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Title 27Chapter ISubchapter APart 20 → Subpart I


Title 27: Alcohol, Tobacco Products and Firearms
PART 20—DISTRIBUTION AND USE OF DENATURED ALCOHOL AND RUM


Subpart I—Operations by Dealers and Users of Specially Denatured Spirits


Contents

Obtaining Specially Denatured Spirits

§20.161   Withdrawals under permit.
§20.162   Regulation of withdrawals.
§20.163   Receipt and storage of specially denatured spirits.

Premises and Equipment

§20.164   Premises.
§20.165   Storage facilities.
§20.166   Stills and other equipment.
§20.167   Recovered and restored denatured spirits tanks.

Inventory and Records

§20.170   Physical inventory.
§20.171   Record of shipment.
§20.172   Records.

Operations by Dealers

§20.175   Shipment for account of another dealer.
§20.176   Packaging by a dealer.
§20.177   Encased containers.
§20.178   Marks and brands on containers of specially denatured spirits.
§20.179   Package identification number or serial number.
§20.180   Record of packages filled.
§20.181   Limitations on shipments.
§20.182   Bulk shipments.
§20.183   Exportation of S.D.S.

Operations by Users

§20.189   Use of specially denatured spirits.
§20.190   Diversion of articles for internal human use or beverage use.
§20.191   Bulk articles.
§20.192   Manufacturing record.
§20.193   Articles for export.

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Obtaining Specially Denatured Spirits

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§20.161   Withdrawals under permit.

(a) General. The permit, Form 5150.9, issued under subpart D of this part, authorizes a person to withdraw specially denatured spirits from the bonded premises of a distilled spirits plant or a dealer.

(b) Photocopying of permit, Form 5150.9. (1) As provided in §20.54, a permittee may make photocopies of its permit, or amended permit, for the exclusive purpose of furnishing proof of authorization to withdraw specially denatured spirits.

(2) A permittee need only furnish the photocopy of its permit, or amended permit, to a distilled spirits plant or dealer for the “initial order” from that distilled spirits plant or dealer.

(3) When a permittee makes photocopies of its permit, Form 5150.9, each copy must be signed, dated, and contain the word “COPY” across the face.

(4) A permittee is responsible for obtaining and, as applicable, destroying all photocopies of its permit from distilled spirits plants and dealers when: (i) An amended or corrected permit is issued which supersedes the copy on file, (ii) the permit is canceled by reason of requalification as a new permittee, (iii) the permit is revoked or suspended, or (iv) upon permanent discontinuance of dealing in or using specially denatured spirits.

(c) Withdrawals. (1) When a permittee places an initial order for specially denatured spirits the permittee will forward a signed copy of its permit, for retention by the distilled spirits plant or dealer, along with the purchase request.

(2) When the permittee places a subsequent order for specially denatured spirits, the purchase request, in addition to any other information, will contain the permit identification number along with a statement that the permittee possesses a valid permit to withdraw specially denatured spirits, a copy of which is on file with the supplier.

(3) Shipments will not be made by a proprietor of a distilled spirits plant or dealer until it is in possession of a signed copy of a valid permit, Form 5150.9, unless the appropriate TTB officer authorizes the shipment.

(19 U.S.C. 81c; Sec. 201, Pub. L. 85-859, 72 Stat. 1370, as amended, 1395, as amended (26 U.S.C. 5271, 5555))

[T.D. ATF-199, 50 FR 9162, Mar. 6, 1985; 50 FR 20099, May 14, 1985, as amended by T.D. ATF-274, 53 FR 25156, July 5, 1988; T.D. TTB-91, 76 FR 5478, Feb. 1, 2011]

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§20.162   Regulation of withdrawals.

(a) Each permittee shall regulate its withdrawals of specially denatured spirits to ensure that (1) the quantity on hand and unaccounted for does not exceed the capacity of the storage facilities, and (2) the cumulative quantity withdrawn or received in any calendar year does not exceed the quantity authorized by the permit, Form 5150.9. Recovered alcohol will be taken into account in determining the total quantity of alcohol on hand.

(b) For the purpose of this section, specially denatured spirits and recovered alcohol will be considered as unaccounted for if lost under circumstances where a claim for allowance is required by this part and the claim has not been allowed, or if used or disposed of in any manner not provided for in this part.

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§20.163   Receipt and storage of specially denatured spirits.

(a) Receipt of bulk conveyances or by pipeline. A permittee who receives specially denatured spirits in bulk conveyances or by pipeline shall: (1) Deposit the specially denatured spirits into storage tanks as provided by §20.165; (2) draw the specially denatured spirits into packages marked and labeled as required by paragraph (b) of this section; (3) store the specially denatured spirits in the tank truck or tank car in which received if the conveyance is effectively immobilized within an enclosure secured to prevent unauthorized access; or (4) use the specially denatured spirits immediately in accordance with an approved formula or statement of process.

(b) Marks on portable containers. (1) A user who receives specially denatured spirits in bulk conveyances or by pipeline and who transfers the spirits to drums shall plainly label them to show (i) the words “Specially Denatured Alcohol” or “Specially Denatured Rum”, and (ii) the formula number.

(2) A dealer who fills packages of specially denatured spirits shall label them in accordance with §20.178.

(c) Receipt of portable containers. A permittee who receives specially denatured spirits in portable containers such as drums or barrels shall transfer the specially denatured spirits to storage tanks or deposit the specially denatured spirits in a storeroom as provided in §20.165, or use the spirits in accordance with an approved formula or statement of process. A user may not transfer the spirits to other portable containers for storage except in the following circumstances:

(1) Contents of damaged packages may be transferred to new packages to prevent loss or waste; or

(2) Contents of portable containers may be transferred to “safety” containers to comply with city or State fire code regulations, or on filing notice with the appropriate TTB officer to comply with the safety practices of the user. The user shall label the new containers with the information marked on the original containers and shall also identify the new containers as “repackaged.”

(d) Record of receipt. Records of receipt will consist of the consignor's invoice or bill of lading which identifies the quantities, formula number(s), and serial numbers of containers of specially denatured spirits, and which has been annotated by the consignee with the date of receipt of the shipment.

(e) Losses. On receipt of specially denatured spirits, the user shall determine and account for any losses in transit in accordance with subpart J of this part.

(Approved by the Office of Management and Budget under control number1513-0062)

[T.D. ATF-199, 50 FR 9162, Mar. 6, 1985, as amended by T.D. TTB-140, 81 FR 59459, Aug. 30, 2016]

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Premises and Equipment

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§20.164   Premises.

(a) A permittee shall have premises suitable for the business being conducted and adequate for protecting the revenue.

(b) Storage facilities shall be provided on the premises for specially denatured spirits received or recovered. Except as provided in paragraph (c) of this section, storage facilities shall consist of storerooms, compartments, or stationary storage tanks (not necessarily in a room or building).

(c) A permittee receiving and storing specially denatured spirits in tank cars or tank trucks, as provided in §20.163, need not provide stationary storage tanks.

(d) If specially denatured spirits are received at or removed from a permittee's premises in bulk conveyances, suitable facilities for those operations shall be provided.

(e) The appropriate TTB officer may require the storage facilities or distilling equipment to be secured with Government locks or seals, or both.

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§20.165   Storage facilities.

(a) Storerooms shall be constructed and secured to prevent unauthorized access and the entrance doors shall be equipped for locking.

(b) Each stationary tank used for the storage of specially denatured spirits shall be equipped for locking to control access to the denatured spirits. An accurate means of measuring its contents shall be provided for each tank.

(c) Storerooms and storage tanks shall be kept locked when unattended. A storage cabinet or locker kept inside a room which is locked when unattended is considered to be adequately secured.

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§20.166   Stills and other equipment.

If recovered denatured spirits or articles are to be restored on the permittee's premises, all equipment to be used in the restoration process shall be located on the permit premises. Distilling apparatus or other equipment, including pipelines, for restoration or for recovery, shall be constructed and secured in such a manner as to prevent unauthorized access to the denatured spirits and so arranged as to be readily inspected by appropriate TTB officers.

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§20.167   Recovered and restored denatured spirits tanks.

Suitable storage tanks shall be provided for recovered and restored denatured spirits. Each storage tank for recovered and restored denatured spirits shall be—

(a) Durably marked to show its capacity and use,

(b) Equipped for locking to control access to the contents, and

(c) Provided with an accurate means of measuring its contents.

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Inventory and Records

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§20.170   Physical inventory.

Once in each calendar year and when requested by an appropriate TTB officer, each permittee shall perform and record a physical inventory of each formulation of new and recovered specially denatured spirits.

(Approved by the Office of Management and Budget under control number 1513-0062)

[T.D. ATF-199, 50 FR 9162, Mar. 6, 1985, as amended by T.D. TTB-140, 81 FR 59456, 59459, Aug. 30, 2016]

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§20.171   Record of shipment.

(a) Dealer. When a dealer transfers new or recovered specially denatured spirits to a distilled spirits plant or permittee in the normal course of business or in accordance with §20.216 or §20.231 of this part, the dealer shall prepare a record of shipment in accordance with paragraph (c) of this section. Dealers shall consistently use the same record series for the record of shipment. A dealer's record of shipment shall show a serial number or other unique number.

(b) User. When a user transfers new or recovered specially denatured spirits to a distilled spirits plant or permittee in accordance with §20.216, 20.231, or 20.235 of this part, the user shall prepare a record of shipment in accordance with paragraph (c) of this section.

(c) Record. The record of shipment shall consist of an invoice, bill of lading or similar document which shows the following information:

(1) Date of shipment;

(2) Consignor's name and address;

(3) Consignee's name, address, and permit number or distilled spirits plant registry number;

(4) For each formula of specially denatured spirits—

(i) The formula number,

(ii) The number and sizes of containers, and

(iii) The total quantity; and,

(5) If the specially denatured spirits are recovered, the word “recovered” shall appear on the record.

(Approved by the Office of Management and Budget under control number 1513-0062)

[T.D. ATF-199, 50 FR 9162, Mar. 6, 1985, as amended by T.D. TTB-140, 81 FR 59456, Aug. 30, 2016]

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§20.172   Records.

In addition to the records required by this subpart, permittees shall maintain records required in subpart P of this part.

(Approved by the Office of Management and Budget under control number 1513-0062)

[T.D. ATF-199, 50 FR 9162, Mar. 6, 1985, as amended by T.D. TTB-140, 81 FR 59456, Aug. 30, 2016]

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Operations by Dealers

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§20.175   Shipment for account of another dealer.

(a) A dealer may order specially denatured spirits shipped directly from a denaturer or another dealer to a customer (dealer or user).

(b) The dealer who ordered the shipment of specially denatured spirits shall forward a copy of his or her permit, Form 5150.9, and the consignee's permit, Form 5150.9, to the person actually shipping the specially denatured spirits.

(c) The dealer who ordered the shipment shall be liable for the tax while the specially denatured spirits are in transit and the person actually shipping the specially denatured spirits shall not be liable except as provided in 26 U.S.C. 5001(a)(4) and (5).

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

[T.D. ATF-199, 50 FR 9162, Mar. 6, 1985, as amended at T.D. ATF-476, 67 FR 17939, Apr. 12, 2002; 67 FR 20868, Apr. 26, 2002; T.D. TTB-140, 81 FR 59459, Aug. 30, 2016]

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§20.176   Packaging by a dealer.

A dealer may package specially denatured spirits in containers of any size necessary for the conduct of business. After filling packages, the dealer shall accurately determine the contents of each package. After filling drums, the dealer shall seal all the drum openings with the dealer's own seals. Packages of specially denatured spirits shall be marked or labeled in accordance with §20.178.

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§20.177   Encased containers.

(a) A dealer may package specially denatured spirits in unlabeled containers which are completely encased in wood, fiberboard, or similar material. The total surface (including the opening) of the actual container of the spirits must be enclosed.

(b) When specially denatured spirits are packaged in unlabeled containers, the dealer shall apply the required marks to an exposed surface of the case. The case shall be constructed so that the portion bearing the marks will remain securely attached to the encased container until all the spirits have been removed. A statement reading “Do not remove inner container until emptied,” or of similar meaning, shall be placed on the portion of the case bearing the marks.

(Sec. 201, Pub. L. 85-859, 72 Stat. 1360, as amended (26 U.S.C. 5206))

[T.D. ATF-199, 50 FR 9162, Mar. 6, 1985, as amended at T.D. ATF-476, 67 FR 17939, Apr. 12, 2002]

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§20.178   Marks and brands on containers of specially denatured spirits.

(a) Required marks. Each dealer who fills packages of specially denatured spirits shall mark or label each package with the following information:

(1) Quantity, in gallons, or in liters and gallons;

(2) Package identification number or serial number (see §20.179);

(3) Name and permit number of the dealer;

(4) The words “Specially Denatured Alcohol” or “Specially Denatured Rum,” or an appropriate abbreviation;

(5) Formula number;

(6) Proof, if the spirits were denatured at other than 190° proof;

(7) Denaturants used, if alcohol was denatured under an approved formula authorizing a choice of denaturants; and

(8) Quantity of denaturants used, if the approved formula authorizes a choice of quantities of denaturants.

(b) Location of marks. The dealer shall place the required marks on the head of the package or on the side of the case.

(c) Other marks. Other marks authorized by this paragraph may not interfere with or detract from the marks required by this subpart. The dealer may place marks other than the required marks on the Government head or Government side of the package if the other marks—

(1) Are authorized by the appropriate TTB officer, or

(2) Consist of a brand name, or consist of caution notices, or consist of other material required by Federal or State law or regulations.

(Sec. 201, Pub. L. 85-859, 72 Stat. 1360, as amended (26 U.S.C. 5206))

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§20.179   Package identification number or serial number.

(a) Requirement. A dealer who fills packages with specially denatured spirits shall mark each package with a package identification number, in accordance with paragraph (b) of this section, or a serial number, in accordance with paragraph (c) of this section.

(b) Package identification number. A package identification number shall apply to all of the packages filled at the same time on which all of the marks required by §20.178 (a)(1) and (a)(3) through (a)(8) are identical. All of the packages in one lot shall be the same type, have the same rated capacity, and be uniformly filled with the same quantity. A package identification number shall be derived from the date on which the package is filled, and shall consist of the following elements, in the order shown—

(1) The last two digits of the calendar year;

(2) An alphabetical designation from “A” through “L,” representing January through December, in that order;

(3) The digits corresponding to the day of the month; and

(4) A letter suffix when more than one identical lot is filled into packages during the same day. For successive lots after the first lot, a letter suffix shall be added in alphabetical order, with “A” representing the second lot of the day, “B” representing the third lot of the day, etc. (e.g., the first three lots filled into packages on November 19, 1983, would be identified as “83K19,” “83K19A,” and “83K19B”).

(c) Serial number. A consecutive serial number shall be marked on each package, beginning with the number “1” and continuing in regular sequence. The dealer shall use a separate but similar number series for packages containing specially denatured rum. When any numbering series reaches “1,000,000”, the dealer may recommence the series by providing an alphabetical prefix or suffix for each number in the new series.

(d) Continuation of numbering series. If a change in proprietorship, name, or trade name occurs, the numbering system in use at the time of the change may be continued. If serial numbers are used at the time of a change, the numbering series in use at the time of the change may be continued.

(Sec. 201, Pub. L. 85-859, 72 Stat. 1360, as amended (26 U.S.C. 5206))

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§20.180   Record of packages filled.

(a) Requirement to keep record. A dealer shall keep a record when filling packages with specially denatured spirits. The dealer shall keep a separate record of packages for each formula of specially denatured alcohol and specially denatured rum.

(b) Information to be shown. The dealer shall show the following information on the record of packages filled—

(1) Date packages filled;

(2) Package identification number and number of packages in each identical lot filled, or the serial numbers;

(3) Kinds of packages;

(4) Wine gallons or liters;

(5) Kind of specially denatured spirits and formula number; and

(6) Proof, if the spirits were denatured at other than 190° proof.

(c) Filing. The dealer shall retain the record at the premises and shall file it according to the serial numbers or package identification numbers of the packages.

(Approved by the Office of Management and Budget under control number 1513-0062)

[T.D. ATF-199, 50 FR 9162, Mar. 6, 1985, as amended by T.D. TTB-140, 81 FR 59456, Aug. 30, 2016]

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§20.181   Limitations on shipments.

(a) Shipments made under permit. A dealer may ship specially denatured spirits to users and other dealers under the consignee's permit, Form 5150.9. The dealer may not ship specially denatured spirits before receiving the consignee's permit, Form 5150.9, unless the shipment has been authorized by the appropriate TTB officer.

(b) Shipments of samples. A dealer may ship samples of specially denatured spirits to the persons authorized to receive them, and in the quantities permitted by subpart O of this part.

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§20.182   Bulk shipments.

(a) Use. Dealers may ship specially denatured spirits in bulk conveyances. The dealer shall seal the bulk conveyances at the time of filling with railroad or other appropriate serially numbered seals dissimilar in marking from cap seals used by the Alcohol and Tobacco Tax and Trade Bureau. Specially denatured alcohol or specially denatured rum from only one consignor may be placed in any one compartment of a bulk conveyance. Not less than the entire contents of any one compartment may be delivered to any one consignee at any one premises.

(b) Construction of bulk conveyances. Bulk conveyances shall be constructed to conform to the following requirements:

(1) All openings (including valves) shall be constructed so that they may be sealed to prevent unauthorized access to the contents of the conveyance. Outlets, valves or other openings to or from tank cars may be constructed in such a manner that they may be closed and securely fastened on the inside.

(2) If the conveyance has two or more compartments, the outlets of each shall be so equipped that delivery of any compartment will not afford access to the contents of any other compartment.

(3) Each compartment shall be arranged so that it can be completely drained.

(4) Each tank car or tank truck shall be permanently and legibly marked with its number, capacity in gallons or liters, and the name or symbol of its owner. If the tank car or truck consists of two or more compartments, each compartment shall be identified and the capacity of each shall be marked thereon.

(5) Permanent facilities must be provided on tank trucks to permit ready examination of manholes or other openings.

(6) Calibrated charts, prepared or certified by recognized authorities or engineers, showing the capacity of each compartment in gallons or liters for each inch of depth, must accompany each tank truck, tank ship, or tank barge.

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§20.183   Exportation of S.D.S.

(a) General. Except as otherwise provided in paragraph (b) of this section, a dealer may export S.D.S. that conform to a formula specified in part 21 of this chapter to any country that allows the importation of such spirits. The exporting dealer shall:

(1) For each export shipment, prepare TTB Form 5100.11 in accordance with its instructions as a notice and submit it to the appropriate TTB officer;

(2) Mark each shipping container and case with the words “For Export”;

(3) Export the S.D.S. directly; and

(4) Retain appropriate documentation, such as invoices and bills of lading, as evidence that the denatured spirits were, in fact, exported.

(b) Exception. A dealer may not export under paragraph (a) of this section any spirits that conform to Formula No. 3-C, 29, or 38-B.

[T.D. TTB-140 81 FR 59459, Aug. 30, 2016]

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Operations by Users

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§20.189   Use of specially denatured spirits.

(a) Specially denatured spirits shall not be used for any purpose not authorized in this section.

(b) Specially denatured spirits shall be used (1) in the manufacture of articles in accordance with the formula requirements of subpart F of this part, (2) for other purposes in accordance with approved statements of process (§20.94), or (3) in the case of S.D.A. Formula No. 3-A, 3-C, or 30, for mechanical or laboratory purposes not involving the development of a product.

(c) Unless otherwise authorized by the appropriate TTB officer, each formulation of S.D.S. may be used only for the purposes authorized for that formulation under part 21 of this chapter.

(d) By the use of essential oils and/or chemicals in the manufacture of each article containing 0.5 percent or more alcohol by weight or volume, the manufacturer shall ensure that:

(1) Each finished article is unfit for beverage use; and

(2) Unless approved “for export only” under §20.193(b), each finished article is incapable of being reclaimed or diverted to beverage use or internal human use.

(e) Each finished article shall conform to the sample, if any, and formula for that article approved in accordance with subpart F of this part.

[T.D. ATF-199, 50 FR 9162, Mar. 6, 1985, as amended by T.D. ATF-435, 66 FR 5475, Jan. 19, 2001; T.D. TTB-140, 81 FR 59459, Aug. 30, 2016]

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§20.190   Diversion of articles for internal human use or beverage use.

An appropriate TTB officer who has reason to believe that the spirits in any article are being reclaimed or diverted to beverage or internal human use may direct the permittee to modify an approved formula to prevent the reclamation or diversion. The appropriate TTB officer may require the permittee to discontinue the use of the formula until it has been modified and again approved.

[T.D. ATF-435, 66 FR 5475, Jan. 19, 2001]

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§20.191   Bulk articles.

Users who convey articles in containers exceeding one gallon may provide the recipient with a photocopy of subpart G of this part to ensure compliance with requirements relating to articles.

[T.D. ATF-199, 50 FR 9162, Mar. 6, 1985, as amended by T.D. ATF-249, 52 FR 5961, Feb. 27, 1987; T.D. TTB-140, 81 FR 59460, Aug. 30, 2016]

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§20.192   Manufacturing record.

For each manufacturing process in which specially denatured spirits are used, the user shall record:

(a) Quantity and formula number of new or recovered specially denatured spirits used;

(b) Names and quantities of ingredients used; and

(c) Name, trade name or brand name and alcoholic content of each article or intermediate product manufactured, as applicable.

(Approved by the Office of Management and Budget under control number 1513-0062)

[T.D. ATF-199, 50 FR 9162, Mar. 6, 1985, as amended by T.D. TTB-140, 81 FR 59456, Aug. 30, 2016]

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§20.193   Articles for export.

(a) Articles approved without qualification, including articles made in accordance with one of the general-use formulas in §§20.111 through 20.124, may be exported without restriction.

(b) For each article for which the approved formula is endorsed “For Export Only” the manufacturer shall:

(1) Label the immediate container to clearly show that the article is for export (for example, with the words “For export only”, “Not for sale in the United States”, or “Manufactured for sale in ______”);

(2) Mark the shipping containers and cases with the words “For Export”;

(3) Export the article directly; and

(4) Retain appropriate documentation, such as invoices and bills of lading, as evidence that the article was, in fact, exported.

(c) All articles for export shall comply with the applicable requirements of the countries to which they are sent.

[T.D. TTB-140, 81 FR 59460, Aug. 30, 2016]

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