PART II—OPERATIONS
Editorial Notes
Prior Provisions
A prior part II consisted of
Amendments
1997—
1979—
1976—
§5361. Bonded wine cellar operations
In addition to the operations described in section 5351, the proprietor of a bonded wine cellar may, subject to regulations prescribed by the Secretary, on such premises receive taxpaid wine for return to bond, reconditioning, or destruction; prepare for market and store commercial fruit products and by-products not taxable as wines; produce or receive distilling material or vinegar stock; produce (with or without added wine spirits, and without added sugar) or receive on wine premises, subject to tax as wine but not for sale or consumption as beverage wine, (1) heavy bodied blending wines and Spanish-type blending sherries, and (2) other wine products made from natural wine for nonbeverage purposes; and such other operations as may be conducted in a manner that will not jeopardize the revenue or conflict with wine operations.
(Added
Editorial Notes
Prior Provisions
A prior section 5361, act Aug. 16, 1954, ch. 736,
Amendments
1997—
1979—
1976—
Statutory Notes and Related Subsidiaries
Effective Date of 1997 Amendment
Amendment by
Effective Date of 1979 Amendment
Amendment by
Effective Date
Section effective July 1, 1959, see section 210(a)(1) of
§5362. Removals of wine from bonded wine cellars
(a) Withdrawals on determination of tax
Wine may be withdrawn from bonded wine cellars on payment or determination of the tax thereon, under such regulations as the Secretary shall prescribe.
(b) Transfers of wine between bonded premises
(1) In general
Wine on which the tax has not been paid or determined may, under such regulations as the Secretary shall prescribe, be transferred in bond between bonded premises.
(2) Wine transferred to a distilled spirits plant may not be removed for consumption or sale as wine
Any wine transferred to the bonded premises of a distilled spirits plant—
(A) may be used in the manufacture of a distilled spirits product, and
(B) may not be removed from such bonded premises for consumption or sale as wine.
(3) Continued liability for tax
The liability for tax on wine transferred to the bonded premises of a distilled spirits plant pursuant to paragraph (1) shall (except as otherwise provided by law) continue until the wine is used in a distilled spirits product.
(4) Transfer in bond not treated as removal for consumption or sale
For purposes of this chapter, the removal of wine for transfer in bond between bonded premises shall not be treated as a removal for consumption or sale.
(5) Bonded premises
For purposes of this subsection, the term "bonded premises" means a bonded wine cellar or the bonded premises of a distilled spirits plant.
(c) Withdrawals of wine free of tax or without payment of tax
Wine on which the tax has not been paid or determined may, under such regulations and bonds as the Secretary may deem necessary to protect the revenue, be withdrawn from bonded wine cellars—
(1) without payment of tax for export by the proprietor or by any authorized exporter;
(2) without payment of tax for transfer to any foreign-trade zone;
(3) without payment of tax for use of certain vessels and aircraft as authorized by law;
(4) without payment of tax for transfer to any customs bonded warehouse;
(5) without payment of tax for use in the production of vinegar;
(6) without payment of tax for use in distillation in any distilled spirits plant authorized to produce distilled spirits;
(7) free of tax for experimental or research purposes by any scientific university, college of learning, or institution of scientific research;
(8) free of tax for use by or for the account of the proprietor or his agents for analysis or testing, organoleptic or otherwise; and
(9) free of tax for use by the United States or any agency thereof, and for use for analysis, testing, research, or experimentation by the governments of the several States and the District of Columbia or of any political subdivision thereof or by any agency of such governments. No bond shall be required of any such government or agency under this paragraph.
(d) Withdrawal free of tax of wine and wine products unfit for beverage use
Under such regulations as the Secretary may deem necessary to protect the revenue, wine, or wine products made from wine, when rendered unfit for beverage use, on which the tax has not been paid or determined, may be withdrawn from bonded wine cellars free of tax. The wine or wine products to be so withdrawn may be treated with methods or materials which render such wine or wine products suitable for their intended use. No wine or wine products so withdrawn shall contain more than 21 percent of alcohol by volume, or be used in the compounding of distilled spirits or wine for beverage use or in the manufacture of any product intended to be used in such compounding.
(e) Withdrawal from customs bonded warehouses for use of foreign embassies, legations, etc.
(1) In general
Notwithstanding any other provision of law, wine entered into customs bonded warehouses under subsection (c)(4) may, under such regulations as the Secretary may prescribe, be withdrawn from such warehouses for consumption in the United States by and for the official or family use of such foreign governments, organizations, and individuals who are entitled to withdraw imported wines from such warehouses free of tax. Wines transferred to customs bonded warehouses under subsection (c)(4) shall be entered, stored, and accounted for in such warehouses under such regulations and bonds as the Secretary may prescribe, and may be withdrawn therefrom by such governments, organizations, and individuals free of tax under the same conditions and procedures as imported wines.
(2) Withdrawal for domestic use
Wine entered into customs bonded warehouses under subsection (c)(4) for purposes of removal under paragraph (1) may be withdrawn therefrom for domestic use. Wines so withdrawn shall be treated as American goods exported and returned.
(3) Sale or unauthorized use prohibited
Wine withdrawn from customs bonded warehouses or otherwise brought into the United States free of tax for the official or family use of foreign governments, organizations, or individuals authorized to obtain wine free of tax shall not be sold and shall not be disposed of or possessed for any use other than an authorized use. The provisions of paragraphs (1)(B) and (3) of section 5043(a) are hereby extended and made applicable to any person selling, disposing of, or possessing any wine in violation of the preceding sentence, and to the wine involved in any such violation.
(Added
Editorial Notes
Prior Provisions
A prior section 5362, act Aug. 16, 1954, ch. 736,
Amendments
1980—Subsec. (c)(4).
Subsec. (e).
1979—Subsec. (b).
1976—Subsecs. (a) to (c).
Subsec. (c)(9).
Subsec. (d).
1967—Subsec. (d).
Statutory Notes and Related Subsidiaries
Effective Date of 1980 Amendment
Effective Date of 1979 Amendment
Amendment by
Effective Date of 1976 Amendment
Amendment by section 1905(c)(4) of
Effective Date of 1967 Amendment
§5363. Taxpaid wine bottling house operations
In addition to the operations described in section 5352, the proprietor of a taxpaid wine bottling house may, subject to regulations issued by the Secretary, on such premises mix wine of the same kind and taxable grade to facilitate handling; preserve, filter, or clarify wine; and conduct operations not involving wine where such operations will not jeopardize the revenue or conflict with wine operations.
(Added
Editorial Notes
Prior Provisions
A prior section 5363, act Aug. 16, 1954, ch. 736,
Amendments
1979—
1976—
Statutory Notes and Related Subsidiaries
Effective Date of 1979 Amendment
Amendment by
§5364. Wine imported in bulk
Natural wine (as defined in section 5381) imported or brought into the United States in bulk containers may, under such regulations as the Secretary may prescribe, be withdrawn from customs custody and transferred in such bulk containers to the premises of a bonded wine cellar without payment of the internal revenue tax imposed on such wine. The proprietor of a bonded wine cellar to which such wine is transferred shall become liable for the tax on the wine withdrawn from customs custody under this section upon release of the wine from customs custody, and the importer, or the person bringing such wine into the United States, shall thereupon be relieved of the liability for such tax.
(Added
Editorial Notes
Prior Provisions
A prior section 5364, added
Another prior section 5364, act Aug. 16, 1954, ch. 736,
Amendments
1998—
Statutory Notes and Related Subsidiaries
Effective Date of 1998 Amendment
Amendment by
Effective Date
§5365. Segregation of operations
The Secretary may require by regulations such segregation of operations within the premises, by partitions or otherwise, as may be necessary to prevent jeopardy to the revenue, to prevent confusion between untaxpaid wine operations and such other operations as are authorized in this subchapter, to prevent substitution with respect to the several methods of producing effervescent wines, and to prevent the commingling of standard wines with other than standard wines.
(Added
Editorial Notes
Prior Provisions
A prior section 5365, act Aug. 16, 1954, ch. 736,
Amendments
1979—
1976—
Statutory Notes and Related Subsidiaries
Effective Date of 1979 Amendment
Amendment by
§5366. Supervision
The Secretary may by regulations require that operations at a bonded wine cellar or taxpaid wine bottling house be supervised by an internal revenue officer where necessary for the protection of the revenue or for the proper enforcement of this subchapter.
(Added
Editorial Notes
Prior Provisions
A prior section 5366, act Aug. 16, 1954, ch. 736,
Amendments
1976—
§5367. Records
The proprietor of a bonded wine cellar or a tax-paid wine bottling house shall keep such records and file such returns, in such form and containing such information, as the Secretary may by regulations provide.
(Added
Editorial Notes
Prior Provisions
A prior section 5367, act Aug. 16, 1954, ch. 736,
Amendments
1976—
§5368. Gauging and marking
(a) Gauging and marking
All wine or wine spirits shall be locked, sealed, and gauged, and shall be marked, branded, labeled, or otherwise identified, in such manner as the Secretary may by regulations prescribe.
(b) Marking
Wines shall be removed in such containers (including vessels, vehicles, and pipelines) bearing such marks and labels evidencing compliance with this chapter, as the Secretary may by regulations prescribe.
(Added
Editorial Notes
Prior Provisions
A prior section 5368, act Aug. 16, 1954, ch. 736,
Amendments
1976—
Statutory Notes and Related Subsidiaries
Effective Date of 1976 Amendment
Amendment by section 1905(a)(20) of
§5369. Inventories
Each proprietor of premises subject to the provisions of this subchapter shall take and report such inventories as the Secretary may by regulations prescribe.
(Added
Editorial Notes
Prior Provisions
A prior section 5369, act Aug. 16, 1954, ch. 736,
Amendments
1976—
§5370. Losses
(a) General
No tax shall be collected in respect of any wines lost or destroyed while in bond, except that tax shall be collected—
(1) Theft
In the case of loss by theft, unless the Secretary shall find that the theft occurred without connivance, collusion, fraud, or negligence on the part of the proprietor or other person responsible for the tax, or the owner, consignor, consignee, bailee, or carrier, or the agents or employees of any of them; and
(2) Voluntary destruction
In the case of voluntary destruction, unless the wine was destroyed under Government supervision, or on such adequate notice to, and approval by, the Secretary as regulations shall provide.
(b) Proof of loss
In any case in which the wine is lost or destroyed, whether by theft or otherwise, the Secretary may require by regulations the proprietor of the bonded wine cellar or other person liable for the tax to file a claim for relief from the tax and submit proof as to the cause of such loss. In every case where it appears that the loss was by theft, the burden shall be on the proprietor or other person liable for the tax to establish to the satisfaction of the Secretary, that such loss did not occur as the result of connivance, collusion, fraud, or negligence on the part of the proprietor, owner, consignor, consignee, bailee, or carrier, or the agents or employees of any of them.
(Added
Editorial Notes
Prior Provisions
A prior section 5370, act Aug. 16, 1954, ch. 736,
Amendments
1976—
§5371. Insurance coverage, etc.
Any remission, abatement, refund, or credit of, or other relief from, taxes on wines or wine spirits authorized by law shall be allowed only to the extent that the claimant is not indemnified or recompensed for the tax.
(Added
Editorial Notes
Prior Provisions
A prior section 5371, act Aug. 16, 1954, ch. 736,
§5372. Sampling
Under regulations prescribed by the Secretary, wine may be utilized in any bonded wine cellar for testing, tasting, or sampling, free of tax.
(Added
Editorial Notes
Prior Provisions
A prior section 5372, act Aug. 16, 1954, ch. 736,
Amendments
1976—
§5373. Wine spirits
(a) In general
The wine spirits authorized to be used in wine production shall be brandy or wine spirits produced in a distilled spirits plant (with or without the use of water to facilitate extraction and distillation) exclusively from—
(1) fresh or dried fruit, or their residues,
(2) the wine or wine residues, therefrom, or
(3) special natural wine under such conditions as the Secretary may by regulations prescribe;
except that where, in the production of natural wine or special natural wine, sugar has been used, the wine or the residuum thereof may not be used if the unfermented sugars therein have been refermented. Such wine spirits shall not be reduced with water from distillation proof, nor be distilled, unless regulations otherwise provide, at less than 140 degrees of proof (except that commercial brandy aged in wood for a period of not less than 2 years, and barreled at not less than 100 degrees of proof, shall be deemed wine spirits for the purpose of this subsection).
(b) Withdrawal of wine spirits
(1) The proprietor of any bonded wine cellar may withdraw and receive wine spirits without payment of tax from the bonded premises of any distilled spirits plant, or from any bonded wine cellar as provided in paragraph (2), for use in the production of natural wine, for addition to concentrated or unconcentrated juice for use in wine production, or for such other uses as may be authorized in this subchapter.
(2) Wine spirits so withdrawn, and not used in wine production or as otherwise authorized in this subchapter, may, as provided by regulations prescribed by the Secretary, be transferred to the bonded premises of any distilled spirits plant or bonded wine cellar, or may be taxpaid and removed as provided by law.
(3) On such use, transfer, or taxpayment, the Secretary shall credit the proprietor with the amount of wine spirits so used or transferred or taxpaid and, in addition, with such portion of wine spirits so withdrawn as may have been lost either in transit or on the bonded wine cellar premises, to the extent allowable under section 5008(a). Where the proprietor has used wine spirits in actual wine production but in violation of the requirements of this subchapter, the Secretary shall also extend such credit to the wine spirits so used if the proprietor satisfactorily shows that such wine spirits were not knowingly used in violation of law.
(4) Suitable samples of brandy or wine spirits may, under regulations prescribed by the Secretary, be withdrawn free of tax from the bonded premises of any distilled spirits plant, bonded wine cellar, or authorized experimental premises, for analysis or testing.
(c) Distillates containing aldehydes
When the Secretary deems such removal and use will not jeopardize the revenue nor unduly increase administrative supervision, distillates containing aldehydes may, under such regulations as the Secretary may prescribe, be removed without payment of tax from the bonded premises of a distilled spirits plant to an adjacent bonded wine cellar and used therein in fermentation of wine to be used as distilling material at the distilled spirits plant from which such unfinished distilled spirits were removed.
(Added
Editorial Notes
Prior Provisions
A prior section 5373, act Aug. 16, 1954, ch. 736,
Amendments
1976—
1968—Subsec. (a).