently failed to
make a corresponding change to the
reference to ‘‘sale price’’ in the operative
regulation, 27 CFR 41.39. This
temporary rule makes this technical
correction and also adds a new sentence
at the end of § 41.39 to direct the reader
to 27 CFR 41.40 for circumstances in
which a domestic manufacturer would
be liable for the tax on imported tobacco
products.
Amendment to the Definition of
‘‘Manufacturer of Tobacco Products’’
On July 6, 2012, the President signed
into law the Moving Ahead for Progress
in the 21st Century Act (‘‘MAP–21’’),
Public Law 112–141. Section 100122 of
MAP–21 amended the definition of
‘‘Manufacturer of tobacco products’’ at
26 U.S.C. 5702(d) to include any person
who for commercial purposes makes
available for consumer use (including
the consumer’s personal consumption
or use) a machine capable of making
tobacco products. The definition as
amended also states that a person
making such a machine available for
consumer use shall be deemed the
person making the removal, as that term
is defined by 26 U.S.C. 5702(j), with
respect to any tobacco products
manufactured by such machine.
The definition as amended further
states that a person who sells a machine
directly to a consumer at retail for a
consumer’s personal home use is not
making a machine available for
commercial purposes if such machine is
not used at a retail premises and is
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designed to produce tobacco products
only in personal use quantities. This
temporary rule amends the definition of
‘‘Manufacturer of tobacco products’’
where it appears in the ‘‘Meaning of
terms’’ sections at §§ 40.11, 41.11, and
44.11 to reflect this statutory change.
Public Participation
To submit comments on the
temporary regulations contained in this
document, please refer to the related
notice of proposed rulemaking (Notice
No. 137) published in the Proposed
Rules section of this issue of the Federal
Register.
Regulatory Flexibility Act
Pursuant to the requirements of the
Regulatory Flexibility Act (5 U.S.C.
chapter 6), we certify that these
regulations will not have a significant
economic impact on a substantial
number of small entities. Any effects of
this rulemaking on small businesses
flow directly from the underlying
statutes. Accordingly, a regulatory
flexibility analysis is not required. The
temporary regulations also reduce the
administrative burden on importers of
tobacco products and processed tobacco
by requiring that they renew their
permits only every five years rather than
every three years. Pursuant to 26 U.S.C.
7805(f), TTB will submit the temporary
regulations to the Chief Counsel for
Advocacy of the Small Business
Administration for comment on the
impact of the temporary regulations on
small businesses.
Executive Order 12866
This is not a significant regulatory
action as defined in E.O. 12866.
Therefore, it requires no regulatory
assessment.
Paperwork Reduction Act
The collections of information in the
regulations contained in this reissued
temporary rule have been previously
reviewed and approved by Office of
Management and Budget (OMB) in
accordance with the Paperwork
Reduction Act of 1995 (44 U.S.C.
3504(h)) and assigned control numbers
1513–0068, 1513–0070, 1513–0078,
1513–0106, and 1513–0107. An agency
may not conduct or sponsor, and a
person is not required to respond to, a
collection of information unless it
displays a valid control number
assigned by OMB. There is no new
collection of information imposed by
this temporary rule.
Comments concerning suggestions for
reducing the burden of the collections of
information should be directed to Mary
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Federal Register / Vol. 78, No. 124 / Thursday, June 27, 2013 / Rules and Regulations
A. Wood, Alcohol and Tobacco Tax and
Trade Bureau, at any of these addresses:
• P.O. Box 14412, Washington, DC
20044–4412;
• 202–453–2686 (facsimile); or
• [email protected] (email).
Inapplicability of Prior Notice and
Comment
TTB is issuing this temporary final
rule without prior notice and comment
pursuant to authority under section 4(a)
of the Administrative Procedure Act (5
U.S.C. 553(b)). This provision
authorizes an agency to issue a rule
without prior notice and comment when
the agency for good cause finds that
those procedures are ‘‘impracticable,
unnecessary, or contrary to the public
interest.’’ We believe prior notice and
comment is unnecessary because we
expect the affected industry members
will benefit from an extension of the
permit duration which will reduce the
industry members’ ongoing regulatory
burdens. In addition, TTB believes that
good cause exists to provide the
industry with this temporary rule
because, in addition to the extension of
the duration of the permit, the
temporary rule incorporates statutory
amendments that are already in effect.
TTB is soliciting public comment on the
regulatory provisions contained in this
temporary rule in a concurrently issued
notice of proposed rulemaking.
Drafting Information
Kara T. Fontaine and other
Regulations and Rulings Division staff,
Alcohol and Tobacco Tax and Trade
Bureau, drafted this document.
List of Subjects
27 CFR Part 40
Cigars and cigarettes, Claims,
Electronic funds transfers, Excise taxes,
Imports, Labeling, Packaging and
containers, Reporting and recordkeeping
requirements, Surety bonds, Tobacco.
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27 CFR Part 41
Cigars and cigarettes, Claims, Customs
duties and inspection, Electronic fund
transfers, Excise taxes, Imports,
Labeling, Packaging and containers,
Puerto Rico, Reporting and
recordkeeping requirements, Surety
bonds, Tobacco, Virgin Islands,
Warehouses.
27 CFR Part 44
Aircraft, Armed forces, Cigars and
cigarettes, Claims, Customs duties and
inspection, Excise taxes, Exports,
Foreign trade zones, Labeling, Packaging
and containers, Reporting and
recordkeeping requirements, Surety
bonds, Tobacco, Vessels, Warehouses.
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Amendments to the Regulations
Accordingly, for the reasons set forth
in the preamble, 27 CFR parts 40, 41,
and 44 are amended as set forth below.
PART 40—MANUFACTURE OF
TOBACCO PRODUCTS, CIGARETTE
PAPERS AND TUBES, AND
PROCESSED TOBACCO
1. The authority citation for part 40
continues to read as follows:
■
Authority: 26 U.S.C. 448, 5701–5705,
5711–5713, 5721–5723, 5731–5734, 5741,
5751, 5753, 5761–5763, 6061, 6065, 6109,
6151, 6301, 6302, 6311, 6313, 6402, 6404,
6423, 6676, 6806, 7011, 7212, 7325, 7342,
7502, 7503, 7606, 7805; 31 U.S.C. 9301, 9303,
9304, 9306.
2. In § 40.11, the definition of
‘‘Manufacturer of tobacco products’’ is
revised to read as follows:
■
§ 40.11
Meaning of terms.
*
*
*
*
*
Manufacturer of tobacco products. (1)
Any person who manufactures cigars,
cigarettes, smokeless tobacco, pipe
tobacco, or roll-your-own tobacco, other
than:
(i) A person who produces tobacco
products solely for that person’s own
consumption or use; or
(ii) A proprietor of a customs bonded
manufacturing warehouse with respect
to the operation of such warehouse.
(2) The term ‘‘Manufacturer of tobacco
products’’ includes any person who for
commercial purposes makes available
for consumer use (including such
consumer’s personal consumption or
use under paragraph (1)(i) of this
definition) a machine capable of making
cigarettes, cigars, or other tobacco
products. A person making such a
machine available for consumer use
shall be deemed the person making the
removal with respect to any tobacco
products manufactured by such
machine. A person who sells a machine
directly to a consumer at retail for a
consumer’s personal home use is not
making a machine available for
commercial purposes if such machine is
not used at a retail premises and is
designed to produce tobacco products
only in personal use quantities.
*
*
*
*
*
■ 3. In § 40.183, the introductory text
and paragraphs (a) through (d) and (f)
through (i) and the Office of
Management and Budget control
number referenced at the end of the
section, are revised to read as follows:
§ 40.183
Record of tobacco products.
The record of a manufacturer of
tobacco products must show the date
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and total quantities of all tobacco
products by kind (small cigars; large
cigars; small cigarettes; large cigarettes;
chewing tobacco; snuff; pipe tobacco;
roll-your-own tobacco) that are:
(a) Manufactured;
(b) Received in bond by—
(1) Transfer from other factories,
(2) Release from customs custody,
(3) Transfer from export warehouses,
and
(4) Transfer from foreign trade zones;
(c) Received by return to bond;
(d) Disclosed as an overage by
inventory;
*
*
*
*
*
(f) Removed, in bond, for—
(1) Export,
(2) Transfer to export warehouses,
(3) Transfer to other factories,
(4) Transfer to foreign trade zones,
(5) Use of the United States, and
(6) Experimental purposes off factory
premises;
(g) Otherwise disposed of, without
determination of tax, by—
(1) Consumption by employees on
factory premises,
(2) Consumption by employees off
factory premises, together with the
number of employees to whom
furnished,
(3) Use for experimental purposes on
factory premises,
(4) Loss,
(5) Destruction, and
(6) Reduction to materials;
(h) Disclosed as a shortage by
inventory; and
(i) On which the tax has been
determined and which are—
(1) Received, and
(2) Disposed of.
(Approved by the Office of Management
and Budget under control number 1513–
0068.)
4. Section 40.213 is revised to read as
follows:
■
§ 40.213
export.
Tobacco products labeled for
Tobacco products labeled for export
are ineligible for removal from the
factory for distribution into the U.S.
domestic market. Tobacco products
labeled for export may not be sold,
transferred, or delivered into the U.S.
domestic market by a manufacturer of
tobacco products unless the
manufacturer repackages the tobacco
product by removing it from its original
package bearing the export marks and
placing it into a new package. The new
package, mark, and notice must conform
to the requirements of this subpart.
5. In § 40.233, the last sentence is
revised to read as follows:
■
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§ 40.233
Federal Register / Vol. 78, No. 124 / Thursday, June 27, 2013 / Rules and Regulations
Transfer in bond.
* * * However, tobacco products are
eligible for transfer in bond to a
manufacturer of tobacco products or to
an export warehouse only if they bear
the required marks, labels, and notices.
PART 41—IMPORTATION OF
TOBACCO PRODUCTS, CIGARETTE
PAPERS AND TUBES, AND
PROCESSED TOBACCO
6. The authority citation for part 41
continues to read as follows:
■
Authority: 26 U.S.C. 5701–5705, 5708,
5712, 5713, 5721–5723, 5741, 5754, 5761–
5763, 6301, 6302, 6313, 6402, 6404, 7101,
7212, 7342, 7606, 7651, 7652, 7805; 31 U.S.C.
9301, 9303, 9304, 9306.
7. Section 41.1 is revised to read as
follows.
■
§ 41.1 Importation of tobacco products,
cigarette papers and tubes, and processed
tobacco.
This part contains regulations relating
to tobacco products, cigarette papers
and tubes, and processed tobacco
imported into the United States from a
foreign country or brought into the
United States from Puerto Rico, the
Virgin Islands, or a possession of the
United States.
8. In § 41.11, the definitions of
‘‘Customs officer’’, ‘‘Export warehouse’’,
‘‘Export warehouse proprietor’’,
‘‘Manufacturer of tobacco products’’,
‘‘Port Director of Customs’’, ‘‘Records’’,
‘‘Relanding’’, and ‘‘Removal or remove’’
are revised to read as follows:
■
§ 41.11
Meaning of terms.
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*
*
*
*
*
Customs officer. An officer of U.S.
Customs and Border Protection or any
agent or other person authorized by law
or designated by the Secretary of the
Treasury or the Secretary of Homeland
Security to perform the duties of an
officer of U.S. Customs and Border
Protection.
*
*
*
*
*
Export warehouse. A bonded internal
revenue warehouse for the storage of
tobacco products and cigarette papers
and tubes, upon which the internal
revenue tax has not been paid or for the
storage of processed tobacco, for
subsequent shipment to a foreign
country, Puerto Rico, the Virgin Islands,
or a possession of the United States, or
for consumption beyond the jurisdiction
of the internal revenue laws of the
United States.
Export warehouse proprietor. Any
person who operates an export
warehouse.
*
*
*
*
*
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Manufacturer of tobacco products. (1)
Any person who manufactures cigars,
cigarettes, smokeless tobacco, pipe
tobacco, or roll-your-own tobacco, other
than:
(i) A person who produces tobacco
products solely for that person’s own
consumption or use; or
(ii) A proprietor of a customs bonded
manufacturing warehouse with respect
to the operation of such warehouse.
(2) The term ‘‘Manufacturer of tobacco
products’’ includes any person who for
commercial purposes makes available
for consumer use (including such
consumer’s personal consumption or
use under paragraph (1)(i) of this
definition) a machine capable of making
cigarettes, cigars, or other tobacco
products. A person making such a
machine available for consumer use
shall be deemed the person making the
removal with respect to any tobacco
products manufactured by such
machine. A person who sells a machine
directly to a consumer at retail for a
consumer’s personal home use is not
making a machine available for
commercial purposes if such machine is
not used at a retail premises and is
designed to produce tobacco products
only in personal use quantities.
*
*
*
*
*
Port Director of Customs. The director
of any port or port of entry as defined
in 19 CFR 101.1. A list of customs
service ports and ports of entry is set
forth in 19 CFR 101.3.
*
*
*
*
*
Records. The accounts, books,
correspondence, declarations, papers,
statements, technical data, electronic
media and the computer programs
necessary to retrieve the stored
information in a usable form, and other
documents that:
(1) Pertain to any importation of
tobacco products, cigarette papers or
tubes, or processed tobacco, to the
information contained in the documents
required by law or regulation under the
Tariff Act of 1930, as amended, in
connection with the importation or
shipment of merchandise into the
United States from Puerto Rico; and
(2) Are of the type normally kept in
the ordinary course of business; and
(3) Are sufficiently detailed to:
(i) Establish the right to make the
importation or shipment into the United
States from Puerto Rico;
(ii) Establish the correctness of any
importation or shipment into the United
States from Puerto Rico;
(iii) Determine the liability of any
person for duties and taxes due, or
which may be due, to the United States;
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(iv) Determine the liability of any
person for fines, penalties, and
forfeitures; and
(v) Determine whether the person has
complied with the laws and regulations
administered by TTB and U.S. Customs
and Border Protection (CBP) and with
any other documents required under
laws or regulations administered by
TTB and CBP.
Relanding. When used with reference
to tobacco products and cigarette papers
and tubes, the term ‘‘relanding’’ means
importing, bringing, or returning into
the jurisdiction of the United States any
tobacco products or cigarette papers or
tubes that were manufactured in the
United States, labeled or shipped for
export (including to Puerto Rico) as
prescribed in this chapter, and
previously exported from the United
States.
Removal or remove. When used with
reference to tobacco products or
cigarette papers or tubes or any
processed tobacco, the term ‘‘removal’’
or ‘‘removed’’ means removal from the
factory, release from internal revenue
bond under 26 U.S.C. 5704, release from
customs custody (including conditional
release as defined in 19 CFR 141.0a(i)),
and also includes the smuggling or other
unlawful importation of such articles
into the United States.
*
*
*
*
*
■ 9. In § 41.25 the fourth sentence is
revised to read as follows:
§ 41.25 Disposal of forfeited, condemned,
and abandoned tobacco products and
cigarette papers and tubes.
* * * Except when the tax is to be
paid to the Port Director of Customs or
other authorized customs officer in
accordance with customs regulations
(19 CFR part 127) on sales of articles by
customs officers, the payment of tax on
those articles must be evidenced by
presentation, to the officer having
custody of the articles, of a receipt from
the appropriate TTB officer showing
such payment. * * *
10. In § 41.39, the first sentence is
amended by adding the words ‘‘United
States’’ before the word ‘‘manufacturer’’,
and a sentence is added at the end to
read as follows:
■
§ 41.39 Determination of sale price of large
cigars.
* * * See § 41.40 of this chapter
regarding liability for tax on large cigars,
not put up in packages, released from
customs custody without payment of tax
for delivery to a domestic manufacturer
of tobacco products.
11. Section 41.40 is revised to read as
follows:
■
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Federal Register / Vol. 78, No. 124 / Thursday, June 27, 2013 / Rules and Regulations
§ 41.40
Persons liable for tax.
The importer of tobacco products or
cigarette papers and tubes is liable for
the internal revenue taxes imposed
thereon by 26 U.S.C. 5701 or 7652,
except when tobacco products or
cigarette papers or tubes imported or
brought into the United States (other
than those previously exported and
returned) are released from customs
custody, without payment of tax as
provided under 26 U.S.C. 5704(c).
Under section 5704(c), tobacco products
and cigarette papers and tubes,
imported or brought into the United
States, may be released from customs
custody, without payment of tax, for
delivery to the proprietor of an export
warehouse, or to a manufacturer of
tobacco products or cigarette papers and
tubes if such articles are not put up in
packages. Under these circumstances
the transferee will become liable for the
internal revenue tax on these articles
upon release from customs custody, and
the importer will thereupon be relieved
from the liability for the tax. However,
if the transferee is also the importer, the
importer will not be relieved from the
liability for the tax.
12. Section 41.41 is revised to read as
follows:
■
§ 41.41
Determination and payment of tax.
Tobacco products and cigarette papers
and tubes imported or brought into the
United States, on which internal
revenue taxes are due and payable, are
not eligible for release from customs
custody until those taxes have been
determined.
13. In § 41.50, the last two sentences
are revised to read as follows:
■
§ 41.50
Exemptions.
* * * These exemptions include, but
are not limited to, certain importations
in passengers’ baggage, for use of crew
members, and by foreign officials.
Persons importing tobacco products and
cigarette papers and tubes as described
in this section are not required to obtain
a permit.
■ 14. Section 41.62 is revised to read as
follows:
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§ 41.62 Customs collection of internal
revenue taxes on tobacco products and
cigarette papers and tubes imported or
brought into the United States.
Internal revenue taxes on tobacco
products and cigarette papers and tubes
imported or brought into the United
States, which are to be paid to the Port
Director of Customs or other authorized
customs officer, in accordance with this
part, must be collected, accounted for,
and deposited as internal revenue
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collections by the Port Director of
Customs in accordance with customs
procedures and regulations.
15. In § 41.81, paragraphs (a), (b), and
(c) introductory text are revised to read
as follows:
■
§ 41.81
Taxpayment.
(a) General. This section applies to
tobacco products and cigarette papers
and tubes upon which internal revenue
tax is payable and which are imported
into the United States from a foreign
country or are brought into the United
States from Puerto Rico, the Virgin
Islands, or a possession of the United
States. For provisions relating to
restrictions on the importation of
previously exported tobacco products
and cigarette papers and tubes, see
§ 41.82.
(b) Method of payment. Except for
articles imported or brought into the
United States as provided in §§ 41.85
and 41.85a, the internal revenue tax
must be determined before the tobacco
products, cigarette papers, or cigarette
tubes are removed from customs
custody. The tax must be paid on the
basis of a return on the customs form or
by authorized electronic transmission
by which the tobacco products, cigarette
papers, or cigarette tubes are duty- and
tax-paid to customs.
(c) Required information. When
tobacco products or cigarette papers or
tubes enter the United States for
consumption, or when they are released
from customs custody for consumption,
the importer must include the Federal
excise tax information specified in
paragraphs (c)(1) through (7) of this
section on the customs form or on the
authorized electronic transmission if the
form or electronic transmission allows
for the reporting of such information.
Whether or not the specified
information appears on the form or
electronic transmission filed with
customs, that information, together with
a copy of the customs form or the
electronic transmission, must be
retained and made available for
inspection by the appropriate TTB
officer.
*
*
*
*
*
■ 16. Section 41.85 is revised to read as
follows:
§ 41.85 Release from customs custody of
imported tobacco products or cigarette
papers or tubes.
(a) General. This section applies only
to tobacco products and cigarette papers
and tubes that are not put up into
packages in which they will be sold to
consumers. Subject to the requirements
of § 41.86, the Port Director of Customs
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38569
or authorized customs officer may
release the following articles from
customs custody without payment of
internal revenue tax under the internal
revenue bond of the manufacturer or
export warehouse proprietor to whom
the articles are released:
(1) Tobacco products manufactured in
a foreign country, the Virgin Islands, or
a possession of the United States, for
transfer to the bonded premises of a
manufacturer of tobacco products or to
the bonded premises of an export
warehouse proprietor; and
(2) Cigarette papers and tubes
manufactured in a foreign country, the
Virgin Islands, or a possession of the
United States, for transfer to the factory
of manufacturer of cigarette papers and
tubes, to an export warehouse
proprietor, or to a manufacturer of
tobacco products solely for use in the
manufacture of cigarettes.
(b) Products from the Virgin Islands.
In addition to the documentation
required by § 41.86, in the case of
products exported from the Virgin
Islands the manufacturer also must file
an extension of coverage of the internal
revenue bond on TTB F 5000.18, and
receive a notice of approval from the
appropriate TTB officer, in order to
obtain release under paragraph (a)(1) of
this section. The extension of coverage
must be executed by the principal and
the surety and must be in the following
form:
‘‘Whereas the purpose of this extension is
to bind the obligors for the purpose of the tax
imposed by 26 U.S.C. 7652(b), on tobacco
products and cigarette papers and tubes
exported from the Virgin Islands and
removed from customs custody in the United
States without payment of internal revenue
tax, for delivery to the principal on said
bond.’’
‘‘Now, therefore, the said bond is further
specifically conditioned that the principal
named therein must pay all taxes imposed by
26 U.S.C. 7652(b) plus penalties, if any, and
interest, for which he may become liable
with respect to these products exported from
the Virgin Islands and removed from customs
custody in the United States without
payment of internal revenue tax thereon, and
must comply with all provisions of law and
regulations with respect thereto.’’
(c) Receipt by manufacturer. Articles
received into the factory of a
manufacturer under this section are
subject to the requirements of part 40 of
this chapter.
■ 17. Section 41.85a is revised to read
as follows:
§ 41.85a Release from customs custody of
returned articles.
(a) Domestically manufactured
tobacco products (classifiable under
item 9801.00.80 of the Harmonized
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Tariff Schedule of the United States, 19
U.S.C. 1202) exported from and
returned to the United States without
change to the product or the shipping
container may be released from customs
custody in the United States, under the
bond of the original manufacturer or of
the export warehouse proprietor who
has been authorized by the original
manufacturer (see § 41.82), without
payment of that part of the duty
attributable to internal revenue tax, for
delivery to the bonded premises of the
original tobacco products manufacturer
or to the bonded premises of the export
warehouse proprietor.
(b) Domestically manufactured
cigarette papers and tubes (classifiable
under item 9801.00.80 of the
Harmonized Tariff Schedule of the
United States, 19 U.S.C. 1202) exported
from and returned to the United States
without change to the product or the
shipping container may be released
from customs custody in the United
States, without payment of that part of
the duty attributable to internal revenue
tax, for delivery to the bonded premises
of the original manufacturer of the
cigarette papers and tubes or an export
warehouse proprietor authorized by the
original manufacturer to receive such
products.
(c) Releases under this section must
be in accordance with the procedures
set forth in § 41.86. Once released, the
tobacco products and cigarette papers
and tubes are subject to the tax and
other provisions of 26 U.S.C. chapter 52
and, as applicable, to the regulations in
part 40 of this chapter as if they had not
been exported or otherwise removed
from internal revenue bond.
■ 18. Section 41.86 is revised to read as
follows:
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§ 41.86
Procedure for release.
(a) Every manufacturer of tobacco
products or cigarette papers and tubes
and every export warehouse proprietor
who desires to obtain the release of
tobacco products or cigarette papers and
tubes from customs custody, without
payment of internal revenue tax under
its internal revenue bond, as provided
in §§ 41.85 or 41.85a, must prepare a
notice of release, TTB F 5200.11 and file
the form with the appropriate TTB
officer in accordance with the
instructions on the form. The
appropriate TTB officer will certify TTB
F 5200.11 covering the release of the
tobacco products or cigarette papers and
tubes under 26 U.S.C. 5704(c) or (d) if
the manufacturer or export warehouse
proprietor is authorized to receive the
products.
(b) Importers who are manufacturers
of tobacco products or cigarette papers
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and tubes or export warehouse
proprietors, or their authorized agents,
who request the release of tobacco
products or cigarette papers and tubes
from customs custody in the United
States under this section, using customs
electronic filing procedures, must not
request the release until they have
received the TTB F 5200.11 certified by
the appropriate TTB officer. Once U.S.
Customs and Border Protection releases
the tobacco products or cigarette papers
and tubes in accordance with 19 CFR
part 143, customs directives, and any
other applicable instructions, the
importer must submit a copy of the TTB
F 5200.11 along with a copy of the
electronic filing and customs release to
the appropriate TTB officer at the
address shown on TTB F 5200.11. The
importer must retain two copies of the
TTB F 5200.11, one copy to meet TTB
recordkeeping requirements and one
copy to meet customs recordkeeping
requirements.
(c) Importers or their authorized
agents requesting release of tobacco
products or cigarette papers or tubes
from customs custody in the United
States under any authorized procedure
other than the electronic filing
procedures provided for in paragraph
(b) of this section, must submit all
copies of the TTB F 5200.11 to the
appropriate customs officer along with
the request for release. The customs
officer will verify that the TTB F
5200.11 has been certified by the
appropriate TTB officer and return all
copies to the importer or the importer’s
authorized agent.
(d) Once U.S. Customs and Border
Protection releases the tobacco products
or cigarette papers and tubes in
accordance with 19 CFR part 143,
customs directives, and any other
applicable instructions, the importer
must send a copy of the TTB F 5200.11
along with a copy of the customs release
to the appropriate TTB office at the
address shown thereon. The importer
must retain two copies of the TTB F
5200.11, one copy to meet TTB
recordkeeping requirements and one
copy to meet customs recordkeeping
requirements.
19. In § 41.115a, paragraph (e) is
revised to read as follows:
■
§ 41.115a Payment of tax by electronic
fund transfer.
*
*
*
*
*
(e) Procedure. Upon the notification
required under paragraph (b)(1) of this
section, the appropriate TTB officer will
issue to the taxpayer a TTB Procedure
entitled, Payment of Tax by Electronic
Fund Transfer (EFT). This publication
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outlines the procedure a taxpayer must
follow when preparing returns and EFT
remittances under this part.
*
*
*
*
*
■ 20. In § 41.140, the first sentence is
revised to read as follows:
§ 41.140 Taxpayment of unpackaged
Puerto Rican products made in Puerto Rico
and brought into the United States.
Every manufacturer of tobacco
products or cigarette papers or tubes in
the United States who receives, under
its bond without payment of internal
revenue tax, Puerto Rican tobacco
products or cigarette papers or tubes not
put up in packages, and who
subsequently removes such products
subject to tax, must pay the tax imposed
on these products by 26 U.S.C. 7652(a)
at the rates prescribed in 26 U.S.C. 5701
on the basis of a return as prescribed by
part 40 of this chapter. * * *
21. In § 41.141, the first sentence is
revised to read as follows:
■
§ 41.141
Reports.
Every manufacturer of tobacco
products or cigarette papers or tubes in
the United States who receives Puerto
Rican tobacco products or cigarette
papers or tubes under its bond without
payment of internal revenue tax must
report the receipt and disposition of
such tobacco products and cigarette
papers and tubes on supplemental
monthly reports. * * *
*
*
*
*
*
■ 22. Section 41.190 is revised to read
as follows:
§ 41.190
Persons required to qualify.
Any person who engages in the
business as an importer of tobacco
products must qualify as an importer of
tobacco products in accordance with
this part. Any person eligible for an
exemption described in § 41.50 is not
engaged in the business as an importer
of tobacco products. A person importing
tobacco products for personal use, in
such quantities as may be allowed by
Customs without payment of tax, is not
required to have an importer’s permit.
23. Section 41.191 is revised to read
as follows:
■
§ 41.191
Application for permit.
Every person, before commencing
business as an importer of tobacco
products, must make application for,
and obtain, the permit in accordance
with this subpart. The permit
application must be made on TTB F
5230.4 in accordance with the
instructions for the form. All documents
required under this part to be furnished
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with the permit application must be
made a part thereof.
24. Section 41.193 is revised to read
as follows:
■
§ 41.193
Corporate documents.
Every corporation that files an
application for a permit as an importer
of tobacco products must furnish with
its application for the permit required
by § 41.191 a true copy of the corporate
charter or a certificate of corporate
existence or incorporation executed by
the appropriate officer of the State in
which incorporated. The corporation
must likewise furnish duly
authenticated extracts of the
stockholders’ meetings, bylaws, or
directors’ meetings, listing the offices
that, or the officers who, are authorized
to sign documents or otherwise act in
behalf of the corporation in matters
relating to 26 U.S.C. chapter 52 and the
regulations issued thereunder. The
corporation must also furnish evidence,
in duplicate, of the identity of the
officers and directors and each person
who holds more than ten percent of the
stock of the corporation. Where the
corporation has previously filed with
the appropriate TTB officer any
information required by this section and
that information is currently complete
and accurate, a written statement to that
effect, in duplicate, will be sufficient for
purposes of this section.
25. Section 41.194 is revised to read
as follows:
■
Every partnership or association that
files an application for a permit as an
importer of tobacco products must
furnish with its application for the
permit required by § 41.191 a true copy
of the articles of partnership or
association, if any, or the certificate of
partnership or association where
required to be filed by any State, county,
or municipality. Where a partnership or
association has previously filed these
documents with the appropriate TTB
officer and the documents are currently
complete and accurate, a written
statement, in duplicate, to that effect by
the partnership or association will be
sufficient for purposes of this section.
26. Section 41.195 is revised to read
as follows:
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■
Trade name certificate.
Every person that files an application
for a permit as an importer of tobacco
products operating under a trade name
must furnish with the application for
the permit required by § 41.191 a true
copy of the certificate or other
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27. Section 41.196 is revised to read
as follows:
■
§ 41.196
Power of attorney.
If the application for a permit or any
report or other document required to be
executed under this part is to be signed
by an individual as an attorney in fact
for any person (including one of the
partners for a partnership or one of the
members of an association), or if an
individual is otherwise to officially
represent such person, a power of
attorney on TTB F 5000.8 must be
furnished to the appropriate TTB
officer. A power of attorney is not
required for individuals whose
authority is furnished with the
corporate documents required by
§ 41.193. A new TTB F 5000.8 does not
have to be filed with the appropriate
TTB officer if that form previously was
submitted to TTB and is still in effect.
28. Section 41.197 is revised to read
as follows:
■
§ 41.197
§ 41.194 Articles of partnership or
association.
§ 41.195
document, if any, issued by a State,
county, or municipal authority in
connection with the transaction of
business under the trade name. If no
such certificate or other document is
issued by the State, county, or
municipal authority, a written
statement, in duplicate, to that effect by
the person will be sufficient for
purposes of this section.
Additional information.
The appropriate TTB officer may
require the submission of, and the
applicant must furnish, as a part of the
application for a permit, such additional
information the appropriate TTB officer
deems necessary to determine whether
the applicant is entitled to a permit
under this subpart.
29. Section 41.199 is revised to read
as follows:
■
§ 41.199 Notice of contemplated
disapproval.
If the appropriate TTB officer has
reason to believe that the applicant is
not entitled to a permit, the appropriate
TTB officer will promptly provide to the
applicant a notice of the contemplated
disapproval of the application and an
opportunity for hearing thereon in
accordance with part 71 of this chapter.
If, after the notice and opportunity for
hearing, the appropriate TTB officer
finds that the applicant is not entitled
to a permit, an order will be prepared
stating the findings on which the
application is denied.
30. Section 41.200 is revised to read
as follows:
■
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§ 41.200
38571
Issuance of permit.
If the application for the permit
required under this subpart is approved,
the appropriate TTB officer will issue
the permit on TTB F 5200.24.
31. Section 41.201 is revised to read
as follows:
■
§ 41.201
Duration of permit.
(a) Permits with an effective date on
or after August 26, 2013. A permit
issued under § 41.200 bearing an
effective date of August 26, 2013 or later
will be valid for a period of five years
from the effective date shown on the
permit. Provided that a timely
application for renewal is filed under
§ 41.202, the expiring permit will
continue in effect until final action is
taken by TTB on the application for
renewal.
(b) Permits with an effective date prior
to August 26, 2013. A person operating
as an importer of tobacco products that
holds a permit bearing an effective date
that is prior to August 26, 2013 and that
wishes to continue operations as an
importer of tobacco products, must
apply for and receive a new permit
issued under § 41.200. The person must
file the application under § 41.191
within 150 days after August 26, 2013,
or within 30 days prior to the expiration
date shown on the existing permit form,
whichever is later. If a person timely
files an application but that application
is not complete (that is, the applicant
has not submitted information or
documentation sufficient for TTB to
take action on the permit), and if the
applicant has not provided the missing
information within one year of a written
request for it or within any shorter time
period specified in the written request,
the permit application will be deemed
abandoned and the applicant will be
notified in writing that no permit will
be issued in response to the incomplete
application. Provided that a timely
application is filed, the person may
continue operations under the existing
permit until TTB takes final action on
the application for the new permit.
32. Section 41.202 is revised to read
as follows:
■
§ 41.202
Renewal of permit.
(a) Permits with an effective date on
or after August 26, 2013. A person
operating as an importer of tobacco
products that holds a permit required
under § 41.191 and issued under
§ 41.200 bearing an effective date of
August 26, 2013 or later, and that
wishes to continue operations beyond
the expiration of the permit, must apply
for renewal of the permit within 30 days
prior to expiration of the permit, in
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accordance with the instructions
provided with the renewal application
form. Permits will be renewed only for
those persons that have engaged in the
importing of tobacco products under the
current permit during the one-year
period immediately prior to the date of
the application to renew.
(b) Permits with an effective date prior
to August 26, 2013. A person may not
obtain renewal of a permit bearing an
effective date prior to August 26, 2013.
A person operating as an importer of
tobacco products that holds a permit
bearing an effective date prior to August
26, 2013, and that wishes to continue in
operations as an importer of tobacco
products, must apply for and receive a
new permit for issuance under § 41.200
and in accordance with the rules
contained in § 41.201(b).
■ 33. Section 41.203 is revised to read
as follows:
§ 41.203 Retention of permit and
supporting documents.
The importer must retain the permit,
together with the copy of the
application and supporting documents
returned with the permit, at the same
place where the records required by this
subpart are kept. The importer must
make the permit and supporting
documents available for inspection by
any appropriate TTB officer upon
request.
■ 34. Section 41.204 is revised to read
as follows:
§ 41.204
Records and reports in general.
Every tobacco products importer must
keep records and, when required by this
part, submit reports, of the physical
receipt and disposition of tobacco
products. Records and reports are not
required under this part with respect to
tobacco products that are in customs
custody.
■ 35. Subpart L is revised to read as
follows:
Sec.
Subpart L—Changes After Original
Qualification of Importers
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Changes in Name
41.220 Change in individual name.
41.221 Change in trade name.
41.222 Change in corporate name.
Changes in Ownership or Control
41.223 Fiduciary successor.
41.224 Transfer of ownership.
41.225 Change in officers, directors, or
stockholders of a corporation.
41.226 Change in control of a corporation.
Changes in Location or Address
41.227 Change in location.
41.228 Change in address.
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Subpart L—Changes After Original
Qualification of Importers
Changes in Name
§ 41.220
Change in individual name.
When there is a change in the name
of an individual operating under a
permit as an importer of tobacco
products, the importer must, within 30
days of the change, submit an
application on TTB F 5230.5 for an
amended permit.
§ 41.221
Change in trade name.
When there is a change in, or an
addition or discontinuance of, a trade
name used by an importer of tobacco
products in connection with operations
authorized by the permit, the importer
must, within 30 days of the change,
apply for an amended permit on TTB F
5230.5 to reflect such change. The
importer must also furnish a true copy
of any new trade name certificate or
document issued to the business, or a
statement in lieu thereof, as required by
§ 41.195.
§ 41.222
Change in corporate name.
When there is a change in the
corporate name of an importer of
tobacco products, the importer must,
within 30 days of such change, apply for
an amended permit on TTB F 5230.5.
The importer must also furnish such
documents as may be necessary to
establish that the corporate name has
been changed.
Changes in Ownership or Control
§ 41.223
Fiduciary successor.
If an administrator, executor, receiver,
trustee, assignee, or other fiduciary is to
take over the business of an importer of
tobacco products as a continuing
operation, the fiduciary must, before
commencing operations, apply for a
permit in accordance with § 41.191 and
furnish certified copies, in duplicate, of
the order of the court or other pertinent
documents, showing his or her
appointment and qualification as the
fiduciary. Where a fiduciary intends
only to liquidate the business,
qualification as an importer of tobacco
products is not required if the fiduciary
promptly files with the appropriate TTB
officer a written statement to that effect.
§ 41.224
Transfer of ownership.
If a transfer in ownership of the
business of an importer of tobacco
products (including a change of any
member of a partnership or association)
is to be made, the importer must give
written notice to the appropriate TTB
officer, naming the proposed successor
and the desired effective date of the
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transfer. Before commencing operations,
the proposed successor must qualify as
an importer of tobacco products in
accordance with subpart K of this part.
The importer must give notice of the
transfer, and the proposed successor
must apply for the permit, in sufficient
time for examination and approval of
the application before the desired date
of the transfer. The predecessor
importer must make a concluding report
in accordance with § 41.206 and must
surrender the permit with that report.
The successor importer must make a
first report in accordance with § 41.206.
§ 41.225 Change in officers, directors, or
stockholders of a corporation.
Upon election or appointment
(excluding successive reelection or
reappointment) of any officer or director
of a corporation operating as an
importer of tobacco products, or upon
any occurrence that results in a person
acquiring ownership or control of more
than ten percent in aggregate of the
outstanding stock of such corporation,
the importer must, within 30 days of
that action, so notify the appropriate
TTB officer in writing, giving the
identity of the person. In the event that
the acquisition of more than 10 percent
in aggregate of the outstanding stock of
the corporation results in a change of
control of the corporation, the
provisions of § 41.226 will apply. When
there is any change in the authority
furnished under § 41.196 for officers to
act on behalf of the corporation, the
importer must immediately so notify the
appropriate TTB officer in writing.
§ 41.226 Change in control of a
corporation.
When the issuance, sale, or transfer of
the stock of a corporation operating as
an importer of tobacco products results
in a change in the identity of the
principal stockholders exercising actual
or legal control of the operations of the
corporation, the corporate importer
must, within 30 days after the change
occurs, apply for a new permit on TTB
F 5230.4. If the application is not timely
made, the present permit will
automatically terminate at the
expiration of that 30-day period, and the
importer must dispose of all tobacco
products on hand in accordance with
this part, make a concluding report in
accordance with § 41.206, and surrender
the permit with that report. If the
application for a new permit is timely
made, the present permit will continue
in effect pending final action with
respect to the new application.
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Changes in Location or Address
§ 41.227
Change in location.
When an importer of tobacco products
intends to relocate its principal business
office, the importer must, before
commencing operations at the new
location, make application on TTB F
5230.5 for, and obtain, an amended
permit.
§ 41.228
Change in address.
When any change occurs in the
address, but not the location, of the
principal business office of an importer
of tobacco products as a result of action
by local authorities, the importer must,
within 30 days of such change, make
application on TTB F 5230.5 for an
amended permit.
■ 36. Section 41.240 is revised to read
as follows:
§ 41.240
Issuance of permit.
If the application for the permit
required under this subpart is approved,
the appropriate TTB officer will issue
the permit on TTB F 5200.24.
■ 37. Section 41.241 is revised to read
as follows:
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§ 41.241
Duration of permit.
(a) Permits with an effective date on
or after August 26, 2013. A permit
issued under § 41.240 bearing an
effective date of August 26, 2013 or later
will be valid for a period of five years
from the effective date shown on the
permit. Provided a timely application
for renewal is filed under § 41.242, the
expiring permit will continue in effect
until final action is taken by TTB on the
application for renewal.
(b) Permits with an effective date prior
to August 26, 2013. A person operating
as an importer of processed tobacco that
holds a permit bearing an effective date
that is prior to August 26, 2013 and that
wishes to continue operations as an
importer of processed tobacco must
apply for and receive a new permit
issued under § 41.240. The person must
file the application under § 41.232
within 150 days after August 26, 2013,
or within 30 days prior to the expiration
date shown on the existing permit form,
whichever is later. If a person timely
files an application but that application
is not complete (that is, the applicant
has not submitted information or
documentation sufficient for TTB to
take action on the permit), and if the
applicant has not provided the missing
information within one year of a written
request for it or within any shorter time
period specified in the written request,
the permit application will be deemed
abandoned and the applicant will be
notified in writing that no permit will
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be issued in response to the incomplete
application. Provided that a timely
application is filed, the person may
continue operations under the existing
permit until TTB takes final action on
the application for the new permit.
38. Section 41.242 is revised to read
as follows:
■
§ 41.242
Renewal of permit.
(a) Permits with an effective date on
or after August 26, 2013. A person
operating as an importer of processed
tobacco that holds a permit issued
under § 41.240 bearing an effective date
of August 26, 2013 or later, and that
wishes to continue operations beyond
the expiration of the permit, must apply
for renewal of the permit within 30 days
prior to expiration of the permit, in
accordance with instructions provided
with the renewal application form.
Permits will be renewed only for those
persons that have engaged in the
importing of processed tobacco under
the current permit during the one year
period immediately prior to the date of
the application to renew.
(b) Permits with an effective date prior
to August 26, 2013. A person may not
obtain renewal of a permit bearing an
effective date prior to August 26, 2013.
A person operating as an importer of
processed tobacco that holds a permit
bearing an effective date prior to August
26, 2013, and that wishes to continue in
operations as an importer of processed
tobacco, must apply for and receive a
new permit for issuance under § 41.240
and in accordance with the rules
contained in § 41.241(b).
PART 44—EXPORTATION OF
TOBACCO PRODUCTS AND
CIGARETTE PAPERS AND TUBES,
WITHOUT PAYMENT OF TAX OR WITH
DRAWBACK OF TAX
39. The authority citation for part 44
is revised to read as follows:
■
Authority: 26 U.S.C. 448, 5701–5705,
5711–5713, 5721–5723, 5731–5734, 5741,
5751, 5754, 6061, 6065, 6151, 6402, 6404,
6806, 7011, 7212, 7342, 7606, 7805; 31 U.S.C.
9301, 9303, 9304, 9306.
40. In § 44.11, the definition of
‘‘Manufacturer of tobacco products’’ and
of ‘‘Zone restricted status’’ are revised to
read as follows.
■
§ 44.11
Meaning of terms.
*
*
*
*
*
Manufacturer of tobacco products. (1)
Any person who manufactures cigars,
cigarettes, smokeless tobacco, pipe
tobacco, or roll-your-own tobacco, other
than:
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38573
(i) A person who produces tobacco
products solely for that person’s own
consumption or use; or
(ii) A proprietor of a customs bonded
manufacturing warehouse with respect
to the operation of such warehouse.
(2) The term ‘‘Manufacturer of tobacco
products’’ includes any person who for
commercial purposes makes available
for consumer use (including such
consumer’s personal consumption or
use under paragraph (1)(i) of this
definition) a machine capable of making
cigarettes, cigars, or other tobacco
products. A person making such a
machine available for consumer use
shall be deemed the person making the
removal with respect to any tobacco
products manufactured by such
machine. A person who sells a machine
directly to a consumer at retail for a
consumer’s personal home use is not
making a machine available for
commercial purposes if such machine is
not used at a retail premises and is
designed to produce tobacco products
only in personal use quantities.
*
*
*
*
*
Zone restricted status. The status
assigned to tobacco products and
cigarette papers and cigarette tubes
taken into a foreign trade zone from the
customs territory of the United States
for the sole purpose of exportation or
storage until exported.
■ 41. Section 44.61 is revised to read as
follows:
§ 44.61 Removals, withdrawals, and
shipments authorized.
(a) Tobacco products and cigarette
papers and tubes may be removed from
a factory or from an export warehouse,
and cigars may be withdrawn from a
customs bonded warehouse, without
payment of tax for direct exportation or
for delivery for subsequent exportation,
in accordance with the provisions of
this part.
(b) Tobacco products and cigarette
papers and tubes are eligible for removal
or transfer in bond under this part only
if they bear the marks, labels, and
notices required by this part.
■ 42. In § 44.62, the fifth sentence and
the seventh sentence are revised to read
as follows:
§ 44.62 Restrictions on deliveries of
tobacco products and cigarette papers and
tubes to vessels and aircraft, as supplies.
* * * For this purpose, the customs
authorities may require the master of the
receiving vessel to submit, prior to
lading, customs documentation for
permission to lade the articles. * * *
Deliveries may be made to aircraft that
are clearing through customs and that
are enroute to a place beyond the
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Electronic and Facsimile Availability
Dated: April 10, 2013.
John J. Manfreda,
Administrator.
Approved: April 11, 2013.
Timothy E. Skud,
Deputy Assistant Secretary, (Tax, Trade, and
Tariff Policy).
This document and additional
information concerning OFAC are
available from OFAC’s Web site
(www.treasury.gov/ofac). Certain general
information pertaining to OFAC’s
sanctions programs also is available via
facsimile through a 24-hour fax-ondemand service, tel.: 202/622–0077.
§ 44.142
[FR Doc. 2013–15254 Filed 6–26–13; 8:45 am]
Background
BILLING CODE 4810–31–P
The Office of Foreign Assets Control
(‘‘OFAC’’) administers three sanctions
programs with respect to terrorists and
terrorist organizations. The Terrorism
Sanctions Regulations, 31 CFR part 595
(the ‘‘TSR’’), implement Executive
Order 12947 of January 23, 1995, in
which the President declared a national
emergency with respect to ‘‘grave acts of
violence committed by foreign terrorists
that disrupt the Middle East peace
process.’’ The Global Terrorism
Sanctions Regulations, 31 CFR part 594
(the ‘‘GTSR’’), implement Executive
Order 13224 of September 23, 2001, in
which the President declared a national
emergency more generally with respect
to ‘‘grave acts of terrorism and threats of
terrorism committed by foreign
terrorists.’’ The Foreign Terrorist
Organizations Sanctions Regulations, 31
CFR part 597 (the ‘‘FTOSR’’), implement
provisions of the Antiterrorism and
Effective Death Penalty Act of 1996.
Executive Order 13372 of February
16, 2005, amended section 3 of
Executive Order 12947 and section 4 of
Executive Order 13224 to clarify that the
prohibitions contained in those sections
on the making of donations of the types
of articles specified in section 203(b)(2)
of the International Emergency
Economic Powers Act (50 U.S.C.
1702(b)(2)) apply to donations ‘‘by, to,
or for the benefit of’’ and not just ‘‘to’’
persons whose property and interests in
property are blocked pursuant to those
orders. OFAC is amending sections
594.204 and 594.409 of the GTSR and
sections 595.204 and 595.408 of the TSR
to incorporate this clarification into its
regulations.
OFAC also is adding new interpretive
sections 594.412 and 595.410 to the
GTSR and TSR, respectively, to clarify
that a person whose property and
interests in property are blocked
pursuant to those programs has an
interest in all property and interests in
property of an entity in which it owns,
directly or indirectly, a 50 percent or
greater interest. The property and
interests in property of such an entity,
therefore, are blocked, and such an
entity is a person whose property and
interests in property are blocked
pursuant to the relevant sanctions
Records.
(a) In general. Each export warehouse
proprietor must keep in the warehouse
complete and concise records that show
the:
(1) Number of containers;
(2) Unit type (for example: cartons,
cases);
(3) Kinds of articles (for example:
small cigarettes);
(4) Name of manufacturer and brand;
and
(5) Quantity of tobacco products and
cigarette papers and tubes, and any
processed tobacco received, removed,
transferred, destroyed, lost, or returned
to manufacturers or to customs bonded
warehouse proprietors.
(b) Other records; form and retention.
In addition to the records specified in
paragraph (a) of this section, the export
warehouse proprietor must retain a copy
of each TTB F 5200.14 from a
manufacturer, another export warehouse
proprietor, or a customs warehouse
proprietor, from whom tobacco products
or cigarette papers or tubes were
received, as well as a copy of each TTB
F 5200.14 covering the tobacco products
and cigarette papers and tubes removed
from the warehouse. The entries for
each day in the records maintained
under this section must be made by the
close of the business day following the
day on which the transactions occur. No
particular form of records is prescribed,
but the information required must be
readily ascertainable. The copies of TTB
F 5200.14 and other records must be
retained for 3 years following the close
of the calendar year in which the
shipments were received or removed
and must be made available for
inspection by any appropriate TTB
officer upon request.
44. Section 44.181 is revised to read
as follows:
■
§ 44.181
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the cellophane or other transparent
exterior wrapping material.
jurisdiction of the internal revenue laws
of the United States, and to aircraft
operating on a regular schedule between
U.S. customs areas as defined in the Air
Commerce Regulations (19 CFR part
122). * * *
*
*
*
*
*
■ 43. Section 44.142 is revised to read
as follows:
Packages.
All tobacco products and cigarette
papers and tubes must, before removal
or transfer under this subpart, be put up
by the manufacturer in packages that
bear the label or notice, tax
classification, and mark, as required by
this subpart. For purposes of this
subpart, the package does not include
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DEPARTMENT OF THE TREASURY
Office of Foreign Assets Control
31 CFR Parts 594, 595, and 597
Technical Amendments to CounterTerrorism Sanctions Regulations
Implemented by OFAC
Office of Foreign Assets
Control, Treasury.
ACTION: Final rule.
AGENCY:
The Office of Foreign Assets
Control (‘‘OFAC’’) of the U.S.
Department of the Treasury is amending
the Global Terrorism Sanctions
Regulations and the Terrorism
Sanctions Regulations (the ‘‘TSR’’) to
clarify the scope of prohibitions on the
making of donations contained in the
underlying Executive orders and that a
person whose property and interests in
property are blocked pursuant to those
programs has an interest in all property
and interests in property of an entity in
which it owns, directly or indirectly, a
50 percent or greater interest. In
addition, OFAC is amending the TSR to
add a definition of the term ‘‘financial,
material, or technological support’’ and
to set at 180 days the maximum term of
maturity for instruments in which funds
may be invested or held within a
blocked interest-bearing account.
Finally, OFAC is correcting a clerical
error within the Foreign Terrorist
Organizations Sanctions Regulations.
DATES: Effective: June 27, 2013.
FOR FURTHER INFORMATION CONTACT:
Assistant Director for Sanctions
Compliance & Evaluation, tel.: 202–622–
2490, Assistant Director for Licensing,
tel.: 202–622–2480, Assistant Director
for Policy, tel.: 202–622–2746, Assistant
Director for Regulatory Affairs, tel.: 202–
622–4855, Office of Foreign Assets
Control, or Chief Counsel (Foreign
Assets Control), tel.: 202–622–2410,
Office of the General Counsel,
Department of the Treasury,
Washington, DC 20220 (not toll free
numbers).
SUPPLEMENTARY INFORMATION:
SUMMARY:
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| File Type | application/pdf |
| File Modified | 2016-01-05 |
| File Created | 2016-01-05 |