Proposed Amendments of Parts 220. 221. and 225
Relating to Distilled Spirits
Proprietors of registered distilleries,
fruit distilleries, and internal revenue
bonded warehouses; and others concerned:
1. Continuing study is being given to regulations governing
the operations of distilleries and internal revenue bonded warehouses, and to the supervision exercised by Government officers
at such premises. Proposals for simplification of procedures
have been submitted by the Distilled Spirits Institute and other
industry representatives and have been carefully considered by
this office. Other proposals have been developed by the
division's national office staff. It is proposed to amend the
regulations to incorporate these changes by issuing a Treasury
decision to be effective on or about October 1, 1955. This
industry circular is issued to provide a preview of the
contemplated changes and enable you to begin planning the
transition to the new procedures. In certain areas, changes
in equipment may be necessary while in others special training
of personnel may be involved.
2. The major changes to be proposed would provide that
(1) nighttime supervision of distilleries by storekeepergaugers will be discontinued except where necessary because
of the use of special processes Such as those, involved in the
production of gin and vodka, (2) the responsibility for making
and recording certain entry gauges in the cistern room will be
assumed by the distillers, (3) full responsibility for correct
identification of spirits, including the preparation of certain
records, will rest with the distillers, and (4) distillers will
furnish advance schedules of planned operations to the
3. Basically, the provisions which are intended to
discontinue continuous on-premises supervision of distilleries
during the night hours are similar to those which were provided
in regulations relating to industrial alcohol plants by
Treasury Decision 6090, which provisions have apparently
occasioned a minimum of operating difficulties. In order
to adapt such provisions to distilleries, it is necessary
(a) waste lines from stills be so controlled that
spirits cannot be diverted; in many instances, this security can be provided by permanently connecting the waste lines
of stills to sewers (provision will be made to exempt beer
stills, thus permitting the recovery of spent beer or
(b) air or water lines to unfinished spirits
tanks (for scrubbing, reducing, etc.) will be permanently
connected to the tanks, and water lines so connected will
be equipped, under certain conditions, with meters to
measure the quantity of water added to the spirits,
addition of approved treating agents to spirits in
unfinished spirits tanks in the absence of the storekeepergauger must be by means of devices (locked hoppers, etc.)
which will permit the addition of such substances without
permitting abstraction of spirits, and
(d) routine samples
of unfinished spirits shall be taken by means of mechanical
sampling devices. It is apparent that certain changes in
present equipment and installation of new equipment will
need to be made. Consideration should be given to each of
the items listed and if there are questions concerning the
type of sampling device, water meter, or device for adding
chemicals, the problems should be discussed with the
storekeeper-gauger in charge and the assistant regional
4. The proposed amendments would transfer to distillers
the responsibility for making and recording entry gauges in
the cistern room except those where removal is (a) upon
payment of tax, (b) for exportation, or (c) for deposit in
an internal revenue bonded warehouse for subsequent withdrawal on the original gauge. In order that Government
officers may exercise suitable control of entry operations,
it is necessary that each receiving cistern be equipped with
an etched gauge glass or other equally permanent gauge device.
No receiving cistern may be used subsequent to the effective
date of the proposed regulations, until the Government officer
has affixed thereto a certificate showing that the cistern has
been found to be accurately calibrated.
5. In providing that responsibility for product
identification shall rest with the distillers, the amendments
would require the distiller to maintain records of operations
which will enable internal revenue officers to trace the
movement of spirits from initial distillation to deposit of
the finished spirits in receiving cisterns.
6. In order that the storekeeper-gauger in charge may
effectively plan the work of storekeeper-gaugers, thus avoiding
unnecessary delay in distillery operations, the proposed amendments will provide that the distiller shall furnish the
storekeeper-gauger each business day a schedule of operations planned for the next succeeding work day. This schedule may be a copy of any commercial schedule which the proprietor prepares for his own management purposes.
7. Liberalizations which are proposed for inclusion in the amendment of the regulations include:
(1)Permitting, under certain conditions, communicating
doors between distillery premises and off-premises rooms or
(2) Discontinuing the requirement for weighing or measuring
and reporting materials received (except when received in bond
as in the case of wine for distillation and spirits for
(3) Permitting the volumetric gauge of spirits removed
by pipeline from distilleries to bonded warehouses operated by
the distiller or his affiliate or subsidiary.
(4) Permitting the receipt of distilled spirits for
redistillation without special application.
(5) Providing for the exportation of vodka.
(6) Permitting the use of tank trucks for exportation of
(7) Authorizing the storekeeper-gauger at consignor
premises to approve applications to transfer distilled spirits
(8) Permitting the removal of fermented materials from a
distillery, before being distilled, if fermented for the purpose
of carrying on a business (other than distilling) authorized by
(9) Authorizing assistant regional commissioner to permit
certain warehouse windows to remain open at other than regular
business hours for ventilating purposes.
(10) Permitting the mingling of neutral spirits distilled
in different seasons in warehouse storage tanks.
(11) Authorizing storekeeper-gaugers to approve applications
to rebottle, relabel, and restamp, bottled-in-bond spirits.
(12) Permitting distillery equipment to be erected on
distillery premises outside a room or building.
(13) Authorizing storekeeper-gaugers to approve
applications (Forms 206) to export spirits, where the
exportation is made under a continuing bond.
(14) Authorizing storekeeper-gaugers to issue
certificates of origin for spirits being exported.
(15) Permitting bottling in bond, from the same
tank of spirits, for both domestic use and exportation.
(16) Providing more flexible procedures for the
withdrawal, free of tax, of distilled spirits for use on
aircraft engaged in international flights.
The procedures outlined in this paragraph have been
discussed with members of the industry and their
representatives and probably will be understood without further explanation.
8. It is important that this circular receive
your very careful attention so that you can begin
your planning concerning equipment changes or additions,
to insure that your operations will not be delayed upon
the effective date of the new regulations. The staff of
the National Office as well as those of the Regional
offices will be available for purposes of consultation
and study of individual plant problems. You are
encouraged to work closely with the Government officers
assigned to your plant and with those who may visit the
premises for purposes of inspection, in order that your
questions can be quickly answered or referred to a
higher level for consideration.
9. The issuance of this circular at this early
date is intended to facilitate the discussion of your
individual problems with Government personnel concerned.
Probably most inquiries can be processed by your
assistant regional commissioner and should, accordingly,
be addressed to him and refer to the number of the
circular. Correspondence with this office should be
marked; Attention: 0:AT:PP.
Dwight E. Avis
Director, Alcohol and Tobacco Tax Division.