SEC. 5234. MINGLING AND BLENDING OF DISTILLED SPIRITS.

(a) MINGLING OF DISTILLED SPIRITS ON BONDED PREMISES.

(1) IN GENERAL.-Under such regulations as the Secretary or his delegate shall prescribe, distilled spirits may be mingled on bonded premises if such spirits

(A) were distilled at 190 degrees or more of proof;

(B) are heterogeneous and are being dumped for gauging in bulk gauging tanks for immediate removal to bottling premises for use exclusively in taxable rectification or rectification under section 5025 (f);

(C) are homogeneous:

(D) are for immediate denaturation or immediate removal for an authorized tax-free purpose; or

(E) are for immediate redistillation.

(2) CONSOLIDATION OF PACKAGES FOR FURTHER STORAGE IN BOND.-Unless such regulations as the Secretary or his delegate shall prescribe, distilled spirits

(A) of the same kind,

(B) distilled at the same distillery,

(C) distilled by the same proprietor (under his own or any trade name), and

(D) which have been stored in internal revenue bond in the same kind of cooperage for not less than 4 years (or 2 years in the case of rum or brandy),

within 8 years of the date of original entry for deposit of the spirits, be mingled on bonded premises for further storage in bond in as many as necessary of the same packages in which the spirits were stored before consolidation. Where distilled spirits produced in different distilling seasons are mingled under this paragraph, the mingled spirits shall consist of not less than 10 percent of spirits of each such season. No spirits mingled under the provisions of this paragraph shall be again mingled under the provisions thereof until at least one year has elapsed since the last prior mingling. For purposes of this chapter, the date of original entry for deposit of the spirits mingled under the provisions of this paragraph shall be the date of original entry for deposit of the youngest spirits contained in the mingled spirits and the distilling season of such mingled spirits shall be the distilling season of the youngest spirits contained therein. Notwithstanding any other provisions of law, distilled spirits mingled under this paragraph may be bottled and labeled the same as if such spirits had not been so mingled. No statement claiming or implying age in excess of that of the youngest spirits contained in the mingled spirits shall be made on any stamp or label or in any advertisement.

(b) MINGLING OF DISTILLED SPIRITS FOR NATIONAL DEFENSE.Under such regulations as the Secretary or his delegate shall prescribe, distilled spirits may be mingled on bonded premises or in the course of removal therefrom, for any purpose incident to the national defense.

(c) BLENDING OF BEVERAGE RUMS OR BRANDIES.-Fruit brandies distilled from the same kind of fruit at not more than 170 degrees of proof may, for the sole purpose of perfecting such brandies according to commercial standards, be mixed or blended with each other, or

with any such mixture or blend, on bonded premises. Rums may, for the sole purpose of perfecting them according to commercial standards, be mixed or blended with each other, or with any such mixture or blend, on bonded premises. Such rums or brandies so mixed or blended may be packaged, stored, transported, transferred in bond. withdrawn free of tax, withdrawn upon payment or determination of tax, or be otherwise disposed of, in the same manner as rums or brandies not so mixed or blended. The Secretary or his delegate may make such rules or regulations as he may deem necessary to carry this subsection into effect.

(d) CROSS REFERENCE.

For provisions imposing a tax on the blending of beverage rums or brandies under subsection (c), see section 5023.

SEC. 5235. BOTTLING OF ALCOHOL FOR INDUSTRIAL PURPOSES.

Alcohol for industrial purposes may be bottled, stamped, labeled, and cased on bonded premises of a distilled spirits plant prior to payment or determination of tax, under such regulations as the Secretary or his delegate may prescribe. The provisions of sections 5178 (a) (4) (A), 5205 (a) (1), and 5233 (relating to the bottling of distilled spirits in bond) shall not be applicable to alcohol bottled, stamped, and labeled as such under this section.

SEC. 5236. DISCONTINUANCE OF STORAGE FACILITIES AND TRANSFER OF DISTILLED SPIRITS.

When the Secretary or his delegate finds any facilities for the storage of distilled spirits on bonded premises to be unsafe or unfit for use, or the spirits contained therein subject to great loss or wastage, he may require the discontinuance of the use of such facilities and require the spirits contained therein to be transferred to such other storage facilities as he may designate. Such transfer shall be made at such time and under such supervision as the Secretary or his delegate may require and the expense of the transfer shall be paid by the owner or the warehouseman of the distilled spirits. Whenever the owner of such distilled spirits or the warehouseman fails to make such transfer within the time prescribed, or to pay the just and proper expense of such transfer, as ascertained and determined by the Secretary or his delegate, such distilled spirits may be seized and sold by the Secretary or his delegate in the same manner as goods are sold on distraint for taxes, and the proceeds of such sale shall be applied to the payment of the taxes due thereon and the cost and expenses of such sale and removal, and the balance paid over to the owner of such distilled spirits.

Subpart D-Denaturation

Sec. 5241. Authority to denature.

Sec. 5242. Denaturing materials.

Sec. 5243. Sale of abandoned spirits for denaturation without collection of tax.

Sec. 5244. Cross references.

SEC. 5241. AUTHORITY TO DENATURE.

Under such regulations as the Secretary or his delegate shall prescribe, distilled spirits may be denatured on the bonded premises of any distilled spirits plant operated by a proprietor who is authorized

to produce distilled spirits at such plant or on other bonded premises. Any other person operating bonded premises may, at the discretion of the Secretary or his delegate and under such regulations as he may prescribe, be authorized to denature distilled spirits on such bonded premises. Distilled spirits to be denatured under this section shall be of such kind and of such degree of proof as the Secretary or his delegate shall by regulations prescribe.

SEC. 5242. DENATURING MATERIALS.

Methanol or other denaturing materials suitable to the use for which the denatured distilled spirits are intended to be withdrawn shall be used for the denaturation of distilled spirits. Denaturing materials shall be such as to render the spirits with which they are admixed unfit for beverage or internal human medicinal use. The character and the quantity of denaturing materials used shall be as prescribed by the Secretary or his delegate by regulations.

SEC. 5243. SALE OF ABANDONED SPIRITS FOR DENATURATION WITHOUT COLLECTION OF TAX.

Notwithstanding any other provision of law, any distilled spirits abandoned to the United States may be sold, in such cases as the Secretary or his delegate may by regulation provide, to the proprietor of any distilled spirits plant for denaturation, or redistillation and denaturation, without the payment of the internal revenue tax thereon.

SEC. 5244. CROSS REFERENCES.

(1) For provisions authorizing the withdrawal from the bonded premises of a distilled spirits plant of denatured distilled spirits, see section 5214 (a) (1).

(2) For provisions requiring a permit to procure specially denatured distilled spirits, see section 5271.

PART III-OPERATIONS ON BOTTLING PREMISES

Sec. 5251. Notice of intention to rectify.
Sec. 5252. Regulation of operations.

SEC. 5251. NOTICE OF INTENTION TO RECTIFY.

The Secretary or his delegate may by regulations require the proprietor of any distilled spirits plant authorized to rectify distilled spirits or wines to give notice of his intention to rectify or compound any distilled spirits or wines. Any notice so required shall be in such form, shall be submitted at such time, and shall contain such information as the Secretary or his delegate may by regulations prescribe.

SEC. 5252. REGULATION OF OPERATIONS.

(1) For general provisions relating to operations on bottling premises, see part I of this subchapter.

(2) For provisions relating to bottling and packaging of wines on bottling premises, see section 5363.

Subchapter D-Industrial Use of Distilled Spirits

Sec. 5271. Permits.

Sec. 5272. Bonds.

Sec. 5273. Sale, use, and recovery of denatured distilled spirits.
Sec. 5274. Applicability of other laws.

Sec. 5275. Records and reports.

SEC. 5271. PERMITS.

(a) REQUIREMENTS.-No person shall

(1) procure or use distilled spirits free of tax under the provisions of section 5214 (a) (2) or (3); or

or

(2) procure, deal in, or use specially denatured distilled spirits;

(3) recover specially or completely denatured distilled spirits, until he has filed an application with and received a permit to do so from the Secretary or his delegate.

(b) FORM OF APPLICATION AND PERMIT.

(1) The application required by subsection (a) shall be in such form, shall be submitted at such times, and shall contain such information, as the Secretary or his delegate shall by regulations prescribe.

(2) Permits under this section shall, under such regulations as the Secretary or his delegate shall prescribe, designate and limit. the acts which are permitted, and the place where and time when such acts may be performed. Such permits shall be issued in such form and under such conditions as the Secretary or his delegate may by regulations prescribe.

(c) DISAPPROVAL OF APPLICATION.-Any application submitted under this section may be disapproved and the permit denied if the Secretary or his delegate, after notice and opportunity for hearing, finds that

(1) in case of an application to withdraw and use distilled spirits free of tax, the applicant is not authorized by law or regulations issued pursuant thereto to withdraw or use such distilled spirits; or

(2) 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 his business experience, financial standing, or trade connections, not likely to maintain operations in compliance with this chapter; or

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

(4) the premises on which it is proposed to conduct the business are not adequate to protect the revenue.

(d) CHANGES AFTER ISSUANCE OF PERMIT.-With respect to any change relating to the information contained in the application for a permit issued under this section, the Secretary or his delegate may by regulations require the filing of written notice of such change and,

where the change affects the terms of the permit, require the filing of an amended application.

(e) SUSPENSION OR REVOCATION.-If, after notice and hearing, the Secretary or his delegate finds that any person holding a permit issued under this section

(1) has not in good faith complied with the provisions of this chapter or regulations issued thereunder; or

(2) has violated the conditions of such permit; or

(3) has made any false statement as to any material fact in his application therefor; or

(4) has failed to disclose any material information required to be furnished; or

(5) has violated or conspired to violate any law of the United States relating to intoxicating liquor, or has been convicted of any offense under this title punishable as a felony or of any conspiracy to commit such offense; or

(6) is, in the case of any person who has a permit under subsection (a) (1) or (a) (2), by reason of his operations, no longer warranted in procuring or using the distilled spirits or specially denatured distilled spirits authorized by his permit; or

(7) has, in the case of any person who has a permit under subsection (a) (2), manufactured articles which do not correspond to the descriptions and limitations prescribed by law and regulations;

or

(8) has not engaged in any of the operations authorized by the permit for a period of more than 2 years;

such permit may, in whole or in part, be revoked or be suspended for such period as the Secretary or his delegate deems proper.

(f) DURATION OF PERMITS.-Permits issued under this section, unless terminated by the terms of the permit, shall continue in effect until suspended or revoked as provided in this section, or until voluntarily surrendered.

(g) POSTING OF PERMITS.-Permits issued under this section, to use distilled spirits free of tax, to deal in or use specially denatured distilled spirits, or to recover specially or completely denatured distilled spirits, shall be kept posted available for inspection on the premises covered by the permit.

(h) REGULATIONS.-The Secretary or his delegate shall prescribe all necessary regulations relating to issuance, denial, suspension, or revocation, of permits under this section, and for the disposition of distilled spirits (including specially denatured distilled spirits) procured under permit pursuant to this section which remain unused when such permit is no longer in effect.

SEC. 5272. BONDS.

(a) REQUIREMENTS.-Before any permit required by section 5271 (a) is granted, the Secretary or his delegate may rquire a bond, in such form and amount as he may prescribe, to insure compliance with the terms of the permit and the provisions of this chapter.

(b) EXCEPTIONS.-No bond shall be required in the case of permits issued to the United States or any governmental agency thereof, or to the several States and Territories or any political subdivision thereof, or to the District of Columbia.