the capacity of the package, the increase in tare shall be taken to be one-half of the quantities above enumerated for the respective periods named.

§ 186.104 Packages less than 20 wine gallons. For packages containing, when filled, less than 20 wine gallons, regardless of the capacity of the barrel, the increase in tare shall be taken to be onefourth of the quantities above named for the respective periods mentioned, except that no allowance for soakage will be made for any package having a capacity of less than 20 wine gallons.

§ 186.105 Fractions of 1 pound. In determining the tare for packages containing, when filled, less than 40 wine gallons, should a fraction of a pound arise less than twenty-five hundredths (0.25), it will be dropped; if twenty-five hundredths (0.25), or any intermediate fraction to and including seventy-five hundredths (0.75), it will be called one-half pound, if above seventy-five hundredths (0.75), it will be called 1 pound.

§ 186.106 Packages of 120-gallon capacity. The allowance for increase in tare in case of packages containing 120 wine gallons or more will be double that indicated in the schedule.

ALLOWANCE FOR LOSS OF SPIRITS WHILE IN WAREHOUSE

§ 186.107 Losses shown by regauge. On and after April 9, 1942, if, upon regauge of packages of spirits for withdrawal from internal revenue bonded warehouse, it shall appear that there has been a loss of spirits by leakage or evaporation from any package, without the fault or negligence of the distiller or proprietor of the warehouse, allowance for the loss actually sustained will be made to the extent authorized by section 2901 (a), Internal Revenue Code, as amended, and as set forth in the following schedule, for the period the spirits have been in warehouse. Losses in excess of such quantity must be taxpaid. The period for which allowance of losses will be made begins to run from the date of original gauge as to fruit brandy, and the date of original entry into warehouse as to other spirits.

§ 186.108 Month defined. The period of 1 month is held to run from the date of any month to the day before the same date of the next month, both days inclusive. The 8 years during which spirits may remain in warehouse are held to expire at the close of business on the eighth anniversary of the day next preceding that on which the original entry was made; or, if such day falls on Sunday or a legal holiday, then on the next preceding business day.

§ 186.109 Packages less than 40 wine gallons. The loss allowable on casks or packages of less than 40 wine gallons capacity and not less than 20 wine gallons capacity shall not exceed one-half the amount allowed on casks or packages whose capacity is 40 wine gallons or more,

and no allowance shall be made for loss from casks or packages of less capacity than 20 wine gallons.

§ 186.110 Fractions less than onetenth gallon. Fractions of a gallon less than one-tenth of a gallon arising in determining the allowable loss on such packages shall be disregarded. For example, where the allowable loss is 4.75 gallons, according to the foregoing schedule, the same shall be called 4.7 gallons.

§ 186.111 Eight-year bonded period. Distilled spirits may not remain in internal revenue bonded warehouses more than 8 years from the date of original entry therein, except that spirits which were 8 years old or more on July 26, 1936, may remain in such warehouse until lawfully removed. Allowance for loss by leakage or evaporation from packages of such spirits may be made only if determined by regauge on or before July 26, 1936, and no such allowance may be made for any period subsequent to that date.

§ 186.112 No loss allowance on tanks or tank cars. No allowance can be made under section 307 of the Liquor Tax Administration Act, or any other statute, for losses of distilled spirits by leakage or evaporation from tank cars or from storage tanks in a bonded warehouse, nor from packages filled from such storage tanks. However, where there is a deficiency of not over one-half of 1 percent shown on regauge of spirits in a tank car or storage tank in a bonded warehouse, such deficiency will be regarded as due to a variation in gauge if there is no evidence to the contrary, and no tax will be collected thereon.

COMPUTATION OF TAX ON DISTILLED
SPIRITS

Sec

§ 186.113 Tax rate on spirits. tion 600 (a) of the Revenue Act of 1918, as amended (53 Stat. 298, as amended; 26 U.S.C., and Sup., 2800, 2887), fixes the rate of tax on distilled spirits on and after November 1, 1942, at $6.00 per proof gallon, or wine gallon when below proof, and proportionately at a like rate on fractional parts of such proof or wine gallon.

§ 186.114 Less than one-tenth gallon excluded. In computing the tax on spirits all fractional parts of a gallon

less than one-tenth shall be excluded. Thus, 40.07 proof gallons will be called 40 gallons for the purpose of taxation; 47.53 proof gallons will be called 47.5 gallons, and so on.

§ 186.115 Spirits below proof. When spirits are below proof the tax is levied on each wine gallon or fractional part thereof. For example: In case of a package of spirits, when the loss is not excessive, if the contents are found to be 44.55 wine gallons, 44.11 proof gallons, the tax will be computed on 44.5 gallons.

§ 186.116 Method of computation. The tax at the rate of $6.00 per proof gallon may be readily computed by multiplying the taxable quantity by 6. For example, if the tax is to be computed on 44.5 gallons, the computation will be 44.5 multiplied by 6 equals $267. The tax on 79.4 gallons will be computed 79.4 multiplied by 6 equals $476.40.

STAMPS

SIGNING OF STAMPS

§ 186.117 Facsimile signatures. Facsimile signatures of collectors of internal revenue may be affixed by the use of hand stamps to all stamps in which a space is provided for the signature of the collector, care being taken to use only such ink as will neither fade nor blur. The signatures of storekeepergaugers where required on stamps may also be applied by the use of facsimile stamps.

AFFIXING, CANCELING, AND COVERING STAMPS

§ 186.118 Affixing, canceling, and covering stamps. By virtue of section 3322 of the Revised Statutes (26 U.S.C. 1213), the affixing, cancellation, and covering of stamps, including export stamps, placed on casks or other packages containing distilled spirits, shall be done as hereinafter provided.

DISTILLED SPIRITS OTHER THAN ALCOHOL PRODUCED UNDER TITLE III OF THE NATIONAL PROHIBITION ACT.

§ 186.119 Affixing stamps. When packages of spirits, other than alcohol produced under Title III of the National Prohibition Act, arę withdrawn from the distillery cistern room or internal revenue bonded warehouse upon payment of tax or from such warehouse for export,

the tax-paid or export stamp will be affixed and canceled by the distiller or warehouseman, under the supervision of the storekeeper-gauger, in the manner hereinafter provided, before the package is removed from the warehouse.

§ 186.120 Head of package in two parts. In the case of packages the heads of which are in two or more parts, the stamp will be affixed across a joint or joints of the head in such a manner that the stamp shall rest over a joint at about the middle of the stamp, and so that the centerpiece of the head may not be removed without destroying the stamp.

§ 186.121 Clean surface for affixing stamps. In affixing the stamps care will be taken to see that the surface of the head of the cask or package where the stamp is to be placed is clean and smooth and free from any paint (except metal packages) or oily substance, or any substance which would have a tendency to cause the stamp to crack or peel off, and that the paste, glue, varnish, or other material used is of good quality, strong and well-mixed, and in every way suitable for securely and permanently affixing the stamp.

§ 186.122 Tacks driven through stamp. In affixing stamps, except as hereinafter provided, one tack or staple will be carefully driven in each corner of the stamp, and as many more as appear necessary where the stamp bears coupons reding it irregular in shape.

§ 186.123 Tacks not required in certain cases. The stamps need not be tacked or stapled, but must be securely pasted or glued, on packages of spirits which are to be removed to the bottlingin-bond room, or to a tax-paid bottling plant for immediate bottling or to a rectifying plant for immediate bottling or dumping for rectification, when such tax-paid bottling plant or rectifying plant is in the immediate vicinity of the warehouse and owned by the proprietor of the warehouse or subsidiary, the supervisor to determine from all the circumstances in each case whether the warehouse and the rectifying or taxpaid bottling plant are in the immediate vicinity.

§ 186.124 Size of tacks. When tacks are used they will be carefully selected,

and none but those having well-set heads will be used, the size to be governed by the thickness of the head of the package to be stamped.

§ 186.125 No marks, etc., on Government head other than those required by regulation. No marks, brands, caution notices, or other devices whatsoever will be permitted on the Government head of any package other than the stamps, labels, marks, or brands required or authorized to be affixed by law and regulations.

§ 186.126 Cancelation of stamp. The stamp having been affixed, it must be immediately canceled. For this purpose the storekeeper-gauger will provide a stencil plate of brass or copper, in which will be cut not less than five fine parallel waved lines, long enough to extend not less than three-quarters of an inch above and below the stamp, on the Government head of the package, and the name of the storekeeper-gauger must be cut on one end of the plate, and his title, viz, “U. S. Storekeeper-gauger," and district on the other end, perpendicular to the lines. This plate must be imprinted with black durable coloring material, over and across the stamp, as herein indicated. The stencil plate will be so set as to bring the five parallel waved lines across the stamp at such points as will least obscure the reading and so that the name of the storekeeper-gauger will appear immediately above the stamp and his title and district directly underneath the stamp. The coloring material will be so applied with the brush as to make these lines distinct, without blotting or spreading over the stamp. The stencil plates, with the edges of the cuttings of the lines, letters, and figures, will be kept clean, and the coloring material will be carefully examined to see that it is of a quality which will flow readily without spreading and will make a distinct and durable mark.

§ 186.127 Stamp covered with varnish. The stamp having been affixed and canceled, it must be immediately covered with a coating of transparent varnish, shellac, or lacquer, except where the spirits are transferred to the bottling house for bottling in bond. No varnish, shellac, or lacquer will be used which is not transparent, or which is oily enough

to affect in the least the paste or other adhesive on the stamp.

§ 186.128 Assistance and supplies furnished by proprietor. Persons for whom spirits are gauged are required to furnish all the help needed to handle the cask or package; to furnish the paste, glue, varnish, or other adhesive, tacks, stenciling material, brushes, stencils, branding irons, vessels, and every necessary facility for the preparation of the cask or package to be put upon the market, except the instruments for proofing the spirits, and the storekeeper-gauger's canceling stencil, bearing his name, title, and district, which must be provided by the storekeeper-gauger and kept continually in his possession. The storekeepergauger is authorized to require such materials to be furnished and he will see that the cask or package is in every way complete for marketing when it leaves the warehouse.

§ 186.129 Stamps canceled by warehouseman. The stamps shall be canceled, tacked, and varnished, shellacked, or lacquered by the distiller or warehouseman under the supervision of the storekeeper-gauger.

PROCEDURE FOR OBTAINING TAX-PAID STAMPS

§ 186.133 Procedure for obtaining taxpaid stamps. Whenever it is desired to withdraw spirits from a distillery cistern room or internal revenue bonded warehouse on payment of tax, the procedure prescribed in Parts 183 and 185 of this chapter will be followed in remitting the tax to the collector of internal revenue, who will, upon receipt of such tax and accompanying papers, cut from the book stamps with the requisite coupons annexed, properly filled out and signed. Before being withdrawn from the cistern room or warehouse, the tax-paid stamps must be affixed to the packages, as herein provided, and said stamps must remain upon the packages until the spirits therein are emptied or drawn off. When emptied or drawn off, the stamps, with the other marks and brands, must be completely effaced and destroyed, as required by section 3324 of the Revised Statutes (26 U.S.C., 1217)

§ 186.134 Signature of collector on stamps. Each tax-paid stamp shall

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bear the signature of the collector, who shall write or stamp thereon the date of payment of the tax, by whom paid, the number of gallons and tenths of gallons of proof-spirit, serial number of cask, and location of the distillery or warehouse. The number of taxable gallons and tenths of gallons will be entered in the proper space in the body of the stamp.

REDUCTION IN PROOF IN DISTILLERS' ORIGINAL PACKAGES

§ 186.135 Reduction in proof on warehouse premises. Distilled spirits contained in distillers' original packages may be reduced in strength to a proof of not less than 90 degrees after having been gauged for withdrawal from the internal revenue bonded warehouse, and after having been removed from the warehouse but before removal from the premises, or after they have been removed from the premises tax-paid and are still in the possession of the proprietor at his free warehouse.

§ 186.136 Pure water used in reduction. The spirits will be reduced by the proprietor of the warehouse in the presence of and under the supervision of the storekeeper-gauger. The reduction must be made by the addition of pure water only to the spirits without the admixture of any other substance or material. The presence of any other material suitable for compounding spirits is not permitted on the bonded premises.

§ 186.137 Quantity of water added. Only such addition of water may be made to the body of the spirits in any package as the natural wantage of the package at the time of withdrawal will allow. No introduction of water will be permitted which would require the withdrawal of any portion of the contents of the package either before or after reduction.

§ 186.138 Reduction after removal from warehouse. When spirits are to be reduced on bonded warehouse premises, the reduction must be made after the removal of the duly stamped packages from the bonded warehouse, and on the same day, at some convenient place upon the premises. Where a distillery is operated in connection with the warehouse, the reduction must not be made

in or near the cistern room, the main distillery building, or any building where vessels containing spirits undergoing any of the processes of distillation are situated.

§ 186.139 Separate room or building. In cases where such reduction is to prevail to any considerable extent, a separate room or building should be provided to be used solely for that purpose, and to be known and designated on plans and in notices as the reducing room.

§ 186.140 Help furnished by proprietor. The proprietor of the warehouse must furnish all the help needed to handle the casks or packages, the stencil for the words and initial letters with which to make the required brand, and any other necessary implement or article. The storekeeper-gauger's canceling stencil will be used to affix his name and title.

§ 186.141 One reduction only permitted. One reduction in proof of the contents of a distiller's original package having been made, no further change in proof or volume of the spirits contained in such package can be made except in case of an actual or constructive change of package.

DETERMINATION OF QUANTITY OF WATER REQUIRED FOR REDUCTION

§ 186.142 Rule for determining quantity of water required. The quantity of water required to reduce the spirits can be readily determined by the rules set forth in Tables Nos. 4 and 6 of this part, the rule given in Table No. 4 being perhaps the simpler.

§ 186.143 Table for ascertaining water required. Another convenient method to determine the quantity of water required for reduction of spirits in casks is to ascertain from Table No. 2 the difference in weight between the proof gallons before reduction and the same number of proof gallons after reduction, the difference being the weight of the water required to reduce the spirits. This amount can then be divided by 8.32823 (the weight of a gallon of water in air) to find the number of gallons of water required for reduction.

For example, it is desired to reduce a cask containing 35.80 proof gallons of 113 proof spirits to 100 proof. We find by