proprietor apparently has not accounted for all the low wines produced by him, he shall make such investigation as he may deem necessary and determine, from all the evidence he can obtain, the quantity of low wines actually produced by the proprietor.

§ 195.247

Use of materials not reported.

If the assistant regional commissioner should find that the proprietor has received on his premises materials which have not been accounted for, or has used materials which have not been reported as used, and has produced low wines which have not been reported, the quantity of low wines produced and not reported should be determined from all the evidence that can be obtained, including evidence of the normal actual yield of low wines from such materials at the particular vinegar factory. § 195.248 Determining low wines pro

duced.

If it is determined that all materials received have been accounted for and all materials used have been reported, but that the proprietor has not accounted for all the low wines produced, the quantity actually produced should be determined from all the evidence that can be obtained. The evidence that low wines have been produced from materials reported used and that have not been accounted for by the proprietor should be direct and positive. The fraudulent removal of low wines will not be assumed from the mere fact that the quantity of low wines reported is not equal to the number of gallons which the materials reported used will ordinarily produce. § 195.249 Notice to proprietor.

If it is determined that the proprietor has not accounted for all the low wines produced by him, the assistant regional commissioner will, unless the interests of the Government require an immediate assessment, notify the proprietor of the proposed assessment and afford him an opportunity to submit within 30 days, or such further time as the assistant regional commissioner may consider reasonable, evidence showing why the proposed assessment should not be made. § 195.250 Nature of evidence.

The evidence submitted by the proprietor should be in the form of affidavits and certified documents.

§ 195.251

Consideration of response.

If the proprietor responds to the notice and submits evidence bearing on the merits of the proposed assessment, the assistant regional commissioner will give due consideration thereto and make such further investigation as he may deem advisable. If, after consideration of all the facts, the assistant regional commissioner finds that the tax is due, an assessment will be made in accordance with prescribed procedure.

§ 195.252 Evidence of loss.

Where the proprietor claims, pursuant to notice of proposed assessment, that the low wines produced and not accounted for were actually lost, without any fraud or collusion on his part, and were not illegally used or removed from the premises, he will submit evidence in support thereof.

§ 195.253 Proprietor's failure to respond.

If the proprietor fails to respond to the notice of proposed assessment within the time specified, an assessment will be made for the amount found due in accordance with the prescribed procedure § 195.254 Examination of evidence.

When such evidence of loss is received by the assistant regional commissioner, he will carefully examine the same to see that all the required information has been furnished, and will cause such investigation to be made, or require such additional evidence to be submitted, as he may deem necessary. Upon completion of his investigation, if any, the assistant regional commissioner will allow or disallow the loss in accordance with existing law and regulations.

Subpart T-Rules for Computing
Capacity of Stills

distillation. This result will represent the quantity of wine gallons of absolute alcohol that can be distilled in 24 hours. This quantity, when multiplied by 2, will represent the number of proof gallons. For example, if a pot still having a cubic capacity of 2,000 gallons is used, and such still can be charged three times in eight hours, and the highest percentage of alcohol by volume in the distilling material to be used is 8 percent, the spirit-producing capacity of the still will be computed as follows: 2,000X0.8X9X 0.08X2=2,304 proof gallons. (The quantity that can be distilled in 24 hours.)

[20 F.R. 2356, Apr. 12, 1955, as amended by T.D. 6397, 24 F.R. 5710, July 16, 1959] § 195.261 Charge chamber stills.

The estimated maximum quantity in proof gallons of distilled spirits capable of being produced every 24 hours, which is required to be shown on the proprietor's application, will be computed as follows for charge chamber stills:

Where a charge chamber still is used, the estimated maximum quantity of distilled spirits in proof gallons capable of being produced will be determined by multiplying 80 percent of the cubic capacity of the top or charge chamber of the still by the number of times the same can be filled and emptied in 24 hours. This result will represent the total number of gallons of distilling material that can be distilled in 24 hours, which quantity will be multiplied by the percent of alcohol by volume contained in the highest yielding material to be used. The result of such computation will represent the number of wine gallons of absolute alcohol that can be distilled in 24 hours. This quantity, when multiplied by 2, will represent the number of proof gallons. For example, if a charge still is used having a charge chamber of a cubic capacity of 600 gallons which can be charged three times in one hour, and the highest percentage of alcohol by volume in the distilling material to be used is 8 percent, the spirit-producing capacity will be computed as follows: 600×0.8×3×24×0.08×2=5,529.6 proof gallons. (The quantity that can be distilled in 24 hours.)

of being produced every 24 hours, which is required to be shown on the proprietor's application, will be computed as follows for continuous stills:

If continuous stills are used, the maximum spirit-producing capacity in proof gallons of such stills will be computed on the area of the column in square feet. The first step will be to determine the inside diameter of the still at its base and the diameter will then be divided by 2 to ascertain the radius. The diameter may be determined (1) by accurately measuring the inside width of the still with a rod or tape, or (2) by measuring the outside circumference of the still and dividing the same by 3.1416 and deducting from the quotient twice the thickness of the sides of the still. The radius (in feet) will be squared and then multiplied by 3.1416 (Pi) to ascertain the area of the column in square feet. The area in square feet will be multiplied by the factor, 40 (the number of gallons of 100 proof spirits that can be distilled in one hour per square foot of plate area), and the result will represent the total number of gallons of 100 proof spirits that can be distilled in one hour. This quantity will be multiplied by 24 to determine the number of gallons of 100 proof spirits that can be distilled in one day. For example, if a continuous still having a diameter of 4 feet is used, the spirit-producing capacity will be computed as follows: 2×2×3.1416X40X24= 12,063.74 proof gallons. (The quantity that can be produced in 24 hours.)

[20 F.R. 2856, Apr. 12, 1955, as amended by T.D. 6397, 24 FR. 5710, July 16, 1959]

[20 F.R. 2356, Apr. 12, 1955, as amended by T.D. 6397, 24 F.R. 5710, July 16, 1959]

District director.

Inclusive language.

Person, manufacturer, distiller, user.

Regional commissioner.

Condenser.

PAYMENT OF TAX

196.80 196.81

Removal for domestic use. Removal for exportation. 196.82 Bill of lading required.

AUTHORITY: The provisions of this Part 196 issued under sec. 7805, 68A Stat. 917; 26 U.S.C. 7805, unless otherwise noted.

Subpart A-Scope of Regulations § 196.1 Stills.

This part relates to the manufacture, taxpayment, removal, use, and registration of stills and condensers, and the exportation or transfer to foreign-trade zones of stills and condensers with benefit of drawback of internal revenue tax or without payment of tax.

[T.D. 6393, 24 F.R. 5297, June 30, 1959] § 196.2 Forms prescribed.

The Director, Alcohol and Tobacco Tax Division, is authorized to prescribe all forms required by this part, including applications, claims, records, and reports. Information called for shall be furnished in accordance with the instructions on the forms, or issued in respect thereto.

[20 F.R. 6117, Aug. 23, 1955]

§ 196.8

Director, Alcohol and Tobacco Tax Division.

"Director, Alcohol and Tobacco Tax Division" shall mean the Director, Alcohol and Tobacco Tax Division, Internal Revenue Service, Treasury Department, Washington, D. C.

[20 F.R. 6117, Aug. 23, 1955]

§ 196.8a Director of customs.

The officer who has jurisdiction over all customs activities of a customs district, including district directors of customs at headquarters ports other than the Port of New York, N.Y., the regional commissioner of customs, the deputy and assistant regional commissioners of customs for Customs Region II at the Port of New York, N.Y., and, as applicable, port directors at ports not designated as headquarters ports.

[T.D. 7005, 34 F.R. 2249, Feb. 15, 1969]

§ 196.8b Director of the service center. "Director of the service center" shall mean the Director, Internal Revenue Service Center, in each of the internal revenue regions.

[T.D. 7008, 34 F.R. 3667, Mar. 1, 1969]

§ 196.9 Distilled spirits or spirits.

Distilled spirits or spirits shall mean that substance known as ethyl alcohol, ethanol, or spirits of wine, including all dilutions and mixtures thereof, from whatever source or by whatever process produced, and shall include whisky, brandy, rum, gin, and vodka.

[T.D. 6393, 24 F.R. 5297, June 30, 1959]

spirits, or products containing spirits within the provisions of section 5082, I.R.C.; (d) the distillation, redistillation, or recovery of spirits or of completely or specially denatured spirits, or of articles containing spirits or completely or specially denatured spirits; and (e) the redistillation or recovery of tax-free spirits.

[20 F.R. 6117, Aug. 23, 1955, as amended by T.D. 6393, 24 F.R. 5297, June 30, 1959] § 196.11 Distilling apparatus.

"Distilling apparatus" shall mean any still or condenser defined in §§ 196.17 and 196.18.

[20 F.R. 6117, Aug. 23, 1955, as amended by T.D. 6393, 24 FR. 5297, June 30, 1959]

§ 196.12 District director.

"District director" shall mean a district director of internal revenue. [20 F.R. 6117, Aug. 23, 1955]

§ 196.13 Inclusive language.

Words in the plural form shall include the singular, and vice versa, and words in the masculine gender shall include the feminine, associations, partnerships, and corporations.

[20 F.R. 6117, Aug. 23, 1955] § 196.14

I.R.C.

"Condenser" shall mean any apparatus capable of being used when connected with a still, for condensing or liquefying alcoholic or spirituous vapors, but shall not include condensers to be used with laboratory stills or stills used for distilling water or other nonalcoholic materials where the cubic capacity of such stills is one gallon or less.

[T.D. 6393, 24 F.R. 5297, June 30, 1957] Subpart C-Manufacture, Taxpayment, Sale, Removal, and Registration of Stills or Condensers

§ 196.25 Manufacturer of stills defined. Any person who manufactures any still or condenser to be used in distilling shall be deemed a manufacturer of stills.

(72 Stat. 1339; 26 U.S.C. 5102) (20 F.R. 6117, Aug. 23, 1955, as amended by T.D. 6398, 24 F.R. 5297, June 30, 1959]

Manufacturers of stills, as to each place of manufacture, shall pay a special (occupational) tax of $55, and, in addition thereto, a special (commodity) tax of $22, for each still or condenser to be used in distilling made by him, i.e., $22 for each still and $22 for each condenser: Provided, That the proprietor of a distilled spirits plant who manufactures stills or condensers exclusively for use in his plant or plants, shall not be subject to the special (occupational and commodity) taxes required by this section. (72 Stat. 1339; 26 U.S.C. 5101, 5103) 6393. 24 F.R. 5297, June 30, 1959] MANUFACTURE OF PARTS OF STILLS AND ASSEMBLING THEREOF

[T.D.

same

If separate parts of a complete still or condenser, of any kind, are furnished by the same manufacturer to a person who assembles the same into a still or condenser for distilling, the manufacturer of the parts will incur liability for the special (occupational and commodity) taxes imposed upon manufacturers of stills.

(72 Stat. 1339; 26 U.S.C. 5101) [20 F.R. 6117, Aug. 23, 1955, as amended by T.D. 6393, 24 F.R. 5297, June 30, 1959]

$196.28 Materials or apparatus procured and converted into distilling apparatus.

If a person procures materials or apparatus which are not separately subject to tax under the provisions of this part and converts same into a still or condenser for distilling, he will, except as provided in § 196.26, incur liability for the special (occupational and commodity) taxes imposed upon manufacturers of stills.

(72 Stat. 1339; 26 U.S.C. 5102) [T.D. 6393, 24 F.R. 5297, June 30, 1959]

RECONSTRUCTION OF STILLS

§ 196.29 Repairs or alterations.

Whenever a still or condenser, to be used in distilling, is repaired or altered by the addition of new material to such an extent as to virtually result in the construction of a new still or condenser, the person making such repairs or alterations, unless exempted by the provisions of § 196.26, will be held liable for the special (commodity) tax of $22 for each still or condenser so repaired or altered, and in addition will incur liability for the special (occupational) tax of $55 as a manufacturer of stills.

[20

(72 Stat. 1339; 26 U.S.C. 5101, 5102) F.R. 6117, Aug. 23, 1955, as amended by T.D. 6393, 24 F.R. 5297, June 30, 1959] § 196.30 Extent of changes.

Minor structural changes made in a still or condenser, such as the limited replacement of parts or the addition of new materials, which do not effect any material change in the mode of operation, character, or capacity of the distilling apparatus, will not be deemed to constitute the manufacture of a new still or condenser.

(72 Stat. 1339; 26 U.S.C. 5102) [20 F.R. 6117, Aug. 23, 1955, as amended by T.D. 6363, 24 F.R. 5297, June 30, 1959]