Regulations Governing the Affixture of Internal Revenue Labels to Imported Distilled Spirits and Wines

December 20, 1951 REVENUE REGULATIONS NO. V-21 SUBJECT : Regulations Governing the Affixture of Internal Revenue Labels to Imported Distilled Spirits and Wines TO : All Internal Revenue Officers and Others Concerned SECTION 1. Scope . In accordance with Sections 4 (b) and 338 in relation to Section 125 of Commonwealth Act No. 466, otherwise known as the National Internal Revenue Code, as amended, the following regulations relative to the affixture in the country of origin of Philippine internal revenue labels to distilled spirits and wines are hereby promulgated and shall be known as "Regulations Governing the Affixture of Internal Revenue Labels to Imported Distilled Spirits and Wines." SECTION 2. Definitions . The following words and phrases which appear in these regulations will be given the interpretations indicated in the definitions appearing below: (a) Distilled spirits defined. The term "distilled spirits" includes all substances known as ethyl alcohol, hydrated oxide of ethyl, or spirits of wine, which are commonly produced by the fermentation and subsequent distillation of grain, starch, molasses, or sugar, or of some syrup or sap, including all dilutions or mixtures, commonly known as spirits, whisky, rum, gin; brandy, vodka, alcohol, etc. (b) Wines and imitation wines defined. The terms "wines" and "imitation wines" include all alcoholic beverages produced by fermentation, without distillation from the juice of any kind of fruit, and all imitations of such beverages produced by the mixture of distilled spirits with water and other substances such as flavoring extracts and coloring materials, in such proportions that the resultant mixture contains not more than 25 percent of alcohol by volume. (c) Meaning of the term "gauge liters" and "proof liters." All measurements of distilled spirits and manufactured liquors for the purpose of assessing the internal revenue tax due thereon are made in proof liters, which means that the quantity of liquor measured is reduced to its equivalent quantity of proof liters as defined in the National Internal Revenue Code. "Proof" shall mean the ethyl alcohol content of liquor stated as twice the percent of ethyl alcohol by volume. "Gauge" shall mean the actual volume of the liquor measured. "Proof spirits" being liquor containing 50 percent alcohol by volume of a specific gravity of seven thousand nine hundred and thirty-nine ten-thousandths at fifteen degrees centigrade, it follows that the number of proof liters in a given quantity of liquor is always equal to the number of gauge liters multiplied by twice the percentage of alcohol it contains. For example: A liquor that is 20 percent alcohol is 40 proof, i.e. , 100 liters of such liquor is equivalent to 40 liters of proof spirits. SECTION 3. Amount of Specific Tax . (a) Pursuant to Section 133 of the National Internal Revenue Code, as amended, on distilled spirits there shall be collected specific taxes as follows: (1) If produced from sap of the nipa, coconut, cassava, camote, or buri palm, or from the juice, syrup, or sugar of the cane, per proof liter, seventy centavos. (2) If produced from any other material, per proof liter, ten pesos. (b) In accordance with Section 134 of the same Code, there shall be collected on wines and imitation wines, per liter of volume capacity, the following taxes: (1) Sparkling wines, regardless of proof, eight pesos. (2) Still wines containing fourteen per centum of alcohol or less, except those produced from casuy and duhat , seventy-five centavos. (3) Still wines containing more than fourteen per centum of alcohol, one peso and fifty centavos. Imitation wines containing more than twenty-five per centum of alcohol shall be taxed as distilled spirits. SECTION 4. Manner of Payment. The specific tax on imported dis-spirits and wines shall be paid to customs officers who shall issue the corresponding receipt therefor before the release of the shipment from the customhouse, or if the shipment has been stored in a bonded warehouse, when the same is withdrawal from bond. All specific internal revenue taxes upon distilled spirits, rectified or manufactured liquors, wines, and imitation wines shall be further evidenced by the affixture and cancellation of internal revenue official labels in the manner hereinafter provided, aside from the receipt issued by the Bureau of Customs. SECTION 5. Kinds of Internal Revenue Official Labels . For purposes of these regulations, two kinds of labels shall be used, namely, regular official labels and auxiliary official labels: (a) Data to appear on regular official labels. The regular official labels shall contain the following information, printed, stamped or written in ink: the words and phrases "Regular Official Label," "Importer No. ___," "Republic of the Philippines," "Taxpaid Spirits"; the seal of the Republic; serial number of the regular official label; serial number range of the auxiliary official labels contained in the outside container to which the regular official labels are affixed; contents in gauge liters; percentage of proof; the official receipt number evidencing payment of tax and date of issue; and the signature of the internal revenue officer. The regular official labels shall be numbered consecutively in serial order, starting with the lowest serial number. In the event that the labels are affixed to original and immediate containers not requiring the use of auxiliary official labels, the words "jar," "case," "barrel," "drum," "keg," "cask," etc., as the case may be, shall be written on the space provided for the serial number of the auxiliary label. AaCTcI The regular official labels shall be affixed to the outside or exterior containers in the presence of an internal revenue officer who shall place his signature to every label after all the blank spaces have been filled. (b) Data to appear on auxiliary official labels. The auxiliary official labels shall contain the following information printed, stamped or written in ink: the words and phrases "Auxiliary Official Label," "Importer No. ___," "Republic of the Philippines," "Bureau of Internal Revenue," "Taxpaid Spirits"; the seal of the Republic; and the serial number of the label. The auxiliary official labels shall also be numbered consecutively in serial order, starting with the lowest serial number for affixture to bottles, flasks, or other similar small containers. The auxiliary official labels shall be affixed to original and immediate containers in the manner hereinafter provided. The auxiliary official labels shall be affixed to original and immediate containers in the manner hereinafter provided. The regular and auxiliary official labels to be used for wines and imitation wines shall be of different color or shade but shall contain the same data or information as those appearing on labels for distilled spirits with the exception that instead of the words "Taxpaid Spirits" the labels shall bear the words "Taxpaid Wines." SECTION 6. Mode of Affixing Internal Revenue Labels . Before placing the bottles, flasks or other immediate containers of distilled spirits or wines in packages, cartons, cases, or other exterior containers, an auxiliary official label must be firmly and securely affixed to every bottle or immediate container with the use of a good adhesive or paste. The adhesive or paste must be spread throughout the entire length and breadth of the label and care must be taken to press the whole surface of the label firmly against the surface of the bottle sufficiently long to cause the entire surface of the label to adhere securely to the bottle. The label must pass over the mouth of the bottle, or over a cup or cap placed over the opening of the bottle, extending an approximately equal distance on two sides of the mouth of the bottle in such a manner that the label will be torn apart or destroyed upon opening the bottle but leaving a portion of the label attached to the bottle. The bill of lading, commercial invoice or consular invoice, if any, shall indicate the range of serial numbers of the auxiliary labels contained in the whole shipment. If the spirits or wines are placed in small, miniature or midget bottles containing not more than three-fiftieth of a liter (2 ounces) or if the spirits or wines are placed in original and immediate containers such as jars, jugs, cans, barrels, drums, kegs, casks, etc., not necessitating packing in exterior containers, no auxiliary official labels need be affixed to such containers but only the regular official labels as provided for in these regulations. SECTION 7. Delivery of Auxiliary and Regular Official Labels to Registered Importers . An importer of distilled spirits and/or wines who has filled the required surety bond with the Collector of Internal Revenue and who has been issued a permit to import distilled spirits and/or wines is entitled to requisition for labels. Such importer shall present to the Collector of Internal Revenue his import license issued by the Import Control Commission together with a request for delivery of required number of auxiliary and regular official labels. If this request is approved, the Collector of Internal Revenue shall cause to be delivered to the importer a sufficient supply of both auxiliary and regular official labels to meet the requirements of the licensed importation upon payment of the paper and printing costs of the labels. The cashier of the Bureau of Internal Revenue shall deliver the labels required and shall keep a separate label account for each and every importer, particularly noting down in the account the date of delivery, the quantity of labels of each kind and the corresponding serial numbers. Upon receipt of the labels, the importer shall transmit to the distillery, manufactory, or compounder abroad the auxiliary official labels only for affixture to the containers of distilled spirits or wines at source in the manner provided for in Section 6 hereof. When the shipment has arrived in the Philippines, the importer shall notify the Collector of Internal Revenue of such arrival and shall furnish copies of the bill of lading, the commercial invoice and the Philippine consular invoice, if any. Upon receipt of such notification, the Collector of Internal Revenue shall assign an internal revenue agent to supervise the affixture of the regular official labels to the exterior containers of the distilled spirits or wines in the manner provided for in these regulations. Before the affixture of the labels, the internal revenue officer shall satisfy himself that the blank spaces have been properly and correctly filled out before affixing his signature to each label. Upon releasing the shipment or part whereof from customs custody, all Collectors of Customs are enjoined to see to it that the specific taxes due have been paid and properly accounted for in an official receipt. SECTION 8. Identifying Mark to be Printed on Commercial Labels . The labels used by distillers, compounders, and manufacturers of distilled spirits and/or wines on containers of spirits or wines intended for export to the Philippines shall contain the following inscription printed thereon in bold conspicuous letters: "For Export to the Philippines." No spirits or wines shall be released from customs custody if the commercial label, or an adjunct thereof, on each bottle or container does not bear the above identifying mark, with the exception of spirits or wines duly covered by tax exemption certificates approved by the Collector of Internal Revenue. Persons or entities holding certificates of tax exemption duly approved by the Collector of Internal Revenue may only obtain their supply of imported distilled spirits and wines from abroad. Such spirits and wines need not bear Philippine internal revenue labels nor the inscription required in this section. SECTION 9. Treatment of Imported Spirits or Wines Not Bearing Auxiliary Official Labels or Identifying Inscription . If, despite the requirements of these regulations, an importer of spirits or wines holding an import control license is able to import spirits and wines without the Philippine auxiliary official labels and identifying inscription, the imported articles shall be placed in a bonded warehouse under customs custody and at cost to the importer. Before the articles are allowed to be removed from customs custody, the importer shall affix the requisite auxiliary and regular official labels and cause to be stamped the identifying inscription on every commercial label in the manner prescribed in these regulations. SECTION 10. Report of Stock of Imported Distilled Spirits and/or Wines Not Bearing Corresponding Internal Revenue Labels . Within thirty from the taking effect of these regulations, importers, wholesalers and dealers of imported spirits and wines shall report in writing to the Collector of Internal Revenue the quantity, type and brand of unlabeled spirits and wines in stock together with proof of tax payment having been made thereon. Upon receipt of such inventory and proof of tax payment the requisite number of regular and auxiliary labels shall be issued to the importer, wholesaler, or dealer by the Bureau of Internal Revenue, if in Manila, or the nearest internal revenue officer, if in the provinces, and beginning with the thirty-first day no imported distilled spirits or wines shall be removed from the premises of any importer, wholesaler or dealer without the proper auxiliary label being affixed thereto. Imported distilled spirits and wines found unlabeled after ninety days from the effective date of these regulations shall be presumed not to have been taxpaid and, therefore, subject to confiscation and forfeiture to the Government. Moreover, the possessor thereof shall be amenable to the penalties provided for in Section 174 of the National Internal Revenue Code for unlawful possession of articles subject to the specific tax. SECTION 11. When Bond to be Cancelled. The bond filed by the importer shall remain in full force and effect as long as he is still in business as such and shall guarantee payment to the Philippine Government of any damage it may have suffered in the event the auxiliary and regular official labels are misapplied or are improperly used by the principal. The bond shall be cancelled and returned to the importer when he applies for retirement from the business of importing distilled spirits and/or wines and upon surrendering to the Collector of Internal Revenue his permit to engage in such business, but only after he shall have secured a clearance from his stamp responsibility and other tax liability arising from his business as such importer. EcTCAD SECTION 12. Date of Effectivity . These regulations shall take effect on January 1, 1952. (SGD.) SIXTO B. ORTIZ Undersecretary of Finance Recommended by: (SGD.) S. DAVID Collector of Internal Revenue