showing the amount of tax on Schedule A as an adjustment increasing the tax due.

[T.D. ATF-64, 45 FR 7528, Feb. 1, 1980]

Subpart Y-Distilled Spirits For Fuel Use

SOURCE: T.D. ATF-71, 45 FR 41842, June 20, 1980, unless otherwise noted.

$ 19.931 Scope of subpart.

This subpart relates to the qualification and operation of distilled spirits plants established solely for producing, processing and storing, and using or distributing distilled spirits to be used exclusively for fuel use. Except where incorporated in this subpart by reference, the provisions of Subparts A through X of this part do not apply to alcohol fuel plants (see § 19.63a). (Sec. 232, Pub. L. 96-223, 94 Stat. 278 (26 U.S.C. 5181))

§ 19.932 Taxes.

(a) Distilled spirits tax. Distilled spirits may be withdrawn free of tax from the premises of an alcohol fuel plant exclusively for fuel use in accordance with this subpart. Payment of tax will be required in the case of diversion of spirits to beverage use or other unauthorized dispositions. The provisions of Subpart C of this part are applicable to distilled spirits for fuel use as follows:

(1) Imposition of tax liability (§§ 19.21 through 19.25);

(2) Assessment of tax (§§ 19.31 and 19.32); and,

(3) Claims for tax (§§ 19.41 and 19.44).

(b) Still tax. A commodity tax is imposed by 26 U.S.C. 5101 on the manufacturer for each still or condenser for distilling made by him. Manufacturers of stills are subject to a special occupational tax. However, a proprietor manufacturing stills or condensers exclusively for use in his plant or plants is exempt from these taxes. In addition, proprietors of alcohol fuel plants are exempt from the requirement of 26 U.S.C. 5105 to file an application and obtain a permit before setting up distilling apparatus. Provisions relating

to stills are contained in 27 CFR Part 196.

(Sec. 201, Pub. L. 85-859, 72 Stat. 1314, as amended, 1339 (26 U.S.C. 5001, 5101, 5103); sec. 232, Pub. L. 96-223, 94 Stat. 278 (26 U.S.C. 5181))

§ 19.933 Status of existing experimental distilled spirits plants.

Notwithstanding any other provisions of this subpart, effective July 1, 1980, the prior application and permit of existing experimental plants for alcohol fuel production under Section 5312 will be considered as approved applications to operate under the provisions of 26 U.S.C. 5181 as alcohol fuel plants. Such existing plants may continue to operate and the operations shall be conducted pursuant to the provisions of this subpart. A new permanent permit as an alcohol fuel plant will be issued in lieu of, and prior to the expiration date of, the existing permit as an experimental plant. However, persons who wish to retain their permits under 26 U.S.C. 5312 as experimental distilled spirits plants, instead of converting to alcohol fuel plant status, may do so by filing a written request with the regional director (compliance).

(Approved by the Office of Management and Budget under control number 15120291)

[T.D. ATF-71, 45 FR 41842, June 20, 1980, as amended by T.D. ATF-172, 49 FR 14941, Apr. 16, 1984]

§ 19.934 Meaning of terms.

When used in this subpart, and in forms prescribed under this subpart, terms shall have the meaning given in this section. Words in the plural form include the singular and vice versa, and words indicating the masculine gender include the feminine. The terms "includes" and "including" do not exclude things not enumerated which are in the same general class.

Alcohol fuel plant or plant. An establishment qualified under this subpart solely for producing, processing and storing, and using or distributing distilled spirits to be used exclusively for fuel use.

Alcohol fuel producer's permit. The document issued pursuant to 26 U.S.C.

5181 authorizing the person named therein to engage in business as an alcohol fuel plant.

ATF officer. An officer or employee of the Bureau of Alcohol, Tobacco and Firearms (ATF) authorized to perform any function relating to the administration or enforcement of this subpart.

Bonded premises. The premises of an alcohol fuel plant where distilled spirits are produced, processed and stored, and used or distributed. Premises of small alcohol fuel plants, which are exempt from bonding under § 19.938, shall be treated as bonded premises for purposes of this subpart. CFR. The Code of Federal Regulations.

Director. The Director, Bureau of Alcohol, Tobacco and Firearms, the Department of the Treasury, Washington, DC.

Fuel alcohol. Distilled spirits which have been rendered unfit for beverage use at an alcohol fuel plant as provided in this subpart.

Gallon or wine gallon. The liquid measure equivalent to the volume of 231 cubic inches.

Person. An individual, trust, estate, partnership, association, company or corporation.

Proof. The ethyl alcohol content of a liquid at 60 degrees Fahrenheit, stated as twice the percent of ethyl alcohol by volume.

Proof gallon. A gallon of liquid at 60 degrees Fahrenheit which contains 50 percent by volume of ethyl alcohol having a specific gravity of 0.7939 at 60 degrees Fahrenheit referred to water at 60 degrees Fahrenheit as unity, or the alcoholic equivalent thereof.

Proprietor. The person qualified under this subpart to operate the alcohol fuel plant.

Region. A Bureau of Alcohol, Tobacco and Firearms region.

Regional director (compliance). The principal regional official responsible for administering regulations in this subpart.

Secretary. The Secretary of the Treasury or his delegate.

Spirits or distilled spirits. That substance known as ethyl alcohol, ethanol, or spirits of wine in any form (including all dilutions and mixtures

thereof by whatever process produced), but not fuel alcohol unless specifically stated. For purposes of this subpart, the term does not include spirits produced from petroleum, natural gas, or coal.

This chapter. Title 27, Code of Federal Regulations, Chapter I (27 CFR Chapter I).

Transfer in bond. The transfer of spirits between alcohol fuel plants or between a distilled spirits plant qualified under 26 U.S.C. 5171 and an alcohol fuel plant.

Type of plant. The following three types of alcohol fuel plants are recognized in this subpart:

(a) Small plant. An alcohol fuel plant which produces (including receipts) not more than 10,000 proof gallons of spirits per calendar year.

(b) Medium plant. An alcohol fuel plant which produces (including receipts) more than 10,000 and not more than 500,000 proof gallons of spirits per calendar year.

(c) Large plant. An alcohol fuel plant which produces (including receipts) more than 500,000 proof gallons of spirits per calendar year.

U.S. C. The United States Code.

PERMITS

§ 19.935 Application for permit required.

Any person wishing to establish an alcohol fuel plant shall first make application for and obtain an alcohol fuel producer's permit. Alcohol fuel producers permits are continuing. The permit continues in effect unless automatically terminated under § 19.945, suspended or revoked as provided in § 19.953, or voluntarily surrendered.

(Sec. 232, Pub. L. 96-223, 94 Stat. 278 (26 U.S.C. 5181))

$ 19.936 Criteria for issuance of permit.

In general, an alcohol fuel producer's permit will be issued to any person who completes the required application for permit and who furnishes the required bond (if any). However, the regional director (compliance) may institute proceedings for the denial of the application, if the regional director (compliance) determines that:

(a) The applicant (including, in the case of a corporation, any officer, director, or principal stockholder, and in the case of a partnership, a partner) is, by reason of business experience, financial standing, or trade connections, not likely to maintain operations in compliance with 26 U.S.C. Chapter 51, or regulations issued thereunder; or

(b) The applicant has failed to disclose any material information required, or has made any false statement, as to any material fact, in connection with the application; or

(c) The premises on which the applicant proposes to conduct the operations are not adequate to protect the revenue. The procedures applicable to denial of applications are set forth in 27 CFR Part 200.

(Sec. 201, Pub. L. 85-859, 72 Stat. 1370, as amended (26 U.S.C. 5271); sec. 232, Pub. L. 96-223, 94 Stat. 278 (26 U.S.C. 5181))

§ 19.937 Small plants.

Persons wishing to establish a small plant shall apply for a permit as provided in this section. Except as provided in paragraph (d) of this section, operations may not be commenced until the permit has been issued.

(a) Application for permit. The application (ATF Form 5110.74) shall be submitted to the regional director (compliance) and shall set forth the following information:

(1) Name and mailing address of the applicant, and the location of the alcohol fuel plant if not apparent from the mailing address;

(2) A diagram of the plant premises and a statement as to the ownership of the premises (if the premises are not owned by the proprietor, the owner's consent to access by ATF officers must be furnished);

(3) A description of all stills and a statement of their maximum capacity; (4) The materials from which spirits will be produced;

(5) A description of the security measures to be used to protect premises, buildings, and equipment where spirits are produced, processed, and stored; and,

(6) A statement as to the environmental impact of the proposed operation.

(b) Receipt by the regional director (compliance). (1) Notice of receipt— Within 15 days of receipt of the application, the regional director (compliance) shall send a written notice of receipt to the applicant. The notice will include a statement as to whether the application meets the requirements of paragraph (a) of this section. If the application does not meet those requirements, the application will be returned and a new 15-day period will commence upon receipt by the regional director (compliance) of the amended or corrected application.

(2) Failure to give notice. If the required notice of receipt is not sent, and the applicant has a receipt indicating that the regional director (compliance) has received the application, the 45-day period provided for in paragraphs (c) and (d) will commence on the fifteenth day after the date the regional director (compliance) received the application.

(3) Limitation. The provisions of paragraphs (b)(1) and (2) of this section will apply only to the first application submitted with respect to any one small plant in any calendar quarter. However, an amended or corrected first application will not be treated as a separate application.

(c) Determination by the regional director (compliance). Within 45 days from the date the regional director (compliance) sent the applicant a notice of receipt of a completed application, the regional director (compliance) shall either (1) issue the permit, or (2) give notice in writing to the applicant, stating in detail the reason that a permit will not be issued. Denial of an application will not prejudice any further application for a permit made by the same applicant.

(d) Presumption of approval. If, within 45 days from the date of the notice to the applicant of receipt of a completed application, the regional director (compliance) has not notified the applicant of issuance of the permit or denial of the application, the application shall be deemed to have been approved and the applicant may proceed as if a permit had been issued.

(Sec. 232, Pub. L. 96-223, 94 Stat. 278 (26 U.S.C. 5181))

§ 19.938 Waiver of bond requirement for small plants.

No bond is required for small plants. (Sec. 232, Pub. L. 96-223, 94 Stat. 278 (26 U.S.C. 5181))

§ 19.939 Medium plants.

Any person wishing to establish a medium plant shall make application for and obtain an alcohol fuel producer's permit and furnish a bond as provided in this section. Operations may not be commenced until the application has been approved and the permit issued.

(a) Application for permit. The application (ATF Form 5110.74) shall be submitted to the regional director (compliance) and shall set forth the following information:

(1) The information required by § 19.937(a);

(2) Statement of maximum total proof gallons of spirits that will be produced and received during a calendar year;

(3) Information identifying the principal persons involved in the business and a statement as to whether the applicant or any such person has ever been convicted of a felony or misdemeanor under Federal or State law; and,

(4) Statement of the amount of funds invested in the business and the source of those funds.

(b) Bond required. A bond of sufficient penal sum, as prescribed in § 19.958, must be submitted and approved before a permit may be issued. (Sec. 232, Pub. L. 96-223, 94 Stat. 278 (26 U.S.C. 5181))

§ 19.940 Large plants.

Any person wishing to establish a large plant shall make application for and obtain an alcohol fuel producer's permit and furnish a bond as provided in this section. Operations may not be commenced until the application has been approved and the permit issued.

(a) Application for permit. The application (ATF Form 5110.74) shall be submitted to the regional director (compliance) and shall set forth the following information:

(1) The information required by 19.937(a);

(2) Statement of the maximum proof gallons of spirits that will be produced and received during a calendar year (not required if the bond is in the maximum sum);

(3) Information identifying the principal persons involved in the business and a statement as to whether the applicant or any such person has ever been convicted of a felony or misdemeanor under Federal or State law;

(4) Statement of the amount of funds invested in the business and the source of those funds; and,

(5) Statement of the type of business organization and of the persons interested in the business, supported by the items of information listed in § 19.941.

(b) Bond required. A bond of sufficient penal sum, as prescribed in § 19.958, must be submitted and approved before a permit may be issued. (Sec. 232, Pub. L. 96-223, 94 Stat. 278 (26 U.S.C. 5181))

§ 19.941 Organizational documents.

The supporting information required by paragraph (a)(5) of § 19.940, includes, as applicable, copies of:

(a) Corporate documents. (1) Corporate charter or certificate of corporate existence or incorporation.

(2) List of directors and officers, showing their names and addresses. However, do not list officers who have no responsibilities in connection with the operation of the alcohol fuel plant.

(3) Certified extracts or digests of minutes of meetings of board of directors, authorizing certain individuals to sign for the corporation.

(4) Statement showing the number of shares of each class of stock or other evidence of ownership, authorized and outstanding, and the voting rights of the respective owners or holders.

(b) Statement of interest. (1) Names and addresses of the 10 persons having the largest ownership or other interest in each of the classes of stock in the corporation, or other legal entity, and the nature and amount of the stockholding or other interest of each, whether the interest appears in the name of the interested party or in the name of another for him. If a corpora

tion is wholly owned or controlled by another corporation, those persons of the parent corporation who meet the above standards are considered to be the persons interested in the business of the subsidiary, and the names thereof need be furnished only upon request of the regional director (compliance).

(2) In the case of an individual owner or partnership, the name and address of each person interested in the plant, whether the interest appears in the name of the interested party or in the name of another for that person.

(c) Availability of additional documents. The originals of documents required to be submitted under this section and additional items required under $19.942 such as the articles of incorporation, bylaws, State certificate authorizing operations, or articles of partnership or association (in the case of a partnership where required by State law) shall be made available to any ATF officer upon request.

(Sec. 201, Pub. L. 85-859, 72 Stat. 1349, as amended, 1370, as amended (26 U.S.C. 5172, 5271); sec. 232, Pub. L. 96-223, 94 Stat. 278 (26 U.S.C. 5181))

§ 19.942 Information already on file and supplemental information.

If any of the information required by §§ 19.937 through 19.941 is on file with the regional director (compliance), that information, if accurate and complete, may be incorporated by reference and made a part of the application. When required by the regional director (compliance), the applicant shall furnish as a part of the application for permit, additional information as may be necessary to determine whether the application should be approved.

(Sec. 232, Pub. L. 96-223, 94 Stat. 278, (26 U.S.C. 5181))

CHANGES AFFECTING PERMITS

§ 19.945 Automatic termination of permits.

(a) Permits not transferable. Permits issues under this subpart shall not be transferred. In the event of the lease, sale, or other transfer of such a permit, or of the authorized oper

ations, the permit automatically terminates.

(b) Corporations. In the case of a corporation holding a permit under this subpart, if actual or legal control of the permittee corporation changes, directly or indirectly, whether by reason of change in stock ownership or control (in the permittee corporation or in any other corporation), by operation of law, or in any other manner, the permittee shall, within 10 days of such change, give written notice, executed under the penalties of perjury, to the regional director (compliance); the permit may remain in effect until the expiration of 30 days after the change, whereupon the permit will automatically terminate. However, if operations are to be continued after the change in control, and an application for a new permit is filed within 30 days of the change, then the outstanding permit may remain in effect until final action is taken on the new application. When final action is taken on the application, the outstanding permit automatically terminates.

(Approved by the Office of Management and Budget under control number 15120291)

(Sec. 201, Pub. L. 85-859, 72 Stat. 1370, as amended (26 U.S.C. 5271))

[T.D. ATF-71, 45 FR 41842, June 20, 1980, as amended by T.D. ATF-172, 49 FR 14941, Apr. 16, 1984]

$ 19.946 Change in type of alcohol fuel plant.

(a) Small plants. If the proprietor of a small plant wishes to increase production (including receipts) to a level in excess of 10,000 proof gallons of spirits per calendar year, the proprietor shall first furnish a bond and obtain an amended permit by filing application under § 19.939 or § 19.940, as applicable. Information filed with the original application for permit need not be resubmitted, but may be incorporated by reference in the new application.

(b) Medium plants. Where the proprietor of a medium plant intends to increase production (including receipts) above 500,000 proof gallons of spirits per calendar year, the proprie