product to be used, and one %-quart sample of the nonbeverage wine made therefrom shall be submitted under separate cover at the time of filing the formula. The samples will be taken to be representative of the base wine and of the nonbeverage wine and any material change in characteristics of the finished product from those of the approved samples will require the filing of a new formula, even though the ingredients and process may be the same. The Director, Alcohol, Tobacco and Firearms Division, may require the submission of samples of the materials to be used in rendering the wine or wine products unfit for beverage use. All ingredients to be used will be shown on the Form 698-Supplemental, as well as the quantities required to make 100 gallons of the nonbeverage wine. The formula shall also show the intended use of the nonbeverage wine. The process used in rendering the wine or wine products unfit for beverage use shall be stated in detail.

(a) Containers. Nonbeverage wine may be removed from bond free of tax in containers authorized by § 240.560 of this chapter for removal of wine from bond.

(b) Notice of removals. Where a proprietor removes nonbeverage wine from his bonded wine cellar, or taxpaid room, or other premises operated by him, he shall, except where the removal is in bottles or other consumer packages, prepare, in quadruplicate, a notice of shipment (for example, commercial invoice, bill of lading). Each such notice shall identify the nonbeverage wine shipped, by formula number, quantity, and percent of alcohol by volume, and the name and address of the consignee. One copy of each notice shall be forwarded to the assistant regional commissioner with the proprietor's monthly report, Form 702; one copy shall be retained by the proprietor available for inspection by internal revenue officers; and two copies shall be forwarded to the consignee. The proprietor shall mark one of the consignee's copies as follows: "Receipt of this shipment must be acknowledged on this copy which shall be forwarded to the Assistant Regional Commissioner, Alcohol, Tobacco and Firearms

(in

sert mailing address of the assistant regional commissioner of the region in which the consignor is located.)

§ 170.688 Marks and labels.

Each container of nonbeverage wine shall be marked or labeled in a plain and durable manner with

(a) A serial number,

(b) The name of the proprietor and the registry number and location (city and State) of the bonded wine cellar,

(c) The formula number under which the nonbeverage wine was produced, (d) The contents of the container in wine gallons,

(e) The date of removal or shipment, and

(f) The legend "NOT FOR SALE OR USE AS A BEVERAGE".

The provisions of this section do not carry or import any relief from other statutory or regulatory labeling requirements. Further, if nonbeverage wine or products made therefrom are placed in bottles or other consumer packages, and the marks or labels thereon state or imply that the contents are wine or are made from wine, such marks or labels must state with equal prominence that the contents are not for beverage use.

§ 170.689 Acknowledgment of receipt by user of nonbeverage wine.

Each person receiving nonbeverage wine covered by a notice of shipment required by § 170.687(b) shall acknowledge receipt on one copy of the notice of shipment, indicating the date received and any shortages in shipment, and promptly forward such acknowledgment to the assistant regional commissioner designated on the notice of shipment.

§ 170.690 Bonded wine cellar records.

(a) Daily records. Every proprietor producing nonbeverage wine shall keep daily records, separate from other records required by Part 240 of this chapter, showing the following for each formula of nonbeverage wine produced and withdrawn:

(1) The kind, quantity, and percent alcohol by volume of wine, or wine products made from wine, rendered unfit for beverage use;

(2) The kind and quantity of materials received to render wine, or wine products made from wine, unfit for beverage use;

(3) The kind and quantity of materials used to render wine, or wine products made from wine, unfit for beverage use;

(4) The name, quantity, percent alcohol by volume, and formula number of each nonbeverage wine produced;

(5) The name, quantity, percent alcohol by volume, and formula number of nonbeverage wine removed;

(6) The date of removal; and

(7) The name and address of the consignee if the removal is more than 5 wine gallons or two cases, or if the nonbeverage wine is shipped for resale.

Where a proprietor withdraws nonbeverage wine free of tax from his bonded wine cellar to his taxpaid room or to adjacent premises operated by him, he shall, at each such location, maintain the records required by subparagraphs (5), (6), and (7) of this paragraph.

(b) Summaries and reports. The quantity of wine, or wine products made from wine, used to produce nonbeverage wine shall be recorded daily on the appropriate Form 2056. At the close of each month, such quantities shall be totaled and the total recorded as a credit on Form 702. The quantities of nonbeverage wine produced and withdrawn each month shall be summarized by tax class and reported on Form 702 for that month.

Each proprietor producing nonbeverage wines shall, as of the close of business June 30 and December 31 of each year, take a physical inventory of all nonbeverage wines in storage in bond. A detailed report shall be prepared on a separate Form 702-C, in duplicate, of each inventory taken, showing nonbeverage wine by formula number and the total quantity of such wines in each tax class. The original of the Form 702-C shall be attached to the Form 702 to which it pertains and forwarded to the assistant regional commissioner. The duplicate of the Form 702-C shall be retained by the proprietor and shall be kept available for inspection by internal revenue officers.

Subpart G-Disposal of Forfeited or Abandoned Property

172.65 Authority for destruction.

AUTHORITY: The provisions of this Part 172, issued under sec. 7, 52 Stat. 1252, sec. 8, 53 Stat. 1293, sec. 1, 62 Stat. 761, as amended, sec. 7805, 68A Stat. 917; 15 U.S.C. 907, 49 U.S.C. 788, 18 U.S.C. 1261, 26 U.S.C. 7805, unless otherwise noted.

SOURCE: The provisions of this Part 172 appear at 21 F.R. 8356, Nov. 1, 1956, unless otherwise noted.

Subpart A-Scope of Regulations § 172.1

Procedures relating to personal property and carriers.

Regulations in this part shall relate to personal property and carriers seized by officers of the Internal Revenue Service as subject to forfeiture as being used, or intended to be used, as the case may be, to violate Federal laws.

[T.D. 6866, 30 F.R. 14791, Nov. 30, 1965] § 172.2 Forms prescribed.

The Director, Alcohol, Tobacco and Firearms Division, is authorized to prescribe all forms required by this part, or necessary for its administration. Information called for shall be furnished in accordance with the instructions on the forms or issued with respect thereto. Subpart B-Definitions

§ 172.5 Meaning of terms.

As used in this part, unless the context otherwise requires, terms shall have the meanings ascribed in this subpart.

§ 172.6 Appraised value.

"Appraised value" shall mean the value placed upon seized property or carriers by the appraiser or appraisers designated for the purpose of determining whether the property or carriers may be forfeited administratively.

[T.D. 6886, 30 F.R. 14791, Nov. 30, 1965] § 172.7 Assistant regional commis

sioner. "Assistant regional commissioner" shall mean the assistant regional com

"Carrier" shall mean a vessel, vehicle or aircraft seized under title 49 U.S.C., chapter 11 for having been used to transport, carry or conceal a contraband firearm. Vessels, vehicles or aircraft seized under other provisions of applicable laws shall be considered personal property. [T.D. 6866, 30 F.R. 14791, Nov. 30, 1965] § 172.9 Commercial crimes.

"Commercial crimes" shall be deemed to mean any of the following types of crimes (Federal or State): Offenses against the revenue laws; burglary; counterfeiting; forgery; kidnapping; larceny; robbery; illegal sale or possession of deadly weapons; prostitution (including soliciting, procuring, pandering, white slaving, keeping house of ill fame, and like offenses); extortion; swindling and confidence games; offenses involving gambling or wagering; and attempting to commit, conspiring or commit, compounding or aiding, abetting, counselling, commanding, inducing or procuring the commission of any of the foregoing crimes. Addiction to narcotic drugs and use of marihuana will be treated as if such were commercial crime.

[21 F.R. 8356, Nov. 1, 1956, as amended by T.D. 6482, 25 FR. 6757, July 16, 1960] § 172.10 Commissioner.

"Commissioner" shall mean the Commissioner of Internal Revenue. § 172.11 Contraband firearm.

"Contraband firearm" shall mean & firearm with respect to which there has been committed a violation of the National Firearms Act (I.R.C., chapter 53) or any regulation issued thereunder. § 172.12 Director, Alcohol, Tobacco and Firearms Division.

"Director, Alcohol, Tobacco and Firearms Division" shall mean the Director, Alcohol, Tobacco and Firearms Division, Internal Revenue Service, Treasury Department, Washington, D.C. 20224. § 172.13 I.R.C.

"I.R.C." shall mean the Internal Revenue Code of 1954.

§ 172.14 Person.

"Person" shall mean and include an individual, trust, estate, partnership, association, company or a corporation. § 172.15 Re-appraisal.

The term "re-appraisal" shall mean an up-to-date statutory appraisal to determine the present value of the property or carrier involved in a petition for remission or mitigation of forfeiture made in the same manner as the original appraisal, and performed at the specified request of the petitioner whose petition in regard to the property or carrier has been allowed and who, for reasonable cause, is not satisfied that the original appraisal represents the present value of the property or carrier.

[T.D. 6866, 30 FR. 14791, Nov. 30, 1965]

$172.16 Equity.

The term "equity", as used in administrative action on petitions for remission or mitigation of forfeitures, shall mean that interest which a petitioner has in the personal property or carrier petitioned for at the time of final administrative action on the petition, but such interest shall not be considered to include any unearned finance charges from the date of seizure or the date of default, if later; any amount rebatable on account of paid insurance premiums; attorney's fees for collection; any amount identified as dealer's reserve; or any amount in the nature of liquidated damages that may have been agreed upon by the buyer and the petitioner. [T.D. 6482, 25 FR. 6757, July 16, 1960]

"Region" shall mean the area designated by the Secretary, or his delegate, comprising the geographical jurisdiction of a regional commissioner of internal revenue.

§ 172.18 Regional Commissioner.

"Regional Commissioner" shall mean the Regional Commissioner of Internal Revenue of an internal revenue region. § 172.19 Supervisor in Charge.

"Supervisor in Charge" shall mean the Supervisor in Charge, Alcohol and Tobacco Tax, Internal Revenue Service, who is responsible to, and functions under the direction and supervision of, the Assistant Regional Commissioner, Alcohol, Tobacco and Firearms.

"U.S.C." shall mean the United States Code of 1952.

Subpart C-Seizures and Forfeitures § 172.25 Personal property and carriers subject to seizure,

Personal property may be seized by duly authorized officers of the Internal Revenue Service for forfeiture to the United States when used or intended to be used, in violation of the internal revenue laws, and certain other laws of the United States which such officers are empowered to enforce, including title 18 U.S.C., chapters 59, 229 (liquor); title 27 U.S.C., section 206 (liquor); title 15 U.S.C., chapter 18 (firearms). Carriers, as defined in § 172.8, similarly may be seized when used or intended to be used in violation of title 49 U.S.C., chapter 11 (transportation et cetera of contraband firearms).

[T.D. 6866, 30 F.R. 14791, Nov. 30, 1965] § 172.26 Forfeiture of seized personal property and carriers.

forfeiture.

(1)

(a) Administrative Personal property seized as subject to forfeiture under the internal revenue laws which has an appraised value of $2,500.00 or less, and any carrier appraised by the seizing officer at $2,500.00 or less under the custom laws, shall be forfeited to the United States in administrative or summary forfeiture proceedings.

(2) In respect of personal property seized as subject to forfeiture under the internal revenue laws which, in the opinion of the seizing officer, has an appraised value of $2,500.00 or less, such officer shall cause a list containing a particular description of the seized property to be prepared and an appraisement thereof to be made by three sworn appraisers, selected by the seizing officer, who shall be respectable and disinterested citizens of the United States residing within the internal revenue district wherein the seizure was made. Such list and appraisement shall be properly attested to by the seizing officer and such appraisers.

(3) In respect of personal property seized as subject to forfeiture under the internal revenue laws and found by the appraisers to have a value of $2,500.00 or less, the Supervisor in Charge shall publish a notice once a week for three consecutive weeks, in some newspaper of the judicial district where the seizure was

made, describing the articles and stating the time, place, and cause of their seizure, and requiring any person claiming them to make such claim within 30 days from the date of the first publication of such notice.

(4) In respect of carriers seized as subject to forfeiture under the custom laws which, in the opinion of the seizing officer, have an appraised value of $2,500.00 or less, such officer shall cause a list containing a particular description of the seized carriers to be prepared and the seizing officer shall make the appraisement thereof. Such list and appraisement shall be property attested to by the seizing officer.

(5) In respect of carriers seized as subject to forfeiture under the custom laws and appraised by the seizing officer as having a value of $2,500.00 or less, the Supervisor in Charge shall publish a notice of seizure in the same manner as required by subparagraph (3) of this paragraph; provided that the time for making claim shall be within 20 days from the date of first publication. (19 U.S.C. 1608)

(6) Any person claiming the personal property or carrier so seized, within the time specified in the notice, may file with the Supervisor in Charge a claim, stating his interest in the articles or carrier seized, and may execute a bond to the United States in the penal sum of $250.00, conditioned that, in case of condemnation of the articles or carrier so seized, the obligors shall pay all the costs and expenses of the proceedings to obtain such condemnation. Both the claim and the cost bond should be executed in quadruplicate.

(1) The

(b) Judicial condemnation. Regional Counsel, Internal Revenue Service, shall authorize institution of libel proceedings in those instances where the appraised value of the seized personal property or carrier exceeds $2,500.00, or where a claim and cost bond are filed as provided above.

[T.D. 6866, 30 F.R. 14791, Nov. 30, 1965] § 172.27 Type and conditions of cost bond.

The cost bond delivered by a claimant to effect removal of the forfeiture status of the property or carrier claimed to the jurisdiction of the Federal court for adjudication shall be a corporate surety bond: Provided, however, That upon a showing to the satisfaction of the Supervisor in Charge that the claim

ant is unable to furnish a corporate surety bond such claimant may deliver a cost bond with individual sureties acceptable to the Supervisor in Charge; provided, further, that in lieu of a cost bond with corporate or individual sureties the claimant may deposit collateral as provided in § 172.29. The cost bond shall be conditioned that in the case of the condemnation of the property the obligors shall pay all costs and expenses of the proceedings to obtain such condemnation.

§ 172.28 Corporate surety bonds.

Corporate surety bonds may be given only with surety companies holding certificates of authority from the Secretary of the Treasury as acceptable sureties on Federal bonds, subject to the limitations prescribed by Treasury Department Circular 570, and subject to such amendments as may be issued from time to time.

(Sec. 6, 61 Stat. 648, as amended, 68A Stat. 847; 6 U.S.C. 6, 26 U.S.C. 7101) [T.D. 6866. 30 F.R. 14792, Nov. 30, 1965]

§ 172.29 Deposit of collateral.

Bonds or notes of the United States, or other obligations which are unconditionally guaranteed as to both interest and principal by the United States, may be pledged and deposited by claimants as collateral security in lieu of corporate sureties in accordance with the provisions of Department Circular No. 154, revised (31 CFR Part 225): Provided, That United States Savings Bonds, Defense Savings Bonds and War Savings Bonds issued under the authority of section 22 of the Second Liberty Bond Act, as amended, and other bonds and notes of the United States, which are nontransferable or the hypothecation of which will not be recognized by the Treasury Department, may not be pledged and deposited as security in lieu of corporate sureties: Provided further, That cash, postal money orders, and certified or cashiers' or treasurers' checks may be furnished by claimants as collateral security in lieu of corporate sureties.

(Sec. 15, 61 Stat. 650, 68A Stat. 847; 6 U. 8. C. 15, 26 U. S. C. 7101)

§ 172.30 Bond for return of seized personal goods.

The proceedings to enforce forfeiture of perishable goods shall be in the nature of a proceeding in rem in the district court of the United States for the district wherein such seizure is made.